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Peruvian Miners' Strike Launches, Could Be Declared Illegal

Reuters
Monday, 30 Apr 2007 | 4:31 PM ET

Peru's largest mining union launched a nationwide strike to demand better job benefits, drawing partial support from workers, but the protest could be cut short by a government move to declare it illegal.

Some mines were affected by the walkout, although workers at many of the country's top pits reported for duty.

The labor ministry said in a statement: "In the coming hours, the strike will be declared illegal and any worker who has been absent from work for three straight days after that may be fired by his employer."

It was not immediately clear if the union could appeal the measure and continue with the protest.

The miners' federation claimed that as many as 40,000 members had joined the strike, while some companies and the government downplayed the impact on the mining industry, which is the backbone of Peru's economy.

Prime Minister Jorge del Castillo described the strike as a complete flop.

Luis Castillo, president of the National Federation of Metallurgic and Steel Miners, retorted: "Obviously, the government is going to minimize this strike in the press."

The federation called the walkout to demand improved benefits and an end to outsourcing among mining companies -- which President Alan Garcia pledged on the campaign trail last year.

Metals markets were keeping a close eye on the strike because Peru is among the world's top two silver producers, and is No. 3 in copper and zinc and No. 5 in gold.

Four days of lengthy negotiations between the federation and the labor ministry to avert the strike failed on Sunday.

Industrial metals prices held steady in London on Monday, with fears of a long strike in Peru buoying copper prices.

"Unless they are out for three months or something, and it has a serious impact on production, it doesn't really upset the markets too much," a London Metal Exchange trader said.

Peru's mining federation is made up of 74 mining unions, representing 22,000 workers. About 110,000 miners are estimated to work in the sector overall.

Strike Only Partial

Monday's strike was supported by most workers at Southern Copper, one of the world's top copper miners, whose unions were also pushing their own separate demands.

But the company's chief financial officer said in a conference call that operations were normal at Southern Copper's two Peru mines and at its Ilo smelter.

Workers at Antamina, the country's largest copper producer, do not belong to the federation and said they would not strike, while workers at Cerro Verde, Peru's fourth-largest copper miner, held off from joining the walkout.

At Yanacocha, Latin America's largest gold mine, which is controlled by U.S.-based Newmont Mining, workers said they would continue working for now, as did miners at Barrick Gold'slocal unit.

A union leader at Volcan , the country's No. 1 zinc and silver producer, told Reuters that a majority of workers had gone on strike. Officials at Volcan declined to comment on whether production had been affected.

A spokeswoman at Tintaya, which is Peru's No. 3 copper mine and is run by Switzerland-based Xstrata , said its workers did not join the strike and operations were completely normal. Union leaders at Tintaya were not available to comment.

Mining is one of the South American country's main economic drivers and accounts for more than half of export earnings.

The majority of Peru's mines are controlled by large multinational companies, whose profits have surged on high metals prices. Workers' demands for a greater share of those profits have also intensified.

The last nationwide strike took place three years ago, when miners stopped work for 48 hours to protest the previous government's labor policies.

Peru's broad stock index traded down about 0.50% Monday, pressured a bit by losses in mining company shares.

"The strike is affecting mining companies very little, because it is expected to be resolved quickly," said Leoncio Altamirano, a trader at Juan Magot brokerage in Lima.

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