The Zhitong Finance App learned that mining giant BHP Billiton (BHP.US) and the union representing workers in Port Hedland, Western Australia, made progress in negotiations on Tuesday. However, the two sides had not reached an agreement when they concluded the negotiations on the same day. The trade union said the negotiations will continue next week.
According to reports, the “Tripartite Joint Port Trade Union Federation” stated in a statement: “The negotiations have made some progress, but the two sides have yet to reach an agreement. We will continue negotiations to establish a safe, fair and efficient iron ore industry on July 28.” Progress in negotiations means that the possibility of announcing a new strike by next Tuesday has decreased, which is certainly good news for the operation of Port Hedland, the world's largest iron ore export port.
Port Hedland is one of the world's largest iron ore shipping ports and Australia's largest iron ore export port. The port connects BHP Billiton's mines in the Pilbara region and undertakes all of its iron ore export business in Western Australia. According to the data, about 80 million Australian dollars worth of BHP iron ore products are transported through the port every day. If Port Hedland's operations are disrupted, the economic losses may be enormous, and it will also put pressure on the global iron ore supply chain.
As the world's largest mining company by market capitalization, BHP Billiton has been in negotiations for over 7 months with a trade union representing about 450 operators and maintenance workers to reach a four-year corporate labor agreement. According to trade union estimates, “more than 100” employees in BHP Billiton's Port Hedland iron ore business stopped work for 8 hours last Thursday. Previously, the United Port Trade Union Federation, representing the three trade unions, had predicted that the number of employees participating in this operation could reach 200.
BHP Billiton previously stated in a statement: “Our focus remains to advance negotiations in a constructive manner to reach a fair and reasonable agreement.” “We are committed to continuing to negotiate in good faith on a new working agreement for our iron ore business and believe that involving an independent Fair Work Commission in Port Hedland negotiations is the most constructive way to achieve the best results.” The Fair Work Commission is an Australian industry regulator that can intervene in the labor negotiation process and eventually become the adjudicator of agreement disputes.
Andy Foster, portfolio manager at Argo Investments, an Australian investment company that holds shares in BHP Billiton, said: “At the moment, this doesn't seem to have had much impact on operations. If the situation starts to lead to further action and more production disruptions, it will clearly be a cause for concern.” However, he added that at present, it appears that the impact is still under control, and BHP Billiton seems confident that an agreement can finally be reached.
The Western Australian Electricians Union (ETU), representing Pilbara Port electricians, estimates that the average additional salary requirement it is seeking for 450 employees is 25,000 Australian dollars (approximately $17,500) per person. ETU said in a statement that “fly in and out (FIFO)” jobs — jobs where employees fly to work in remote mining areas and sacrifice time with their families — can no longer compete with working conditions in urban areas. The union said: “In the past, if workers worked in the Pilbara area, their wages could double the Perth wage level... but that is no longer the case.”
The union's analysis found that although BHP Billiton's iron ore business continues to grow and the cost of living in remote and regional regions continues to rise, the wage levels of the company's long-term employees have basically stagnated over the past five to six years. The union said, “In contrast, new employees tend to receive higher pay in order to attract them to work in the mining area, resulting in a two-tier employee structure — the value of experience is undervalued and fairness weakened.”
Last week, electricians responsible for maintaining BHP Billiton's high-voltage power network in the Pilbara region of Western Australia overwhelmingly supported a strike action, further exacerbating local labor tension. The electricians will hold talks with BHP Billiton on Thursday.