Chilean copper miners strike for bonus pay at Escondida mine, 2011

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Time Period:  
21 July
05 August
Location and Goals
Location City/State/Province: 
Atacama Desert
Location Description: 
Northern Chile
Workers demanded higher bonuses to compensate for declining wages

After Augosto Pinochet took power in 1973, Chile depended increasingly on its copper industry to fuel the country’s export-oriented economy. In the 1990s, the Chilean government allowed for the construction of privately owned mines. One such mine was Escondida, which became the world’s largest copper mine in terms of production. The mine was co-owned by four multinational companies, with BHP Billiton controlling the majority of its shares.

In 2003, Escondida executives negotiated a labor contract with the miners’ union, which encompassed 2,375 members. Three years later, the price of copper hit a record high at $3.50 per pound. While this figure translated into greater benefits for Escondida’s senior management and shareholders, the workers did not share in the profits. In August 2006, the union staged a 25-day strike after the mine denied their demands for a 13 percent pay raise in addition to a $30,000 bonus. Despite BHP Billiton’s previous insistence that a wage increase would be too costly to sustain, on 31 August the company agreed to a five percent wage increase along with a $17,000 bonus.

By 2011 production at Escondida was declining. That meant that the workers were receiving less production compensation, which the company calculated based on the mine’s annual output. Over a ten-month period, the monthly bonus payout had dropped from 300,000 pesos to 90,000 pesos. In response, the union demanded bonuses of 5 million pesos per person to offset their decreased compensation. Escondida executives did not agree. In negotiations the company offered only 2.8 million pesos as a bonus, or $6,120 per person. The workers initiated a 24-hour strike on 21 July 2011, to show their determination, but management was not moved and the negotiations broke down.

Union leader Jose Vidal announced that the miners would be willing to strike indefinitely until their demands were met. The campaign’s impact was felt immediately: the mine lost approximately 3,000 tons of copper production on the first day. On 26 July, state labor authorities contacted union leaders in an effort to set up government-mediated negotiations. Mine executives rejected the mediation proposal, however, claiming that the strike was illegal and therefore they were not obligated to meet with the union. Maria Olivia Rescart, the external affairs official at BHP Billiton Base Metals in Santiago, issued a press statement saying that the company would not be willing to validate any type of negotiation as long as the miners refused to work. The company’s focus on legality had to do with the 44-month contract signed by the workers in 2009 – by going on strike, the workers risked losing their jobs because they were violating the 2009 contract negotiations. The following day, Escondida had to declare force majeure on its copper shipments due to the disruption caused by the strike. Their use of the clause essentially meant that the company would be freed of liability if the shipments were delayed.

On 29 July, the ninth day of the strike, the company contacted union leaders with a new bonus offer of $5,760 per person. This offer, as union spokesman Marcelo Tapia mentioned, was slightly lower than the mine’s original proposal. The workers held an assembly on the same day to vote on whether or not they would accept the proposal. The results sent a decisive message: roughly 96% of the union members voted to reject the bonus and continue the strike.

The following week, union representatives announced that the union would be willing to lower the bonus demands to $8,700 per person. The company responded by re-submitting the same offer ($5,760). On 5 August, the union workers accepted the company’s reduced bonus offer. Although the concession did not meet their original demands, union leaders said the workers could not endure another week without pay. The two-week strike not only left a dent in the company’s profits – Escondida lost more than 40,000 tons of copper production – but also caused ripples in the global market. Copper prices reached a four-month high during the second week of the strike, reflecting investors’ fears of a supply shortage.

In retrospect, although the mine’s concession did not meet workers’ expectations, the Escondida stoppage played an influential role in terms of encouraging other union efforts. On 30 July, workers at the Collahuasi copper mine initiated a 24-hour work stoppage with similar demands in mind. According to their union statement, the Collahuasi shift workers wanted increased production bonuses and an end to mistreatment from supervisors.

Research Notes

The Escondida miners may have been influenced by an organized strike at Codelco, Chile's state-owned mining company, which took place days before and overlapped with the Escondida strike. (1)

This strike in turn influenced a similar campaign in Chile's Collahuasi mine, in which union workers organized a 24-hour strike to fulfill similar demands. (2)

“Chile’s Mining Strike at La Escondida has Ended, but the Nation’s Labor Struggle Continues.” Council on Hemispheric Affairs. N.p., 1 Sept. 2006. Web. 16 Oct. 2011. <‌chile%E2%80%99s-mining-strike-at-la-escondida-has-ended-but-the-nation%E2%80%99s-labor-struggle-continues/>.

Craze, Matt. “Escondida Copper Miners Start Strike in Chile, Union Says.” Bloomberg Businessweek. N.p., 21 July 2011. Web. 14 Oct. 2011. <‌news/‌2011-07-21/‌escondida-copper-miners-start-strike-in-chile-union-says.html>.

Esposito, Anthony. “Chilean union will extend strike at Escondida mine.” Market Watch. Market Watch, Inc, 23 July 2011. Web. 14 Oct. 2011. <‌story/‌chilean-union-will-extend-strike-at-escondida-mine-2011-07-23>.

Gardner, Simon. “Strikers to vote on defiant Chile Escondida bonus offer.” Reuters. Reuters, 4 Aug. 2011. Web. 14 Oct. 2011. <‌article/‌2011/‌08/‌04/‌chile-escondida-strike-idUSN1E77224B20110804>.

Soto, Alonso. “Escondida workers to end two-week strike.” Reuters. Reuters, 5 Aug. 2011. Web. 14 Oct. 2011. <‌article/‌2011/‌08/‌05/‌chile-escondida-strike-idUSN1E77400A20110805>.

- - -. “No end in sight to Escondida strike as mediation fails.” Reuters. Reuters, 26 July 2011. Web. 15 Oct. 2011.

Additional Notes: 
The Escondida strike set an important precedent not only for other miners but for all laborers in Chile. Given that the strike is one of several similar campaigns that disrupted the copper industry in 2011, it is likely that labor unrest will continue as other miners press for similar demands.
Name of researcher, and date dd/mm/yyyy: 
Carmen Smith-Estrada, 17/10/2011