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BHP Billiton's Mount Whaleback mine in Australia. (BHP BILLITON/REUTERS)
BHP Billiton's Mount Whaleback mine in Australia. (BHP BILLITON/REUTERS)

Mine workers dig in on wages, pensions, benefits Add to ...

Mine workers are flexing their muscles amid surging commodity prices and increased labour shortages, setting the stage for more union unrest.

Workers at some of the world’s largest copper, gold and coal mines have either walked off the job or are threatening to strike, pushing demands for higher wages, and better job security and benefits.

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The labour activism is playing out worldwide, from rolling strikes at Australian coal mines jointly owned by BHP Billiton Ltd. and Mitsubishi Corp., to walkouts at Freeport-McMoRan Copper & Gold's giant Grasberg mine in Indonesia. African gold producers AngloGold Ashanti Ltd. and Gold Fields Ltd. are also facing labour action, as is Chile's state-owned copper giant Codelco.

Mining companies are trying to hold their ground to prevent a further spike in costs, at the same time maintaining output levels to capitalize on near-record prices for gold, copper, silver and coal. Prolonged strike action could lead to production shortages that would in turn drive up prices for resources as it did with nickel last year following lengthy strikes by workers at Brazilian mining giant Vale SA’s Canadian operations.

Today, some mining companies have been quick to settle contracts to avoid disruption and bad blood, while others are fighting back, with at least one arguing the job actions are illegal and that commodity prices, while high, remain volatile.

So far, workers appear to be making headway due largely to the steady rise in commodity prices, despite a pullback in recent weeks.

Vancouver-based Teck Resources Ltd. avoided job action at its Fording River mine in British Columbia after recently signing a five-year contract with the union. The deal came after a two-month strike at Teck’s nearby Elkview operation that ended in April.

The loss in production from that strike is partly behind Teck’s lower coal guidance announced in June. The company is also taking a $40-million one-time charge related, in part, to better pension and post-retirement benefits from its two union agreements signed this spring.

“The miners are giving in to the worker and union demands to avoid an extended period of production upset,” BMO Nesbitt Burns analyst Tony Robson said. “And the reality is they can afford to pay for it.”

Still, miners face many more challenges when it comes to labour. Not only do workers want more money and better benefits, but companies must contend with a shortage of workers as they try to increase production and build new mines to meet growing global demand.

A shortage of skilled workers can be equally costly for miners.

“It can lead to disruptions in operations,” Mr. Robson said. “There are complications when you have to constantly retrain and reposition your workforce, including lack of continuity.”

Take for instance Cliffs Natural Resources, which said recently a big challenge is the high 40-per-cent labour turnover in Australia, one of the hottest mining production regions of the world. Barrick Gold Corp. has reported a 30-per-cent employee turnover rate in Western Australia, as it competes for workers with other larger miners in the region.

The world’s largest gold producer also said rising inflation in Argentina led to a 35- per-cent raise for its workers in that country, which is along the lines of pay increases being offered by other major miners there.

Workers are using job action as a way to remind companies that their value, given their skills, is becoming harder to come by. What’s more, they want a piece of the growing profits being earned by miners as mining firms grow through international consolidation.

Now that more and more mines are owned by foreign companies, union leaders say workers feel the need to work harder to ensure their compensation and working conditions are protected. Others are looking for more equal pay and benefits across continents.

“We need one big union across this globe,” said Wayne Fraser, a director at the United Steel Workers union, who alleges big foreign miners are trying to play down workers’ rights. “Unions are more necessary now than ever before.”

The argument was one the USW used during its strike at the former Inco nickel operations in Sudbury and Port Colborne, Ont., one of the longest labour actions in Canadian history that ended a year ago this month.

About 3,000 workers walked off the job due to disagreements about pensions and a bonus tied to the price of nickel. The new contract included modest wage increases, a new two-tier pension plan, a tighter nickel bonus and some job cuts. Six months later, an 18-month strike ended at Vale’s Voisey's Bay nickel mine in Labrador.

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UNREST IN THE PITS

Australia

Rolling strikes at Australian coal mines jointly owned by BHP Billiton and Mitsubishi Corp. are expected to continue through next week as workers press for job security and training. The targeted mines have a combined production capacity of more than 58 million tonnes per year of metallurgical coal used to make steel, and account for about 20 per cent of global trade.

Africa

AngloGold Ashanti Ltd. and Gold Fields Ltd., Africa’s largest producers of the metal, face strike action after workers rejected an improved pay offer. The companies offered to raise wages by 5 per cent; unions are seeking wage increases of 12 per cent to 14 per cent. Consumer prices rose an annual 4.6 percent in May.

Indonesia

Mining operations and production at Freeport-McMoRan Copper & Gold's mine in Indonesia have been significantly curtailed by the second day of a seven-day strike by about 8,000 workers. The union is demanding a pay raise for the workers, who earn $1.50 (U.S.) per hour; the union says Freeport workers in other parts of the world are paid at least $15 to $30 an hour. Freeport says the strike is illegal.

Chile

Codelco workers in Chile plan to stage a 24-hour strike on July 11 after disagreements with management about restructuring of the state giant. A one-day shutdown could cost Codelco around $40-million – about 4,600 tonnes of copper – based on last year's average daily output and current copper prices. Codelco produces more than 9 per cent of the world's mined copper.

Reuters, Bloomberg News

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