Codelco strikes amicable deal with union but how long will the positivity last in Chile?

Codelco, Chile’s state-owned copper mining company, has reached an agreement with the supervisor’s union at its El Teniente mine after a series of intense negotiations. The result is no salary adjustments and a 53% lower bonus that in previous negotiations, valid for 36 months from 1 November. Everyone seems happy, but a senior analyst at Codelco has concerns, “Although Codelco’s agreement gives a temporary respite to the rest of the industry, there are doubts that this favourable climate will last.”

According to a Board Member at Codelco, “The company’s recent negotiation has not only had good results but has also been considerably less confrontational than expected. Traditionally, negotiations with unions. have been very aggressive, but in recent years it has become easier to bring positions closer together. The company has made an effort not to damage the image of union leaders, many of whom have an interest in developing political careers.”

“Although Codelco’s agreement gives a temporary respite …there are doubts that this favourable climate will last.

Senior analyst at Codelco, Chile

According to a Board Member of a mid-sized mining company, “Codelco’s union negotiations have been a point of reference for the rest of the industry, since historically many of the mining companies have been pressured to adopt similar offers for their unions, establishing Codelco as a true benchmark.”

However, optimism for these good results may be short-lived as the Codelco analyst explains, “[a continued positive climate] will depend on how the expected constitutional discussions evolve.” The source is referring to the interest of political sectors to include new labour and union issues into constitutional discussions.

The analyst believes that the proximity of constitutional discussions could have been a factor in the docility of negotiations and the willingness of the unions to compromise. “The political climate has added uncertainty to investment decisions, especially in long-term projects and in issues such as water rights and labour issues, that is why the unions have sought to project moderation and accountability.” The same source adds that although the New Constitution could fail to explicitly deal with labour and union issues, it could create opportunities to give more power to unions, an aspiration of the leftist groups in Chile.

“Codelco’s union negotiations have been a point of reference for the rest of the industry.”

Board member of a mid-sized mining company, Chile

An executive at a large mining company considers, however, that it is unlikely that there will be major changes to labour law or union relations. He argues that “higher state spending driven by the left will require huge levels of tax collection, which gives confidence that large-scale projects will not be hampered.”

For now, the industry enjoys a positive climate but our source-led intelligence will continue to monitor the real situation on the ground.

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