Labour woes at mines may boost copper, nickel Wave of strikes expected as contracts expire

Print this page Posted on : 10-13-2009 by recycleinme.com

Industrial action would underpin already high world copper prices as supplies of the metal used in power and construction are expected to remain tight.

Reuters

London, Oct. 9

A wave of strikes is likely at some of the world's major copper mines later this year as labour contracts expire and disruptions may carry over into next year as workers hold out for a bigger slice of company profits.

Industrial action would underpin already high world copper prices as supplies of the metal used in power and construction are expected to remain tight.

Nickel prices might also spike if workers down tools at Xstrata's Sudbury operations when their contract expires in January. But only if demand is much better than now. In copper, BHP Billiton is trying to avert a strike at its 200,000 tonnes a year Spence facility in Chile.

''Strikes will matter more going forward, and copper is particularly vulnerable,'' said analyst Mr Jim Lennon at Macquarie Bank. ''Not many (copper) companies are losing money, if any, and workers will certainly want a share of profits,'' he added.

The global economic crisis pummelled world copper prices in the second half of 2008. But they have far exceeded expectations this year, rising sharply on strong Chinese buying and continued output disruptions, which have kept visible inventories low.

In Chile, contracts expire soon at some of top state-owned copper producer Codelco's main operations, as well as at Escondida {ndash} the world's biggest copper mine.

While a union source suggests workers there are likely to accept an early deal, the same will not necessarily apply elsewhere.

More copper labour deals come up for renewal during the course of next year in Chile and Canada. And workers look well-placed to argue for higher salaries with some analysts predicting copper prices will exceed the July 2008 record price high of almost $9,000.

Demand outlook

Better demand is expected to kick in outside China while production problems are seen continuing to dog the market.

''Even without strikes copper is going to be very tight in 2010...The unions are in a strong position and are undoubtedly going to take advantage,'' said independent consultant Mr Angus MacMillan.

Source : Business Line