FTC confirms strike at all Codelco divisions on July 11

Tuesday, July 5, 2011

Chilean state red metal producer Codelco's copper workers federation (FTC) will not suspend a 24-hour strike scheduled for July 11 despite company attempts to avoid the walkout, FTC president Raimundo Espinoza told BNamericas.

After the FTC announced the strike, which will take place at all of Codelco's divisions, CEO Diego Hernández sent a letter to the federation asking for dialogue to discuss ways to avoid the walkout.

"We had planned a meeting for Thursday [Jul 7]. Management has meetings with the FTC every month and I was planning to attend this one to discuss all our differences, but they decided to call this strike, which I hope will not materialize," Hernández said in a written statement from Codelco.

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"This letter does not change our decision. We will participate in Thursday's meeting but that does not mean we will change the call to strike on July 11," Espinoza said.

Workers from the world's largest copper producer are demanding more participation in the restructuring of the company, which involves a US$17.5bn investment plan in four main projects aimed at increasing output from the current 1.7Mt/y to around 2Mt/y by 2020.

"The methods management have been using to push forward all the changes that will be made at the company do not include workers' opinions, aggravating concerns over labor stability and fueling fears over its potential privatization," Espinoza told BNamericas previously.


The strike has been criticized by Codelco chairman Gerardo Jofré, and mining and energy minister Laurence Golborne.

The call for a walkout is a "smokescreen" as workers are using the fear of privatization as an excuse to protest against the end of the so-called strategic alliance between management and workers that was used in the past, Jofré was reported as saying by paper Diario Financiero.

The system was implemented in 1995 and involved a consultation process between management and union leaders on strategic decisions.

"One of the main problems at Codelco for many years was the existence of bottlenecks as a result of this decision-making system," Jofré said, adding that the administration of the company is set by law to be carried out by the board.

Golborne said he does not understand the call to strike. If the reason is a potential privatization of the company, a walkout makes no sense as the government has consistently argued that it is not part of any plan for Codelco, he said.

Plans for the strike continue at all company operations. "We are already holding meetings at all of our divisions to be ready for next Monday's walkout," Espinoza said.

"A lack of a sound and comprehensive program to face the transition from open pit to underground mining at Chuquicamata, the change in the ownership structure at [the now 99.9%-owned] Gaby subsidiary, statements regarding a potential delay in the development of the phase II expansion at Andina, the lack of capacity to handle the contract workers strike at El Teniente, and the clearly insufficient amount of reinvestment of profits approved by the government are all signs that the government and management lack a real commitment to the development of Codelco as a state-owned company," Espinoza said.

The 24-hour strike will coincide with the 40th anniversary of the company, which was formed following the nationalization of mines previously owned by foreign firms.

A one-day stoppage at all operations would result in a production loss of around 4,700t copper, which could mean slightly more than US$41mn in losses at current prices.


In the letter to the FTC, Hernández recognized that around 2,600 positions will be lost at the Chuquicamata division during the transition to underground mining.

"This is a complicated issue, but we need to face it together... in a responsible and fair way," Hernández said.

The US$2.2bn project at Chuquicamata will mean reducing 500-600 job positions every year until the underground operation kicks off in 2018, according to the CEO.