22 November, 2011
Five days of bargaining last week failed to resolve the 53-day strike between 1,200 Peruvian miners of ICEM-affiliated National Miners’ and Metalworkers’ Union (FNTMMSP) and Sociedad Minera Cerro Verde, Peru’s third largest copper produce that is 53.7% owned by US-based Freeport-McMoRan.
According to the branch General Secretary of the FNTMMSP at Cerro Verde, Leoncio Amudio Peña, bi-lateral talks brought the two sides no closer to agreement, and the legal strike in Peru’s southern Arequipa region likely will last another two-to-three weeks while the union waits for the company to give it financial documents related to the operation.
Cerro Verde management has offered a 3% pay increase and a US$735-per-worker bonus in the first year, while the union is seeking a 6-7% increase in the first year and a 5-6% hike in the second. Other unresolved issues include a union demand for proper food distribution, medical insurance, fixed working hours and restructuring of job classifications.
While management has offered to submit the dispute to private arbitration, the union rejected that offer because doing so under Peruvian law would mean the FNTMMSP branch would have to suspend the strike during the arbitration process. The union prefers continuation of mediation by the Arequipa Region labour ministry.
The strike started on 29 September and the very next day the government declared the strike legal. Cerro Verde is using some 600 “volunteer” workers and management staff to continue ore supply to the leaching platform and the mine’s concentrator, but use of such scab workers during a lawful work stoppage is illegal. The government of Peru has termed this a “serious infraction” of the law and the company faces fines of between US$15,000 and US$26,383.
Daily production of copper and its by-product molybdenum averaged 303,000 metric tonnes in 2010. Freeport-McMoRan has reported to markets that the strike will reduce average output this year by one-third, or 200,000 tonnes per day, which likely is a high estimate. The mine produced a net profit of US$1.05 billion last year.
Besides the majority ownership that operator Freeport-McMoRan holds in Cerro Verde, SMM Cerro Verde Nederlands, a unit of the Japanese Sumitomo Corp., owns a 21% stake, while Peru-based Compania de Minas Buenaventura owns 19.3%.