Codelco's Copper Union Accepts Offer, Averting Strike

Codelco, the world's biggest copper producer, said it reached agreement on a new contract with a group of workers at its largest mine, averting a strike.

Codelco, in a statement sent by e-mail, said a union representing 503 workers at the Chuquicamata copper mine in northern Chile voted to accept its wage offer. Workers, who yesterday rejected an earlier proposal, today approved the terms after Santiago-based Codelco reduced the length of the contract, union Director Juan Legua said.

Since December, Chilean government-owned Codelco has reached accords with its largest unions at Chuquicamata, helping to avoid work stoppages at the mine through the end of this decade. The unions sought a bigger share of record earnings at Codelco after copper prices surged 41 percent last year, fueled by demand in China, the largest user of the metal.

``This reflects copper prices and the market,'' Legua said in a phone interview from the Chilean city of Calama.

Codelco offered a 37-month contract, shaving one month off its prior contract proposal that had been rejected by workers, Legua said. Workers had sought a 36-month contract.

Copper futures for May delivery rose 6.45 cents, or 2.5 percent, to close at $2.6645 a pound on the Comex division of the New York Mercantile Exchange.

Labor Unrest

Labor strikes in Chile and Mexico last year helped boost copper prices by disrupting supplies of the metal. An almost monthlong strike that ended in September trimmed output at Escondida, the world's biggest copper mine, which is controlled by BHP Billiton Ltd. This month, BHP Billiton reached a wage accord with a union at its Cerro Colorado copper mine in Chile, avoiding a walkout.

In the offer approved today, Codelco left unchanged its proposed wage increase of 3.8 percentage points above inflation and bonuses of 8.1 million pesos ($15,028) for each worker, Legua said. Chilean annual inflation was 2.8 percent in January.

Copper prices were half today's level the last time workers negotiated contracts in 2004. At the time, the union accepted a wage increase of 2.85 percentage points above inflation and bonuses of 2.3 million pesos each, Legua said.

Legua's group, called the Mining Union, represents 7.5 percent of employees working in mining operations at Chuquicamata, based on estimates by unions at Codelco.

Chuquicamata produced about 670,000 metric tons of copper in 2005, or 39 percent of Codelco's overall production that year of 1.728 million tons, according to the Chilean Copper Commission, a state-run research group.

Chuquicamata is the second-largest copper mine in Chile after Escondida. Chile is the world's largest supplier of copper.

source:www.bloomberg.com