Strike shuts down operations at BHP’s Spence mine in Chile

Unionized workers at BHP's Spence copper mine in Chile, on a strike since earlier this week over layoffs, said operations at the mine have been shut down ever since.

The move followed the dismissal of 49 workers and eight supervisors, union President Ronald Salcedo told local radio Bío Bío, which made the remaining miners feel unsafe about their jobs and prompted the shutdown.

The Spence copper mine, in northern Chile, is BHP's second biggest in the South American country after Escondida, the world's largest. Last year, it produced 198,600 tonnes of  the red metal.

The company has committed to spend $2.5 billion to extend the mine’s life, adding another 50 years to its productive life.

The Spence copper mine is BHP's second biggest in Chile after Escondida, the world's largest.

Spence’s expansion contemplates the construction of a concentrator plant and a desalination plant at Mejillones port, located about 60 km north of Antofagasta city, which will be built and operated by a third party. BHP has committed to a 20-year lease nominally worth $1.43 billion.

It’s estimated the Spence project will generate 5,000 jobs during its construction phase, and, in the words of chief executive Andrew Mackenzie, it will create long-term value for shareholders in one of BHP's preferred commodities.

"These layoffs are strange given that costs are under control at the mine and even more so given that the company is pushing the upgrade project, which should mean contracting more workers," Salcedo told Bío Bío radio.

BHP, already the world's second-biggest listed copper miner, has taken steps towards increasing its presence in the market. Together with approving the expansion of Spence, the company raised last year its annual exploration spending by 29%, allocating nearly all of its $900 million budget to finding new copper deposits.

In October, BHP nearly doubled its stake in SolGold (LON, TSX: SOLG), which is developing the Cascabel copper-gold project in Ecuador, 180 km north of the capital Quito.

Earlier this week, the mining giant — which has also targeted tier-one copper deposits in Canada, Peru and the south west of the United States — made an exceptionally rare public disclosure of drilling results from a very early-stage exploration program in South Australia, close to its Olympic Dam copper-uranium mine. The find is already being called by some experts “the thickest high-grade copper intersection seen in years.”

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