CESCO-ANALYSIS-Labor unrest during electoral year could jolt Chile copper – by Alexandra Ulmer and Fabian Cambero (Reuters India – April 8, 2013)


SANTIAGO, April 8 (Reuters) – The costly port strikes that recently hit top copper producer Chile and detained an estimated 9,000 tonnes of the red metal’s exports per day were an unwelcome reminder for miners of the risk of labor action during an electoral year.

For copper powerhouse Chile, 2013 was set to be its year. With massive investment in troubled mines paying off, a rare
new deposit slated to come on line at the end of 2013 and fairly smooth contract negotiations at two key mines, Chile’s copper output seemed all set to reach a record 5.596 million tonnes.

But that was overlooking Chile’s hotly contested presidential election in November and the labor unrest it can
galvanize as unions seek to make their issues heard.

Leading copper miner Codelco is facing a potential 24-hour strike in all its divisions this month, and industry players now fear conflicts could flare up in more of the Andean country’s mega mines.

“This is going to be an intense year,” one Chile-based trader said. At stake is a third of the world’s copper supply. The potential uptick in labor unrest will likely be a major talking point on the sidelines of the CESCO/CRU copper conference in Santiago this week.

To be sure, deft negotiations or internal union divisions are among the many factors that could ultimately assuage fears
of labor disruptions. Chile’s output is still seen growing 2.6 percent this year from 2012 levels to a downwardly revised 5.58 million tonnes.

But memories of a shock two-week strike at world No.1 copper mine Escondida in 2011 are fresh, and union activity could prove a growing pain for Chilean miners, who are already battling soaring prices, slipping ore grades and energy woes.

“I don’t think there’s any doubt that we … are seeing a heightened tension in the labor market,” global miner BHP
Billiton’s head of copper Peter Beaven said in Santiago on Thursday.

A potential supply disruption could jolt a market currently fixated on copper prices near eight-month lows, tepid demand
from top metals consumer China and projections of a surplus.

For the rest of this article, click here: http://in.reuters.com/article/2013/04/08/copper-conference-chile-labor-idINL2N0CH1LB20130408


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