Cerro Verde strike to be over by November 28

Thursday, November 24, 2011

The strike at US-based Freeport-McMoRan Copper & Gold's (NYSE: FCX) 53.7%-controlled Cerro Verde copper mine in Peru will be over by Monday (Nov 28) if not before, Leopoldo Monzón, an advisor to the mines and energy ministry (MEM), told BNamericas.

"The government wants the dispute at Cerro Verde to be over as soon as possible," Monzón said.

The striking workers have decided to no longer negotiate with the company and will wait for a government-brokered agreement, union official William Camacho told BNamericas after a vote on Thursday.

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"We will negotiate a year-long contract with the government, not with Cerro Verde," Camacho said, adding that how soon the strike will be called off depends on how fast the labor ministry can draw up a proposal.

Workers at Cerro Verde walked off the job on September 29. Among other benefits, they were looking for an 11% wage increase. Following negotiations with the company, workers dropped demands to a 6-7% pay raise in the first year and a 5-6% pay rise in the second year.

"They [management] said they could never meet our expectations, so we reduced the percentage, but we're standing firm on these new numbers because we need this raise," union leader Leoncio Amudio told BNamericas last week.

Workers are also asking for other benefits such as a cafeteria, medical insurance, fixed working hours and a restructuring of job categories.

Authorities declared the strike legal on September 30, which means Freeport cannot hire temporary workers to replace the strikers. Cerro Verde - located in Arequipa region - put out 303,000t last year, making it the third biggest copper producer in Peru.

Cerro Verde has been forced to reduce mining rates to around two-thirds of normal levels, according to FCX spokesperson Eric Kinneberg. Mining rates are around an average 200,000t/d, which is approximately two thirds of normal rates, he said

SMM Cerro Verde Netherlands owns 21% of Cerro Verde and Peruvian precious metals miner Buenaventura (NYSE: BVN) has 19.3%. The remainder is held by various small shareholders.