February 10, 2017 / 4:33 PM / a year ago

UPDATE 1-BHP's Escondida copper mine declares force majeure on Chile strike

(Adds company declaring force majeure on shipments, recasts story)

By Fabian Cambero and Anthony Esposito

ANTOFAGASTA, Chile, Feb 10 (Reuters) - BHP Billiton’s Escondida in Chile, the world’s largest copper mine, will not be able to meet its contractual obligations on metals shipments after a 2-day-old workers’ strike brought production to a standstill, a company spokesman said on Friday.

Copper prices on the London Metal Exchange rose 4.5 percent to hit $6,083 a tonne, its highest since June 2015, on market chatter that force majeure would be declared, meaning unavoidable circumstances would prevent the mine from fulfilling its contracts.

“I can confirm that force majeure has been declared,” a company spokesman told Reuters.

Workers in the 2,500-member Escondida Union No. 1 downed tools early on Thursday after collective wage talks with the company failed, beginning a strike that threatens to imminently affect supplies for one of the most widely used industrial metals in the world.

BHP had said it will not produce copper during the strike, and instead will focus on maintaining minimum services, which consist of small teams of workers maintaining equipment and making sure the mine adheres to environmental protocols. It also has said it will continue with investment projects.

The union has warned that it is ready for a long strike, saying that it has enough provisions and rations for striking workers to last about two months.

In an apparent signal that striking workers were not looking to budge any time soon, they continued on Friday to build an encampment outside the mine, which is 3,100 meters above sea-level on an arid plateau in Chile’s Atacama desert, putting in semi-permanent installations, such as bathrooms and sleeping quarters.

“We’re continuing with our installation, with the construction (of the encampment),” said union spokesman Carlos Allendes. “We’re in the organization process and we’re improving conditions.”

For the moment the union and company appear far from reaching an agreement. The union says the company’s last offer curtailed their current benefits and put senior and newer workers on unequal footing in terms of benefits, something they find unacceptable.

Three workers doing expansion work at the company’s Los Colorados concentrator, one of the investment projects where work has not stopped, were injured in a fire early on Friday, the company said. It is being investigated.

Copper prices already surged in recent session in the run-up to the strike at Escondida, which produced 1.15 million tonnes of copper in 2015, or 6 percent of global output that year.

Escondida is majority-controlled by BHP, with Rio Tinto and Japan’s JECO also holding stakes. (Writing by Gram Slattery & Anthony Esposito; Editing by Bill Trott)

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