About 2,500 striking workers at BHP Billiton's Escondida mine in Chile, the world's biggest copper operation, have agreed to let the government mediate in the conflict between them and the company.
There are not guarantees the dialogue will resume, however, as a BHP spokeswoman said Tuesday the while the company had received the government's invitation to attend a three-part meeting, it was still evaluating its participation, local newspaper La Tercera reports (in Spanish).
There are not guarantees the dialogue will resume as a BHP is still evaluating its participation.Miners have accused BHP, which holds a 57% stake in the mine, of offering no pay increase, seeking to cut bonuses, and removing top-up payments for those who take voluntary redundancy, as well as changing shift hours.
The company, in turn, has blamed miners for causing damages to equipment and installations. Last week, it decided to stop copper production and declared force majeure on contracts from the mine during the strike, which entered its sixth day Tuesday.
Escondida, located in the copper-rich Antofagasta region, in northern Chile, supports just over 10,000 full-time jobs and it is forecast to produce about 1.1 million tonnes of in the 12 months to June 30, according to BHP figures. That is equivalent to about 5% of the world's total copper production.
Prices for the red metal have been trading over $6,000 a tonne since news of the strike, but they were down 1.2% on the London Metal Exchange Tuesday to $6,030 a tonne around in mid-afternoon trading, despite a production halt at Freeport-McMoRan's Grasberg mine in Indonesia, the world's second-largest copper operation.
The stoppages at the world's two biggest copper producers have also boosted worries about global supplies, as they come at a time when Chinese demand typically picks up.The stoppages at the world's two biggest producers of the industrial metal have also increased worries about global supplies, as they come at a time when Chinese demand typically picks up following the new year holiday, which ended earlier this month.
But Paul Benjamin, an analyst at energy consultant Wood Mackenzie, told FT.com there are no reasons to panic just yet:
"There isn't structurally a shortage of copper in the market but if the world's biggest producer goes offline for a significant period of time that changes," he said.
However, some analysts such as those at Goldman Sachs are already downgrading their expectations for supply growth this year. The investment bank recently revised its outlook for copper saying supply is expected to shrink 0.4% this year instead of growing 1%, as it said earlier.