Copper jumped again on Thursday morning to trade at $ 3.28 a pound up 0.46%, the highest since end-February, as worries about supply disruptions in key producing region resurface.Workers at the Escondida copper mine in Chile put down quite a marker in the third round of contract negotiations with part-owner and operator BHP.
Domestic Copper is riding on bulls seeking cues from its counterparts. The prices gained by 1.32% to trade at Rs 481 per kg. On the higher side, Rs 482.5 per kg was tested. Important caps for Copper is at Rs 485 and 488 per kg levels.
The union is demanding a one-time bonus equivalent to 4% of dividends distributed to BHP shareholders in 2017. That works out to about $ 34,000 per worker. It would be the biggest bonus payout to mineworkers ever in Chile.
The union also wants a wage increase of 5%, which is more than double the inflation rate in the South American nation. BHP has until next Friday to respond, but after two rounds of failed talks, the reception of the proposals is likely to be cool. Due to its size, Escondida can on its own change global copper supply dynamics.
BHP, which owns 57.5% of the mine, has spent nearly $ 8 billion expanding the mine (including a $ 3.4bn water plant) in the past five years to maintain output above one million tonnes (2018 guidance is 1.18-1.23mt). That means Escondida is responsible for nearly 5% of the worlds primary copper supply.
The 2017 strike at Escondida was the longest in Chile since the 74-day action at state-owned Codelcos El Teniente mine in 1973, which took place shortly before the military coup that overthrew socialist President Salvador Allende. The threat of copper supply disruptions due to a slew of labour contract negotiations in top producers Chile and Peru, boosted prices at the beginning of the year.