Workers Threaten Strike at BHP Billiton Nickel Mine

Andrew Klips |

Shares of Anglo-Australian mining giant BHP Billiton Ltd. (BHP) slid in overseas trading Monday night as news hit that union miners at its Cerro Matoso mine in Colombia are warning that they will go on strike if a colleague is disciplined by the company.  Cerro Matoso produces ferronickel, iron alloys and nickel.  The mine, located in the northern province of Cordoba, bills itself as the second largest nickel producer in the world, producing 37,810 tons of the key metal used in stainless steel manufacturing in 2011.

The pending strike stems from worker Jamer Ledesma, also a board member of the Sintracerromatoso union, allegedly ignoring a safety procedure.  BHP Billiton is scheduled to hold a hearing on February 14 to determine any actions against Ledesma with the union saying that it will decide within one week of the hearing how they will respond to the outcome of the disciplinary hearing.

While strikes have become common in the mining industry in recent years, a strike at Cerro Matoso will have an impact on the nickel markets if history repeats itself.  On February 27, 2008, workers at the BHP mine and smelting business went on strike after labor negotiations broke down.  Workers were demanding better pay, the hiring of more permanent employees (less outside contractors) and better safety conditions.

Three weeks into the strike, BHP Billiton declared “force majeure” on nickel deliveries from the mine as operations remained paralyzed at the leading nickel producer.  The strike ended on March 31 with BHP Billiton agreeing to pay employees 8 percent more, hiring 35 new permanent staffers and a bonus of about US$5,000 after suffering more than $100 million in estimated losses.

Nickel prices spike by about 15 percent during the first quarter of 2008, spurred in part by the work stoppage.  Shares of BHP dropped 13 percent across the strike period.

Nickel prices for May delivery climbed 0.8 percent to $18,165 per ton on the London Metal Exchange on Monday.

Shares of BHP Billiton hit 52-week highs on the first trading day of 2013 at $80.30.  Shares have lingered around that area, but are down about 3.5 percent since, closing Monday’s trading session at $77.48.

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Companies

Symbol Name Price Change % Volume
IFB.UN:CA Investment Grade Infrastructure Bond Fund 8.31 -0.05 -0.60 8,225
BHP BHP Billiton Limited 38.48 -0.42 -1.08 2,059,742

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