Strike to end at Chuquicamata after Codelco reaches deal with unions [UPDATE]

The agreement ends a strike that had started on June 14 at Chuquicamata, the world’s largest open-pit copper mine.

Employees were reintegrated during the morning of June 28, the unions added.

Chilean state-run copper miner Codelco is in the process of transitioning the mine from open pit to underground, which will result in 4,500 roles being made redundant.

The underground phase of operations is expected to start in July. Meanwhile, Codelco is also ramping up its flash smelter, which remained closed from December to May for work to bring in into line with Chile’s new environmental standards.

The three-month copper price on the London Metal Exchange recently traded at $5,983 per tonne, $6 below Tursday’s close of $5,989 per tonne. The price is are still up by 2.7% from $5,828 per tonne on June 13, the day before the strike started.

Copper supply disruptions have boosted prices lately, with Codelco’s El Teniente mine also suspending operations after the death of a worker in an accident on June 2.

The decrease in global output also pressured copper treatment and refining charges (TC/RC) lower. Fastmarkets’ TC/RC Asia-Pacific index was at $53.50 per tonne/5.35 cents per lb on June 21, the lowest since its launch in 2013.

“[The end of the strike at Chuquicamata] reduces the supply uncertainty on the global copper market,” Commerzbank analyst Daniel Briesemann wrote in a report on June 28.

Chuquicamata was running close to 60% of its full capacity during the strike, Codelco said. Throughput is expected to be normalized from now on, the company added.

The division was Codelco’s second-largest in the first quarter, recording output of 84,000 tonnes of copper.

The offer from the copper producer was accepted by 77% of workers belonging to Union No1, 74% of members from Union No2 and 81% of employees with Union No3, Codelco and the unions stated.

New labor contracts, which will last for 36 months, include a 1.2% wage raise, bonuses, better health insurance terms and a benefit plan for former workers.

“The three agreements meet the workers’ demands as well as the mining business challenges,” Chuquicamata general manager Mauricio Gallardo said.

Julian Luk in London contributed to this report.