Escondida to take over additional US$150 million for collective bargaining
16-Jan-2013 La Tercera – News
– Employees will receive an unprecedented bonus of CH$19.3 million, loan of CH$3.7 million and 5% actual salary readjustment
– Miners to vote for this proposal next week and bonus should be paid in February
An unprecedented CH$19.3 million bonus for 2,900 employees of Minera Escondida was agreed during the anticipated collective bargaining process with the workers’ unions.
The proposal will start to be voted next week and includes, amongst other benefits, an actual salary readjustment of about 5%, a $3.7 million soft loan besides increment to management and productivity bonus that are quarterly and monthly paid.
Thus, the company will be disbursing about US$142 million only for conflict-end bonus concept (US$119 million) and loans (US$23 million) plus US$10 million for salaries readjustment. This is a cost the company will have to afford in addition to the expenses the company had as of December 2012.
Today the average salary of an employee in the mining company, excluding supervisors and executives, is in the neighborhood of CH$791,000 with a minimum of CH$433,000 and a maximum of CH$1.15 million.
According to the Escondida’s Workers Union President, Marcelo Tapia, the new collective contract will be valid for 48 months (the previous one had a 44-month validity) and will be effective in July 2013.
The agreement considers two main changes with respect to previous negotiations: the settlement of a retirement plan (a condition the Codelco’s employees already have implemented for example) for 55-60 year old employees with more than 10 years in the company, and the shifts system modification from current 4×4 (four working days followed by four days of rest) to a 7×7 regime.
“This modification will enable the Escondida operations have more continuity especially considering the scheduled expansions and the productivity improvement, Tapia stated.
Also some improvements to the health insurance plan, university scholarships for offspring and husbands and wives, amongst other benefits must be added. Some sources close to the negotiation indicate that the 2009 Escondida labor agreement amounted to US$700 million for the company cost and some estimations consider this agreement cost will be about US$900 million.
Gustavo Lagos, Professor and Investigator of PUC University indicates that these benefits will result in the Treasury collecting less taxes: “In the case of Escondida, between 35-40% of earnings goes to tax payment, then, this has a direct impact on the rest of the Chilean population”.
He states that this kind of agreements are a demonstration of the costs increment affecting the mining industry and that this situation will probably continue to develop to the extent copper prices are high. Average copper price in 2012 was US$3.6 per pound. Sonami has forecasted a copper price in the neighborhood of US$3.6-US$3.8 per pound for 2013.
“Costs have been increasing in a spiral way that doesn’t seem to stop. This will continue in a wide scope unless the copper super cycle ends”, he asserts.
Unprecedented Bonus
The end-of-conflict bonus is one of the negotiation’s interesting parts. It reached the unprecedented amount of CH$19.3 million that together with the “soft loan” add up CH$23 million. In the 2009 negotiation process Escondida granted a CH$14 million bonus.
Anticipating the collective bargaining will allow Escondida make important savings and will avoid social conflicts like the one of 2006 when the mine experienced a 24-day strike with a US$2.5 million per day cost.
“With this agreement the company may seal four years of social and labor peace”, Tapia states.
If the proposal that is to be voted between January 23 and 27 is approved the company should pay the bonus during the first week of February.
