15 October 2009

BHP to Stop Copper Output at Spence Mine, Union Says

By Nathan Gill and Matthew Craze
Oct. 15 (Bloomberg) -- BHP Billiton Ltd. will cease production of refined copper tomorrow at its 200,000-ton-a-year Spence copper mine in Chile because of a strike, a union leader said.

Workers stopped mining on Oct. 13, leaving BHP without enough raw materials to be turned into refined copper, union president Andres Ramirez said today in a telephone interview.

Workers at Spence rejected an Oct. 12 wage proposal that was less than what miners received at BHP’s Escondida, the world’s largest copper mine. Escondida workers won a one-time bonus worth 14 million pesos ($25,410) and a pay increase of 5 percent a year over five years, Santiago newspaper La Tercera reported Oct. 11, without saying how it got the information.

“Refined copper production is going to collapse,” Ramirez said. “By tomorrow they won’t be producing anything.”

Ruban Yogarajah, a BHP spokesman based in London, said refined copper production continues at a “reduced rate” at the mine. He declined to say if production would stop tomorrow.

He also wouldn’t comment on talks between management and the union representing about 560 workers in an e-mailed response to questions. BHP is based in Melbourne.

Copper futures for December delivery rose 1.45 cents, or 0.5 percent, to $2.859 a pound on the New York Mercantile Exchange’s Comex unit. Copper for delivery in three months rose $69, or 1.1 percent, to $6,289 a metric ton ($2.85 a pound) on the London Metal Exchange.

Spence will produce about 100 metric tons of refined copper today, compared with a normal average of 700 tons, Ramirez said.

BHP Production

BHP produced 172,685 tons of copper at its Spence mine in the 12 months through June 30 and has plans to reach full capacity of 200,000 tons in the coming year, the company said in its annual report on Sept. 14.

Codelco, the world’s largest copper producer, is also due to negotiate new wage contracts with workers at mines in Chile by year-end. Freeport McMoRan Copper & Gold Inc. reached a wage agreement with their workers on Aug. 1, ahead of a Sept. 30 deadline, the New Orleans-based company said Aug. 7.

BHP is negotiating new labor agreements at the Antamina mine in Peru where workers contracts have expired. BHP and Xstrata Plc each hold a 33.75 percent stake in the Antamina mine, while Teck Resources Ltd. has 22.5 percent and Mitsubishi Corp. owns 10 percent.

BHP fell 1.6 percent to 1,811.5 pence in London trading.