Weekly Report - 28 July 2011 (WR-11-30)

CHILE | Mining troubles. On 22 July Rodrigo Alvarez, the deputy finance minister, was appointed energy minister. The government was embarrassed when Fernando Echeverría, its first choice as energy minister in last week’s reshuffle had to resign citing possible conflicts of interest. The government’s new spokesman, Andrés Chadwick, who sits in the cabinet, spent the weekend on TV programmes defending the government’s handling of the bungle. Even he admitted that the conflict of interest “should have been foreseen … but governing was a human activity, not divine nor infallible.”  The reshuffle was designed to pep up the government, which has been reeling in the opinion polls after a series of demonstrations and protests. President Sebastián Piñera, who took office in March 2010, has seen his approval rate sink to 31%, according to the latest opinion polls.  On 22 July the unrest in the copper mines spread to the private sector: workers at the huge La Escondida pit, the largest copper mine in the world, began an indefinite strike, over production bonuses: these have been falling because the mine is now working ore, which contain less copper. The workers are grouped in a single union comprising 2,375 members. Union leaders say the strike is legal as they are renegotiating a 2009 collective bargain agreement. The workers want a US$10,000 bonus in compensation; the company, which is owned by BHP-Billiton, is now offering US$6,000. The strike is costing the company about US$30m a day.  As we went to press on 28 July, BHP-Billiton invoked force majeure on its copper concentrate shipments. In a filing to the local SVS securities regulator, the firm called the workers' strike illegal and noted that the walkout was "producing an impact on the production of copper concentrates".

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