Gee, the Chinese government is going to mightily upset – a strike by 205 workers employed by BHP at two of its big mines in Chile has pushed the price of copper back over $US10,000 a tonne.
The Chinese government has been fulminating for weeks now about the rising price of key commodities like iron ore and copper and has threatened action if it finds evidence of manipulation etc. It has told end users in China not to try and push up prices of the commodities and to keep price rises for manufactured products as low as possible, if not at all.
The commentaries saw prices of key commodities like iron ore and copper fade – Copper peaked at $US10,724.50 a fortnight ago, but drifted back under $US10,000 a tonne while the Chinese attacks on manipulation continued. Iron ore (the price of 62% Fe fines) fell back under $US200 a tonne to $US189 on Thursday.
Edicts emerged from the highest levels of the Chinese government – the State Council for instance highlighted rising commodity for the third time in 14 days, on Wednesday (May 26), during the weekly executive meeting of China’s State Council, led by the country’s premier Li Keqiang.
Those 205 BHP employees in faraway Chile were not listening to the strictures of the Chinese government and Communist Party and exercised their right to strike in support of demands for a better wage deal from BHP. The BHP workers are remote controllers for parts of the mining and concentrators at Escondida and Spence mines. Escondida is the world’s biggest copper mine.
The irony of workers exercising their rights to strike for higher pay would be lost in the workers’ paradise that the Chinese Communist Party claims China is these days. Strikes are not allowed in China, nor is demanding more pay – if there are demands they are quickly put down and the recalcitrants sent for a spot of ‘re-education’ in a labour camp where work is mandated.
Comex copper for July delivery surged more than 3% to $US4.677 ($US10,310 a tonne) on Thursday in New York, ending the recent weakness. The metal settled at $US4.66.30 a pound (up 3.05%) and then edged higher in early Asian trading.
BHP said on Wednesday it would take contingency measures at its operations, and said the rest of its workers and contractors would continue with their everyday tasks.
Reuters pointed out the strike is the first of its kind at Escondida by a group of remote operations workers
The strike comes as global copper prices remain near record highs and amid rising political risk in the region, with potentially big political shifts under way in both the top copper producer Chile and neighbouring Peru, the second biggest.
Escondida produced 1.19 million tonnes of copper in 2020, while Spence produced 146,700 tonnes of Chile’s total 5.7 million tonnes.
There’s no sign of an end to the dispute – BHP has staff doing the job of the 205 strikers. Once the production impact becomes clearer copper prices could ease – as they will when the strike ends.
But tax issues for copper produced in Chile and Peru are likely to keep prices volatile until they are sorted and that could take a while.
