Chilean Workers Stake a Claim to Mine Profits
Hugo Fazio | September 14, 2006
Translated from: Minera Escondida: Ejemplo de despojo al país
Translated by: Nick Henry
By the end of this year, the world's largest copper deposit — Northern
Chile's "Escondida Mine" — stands to make a $6 billion profit based on
its first-semester earnings. Miners have gone on strike to demand that
they receive a share in this bonanza. The demands of the miners
represent a tiny portion of earnings compared to the profits reaped by
the company.
At the heart of the issue is who should benefit from a natural
resource that is being mined practically royalty-free. Under the
current arrangement, Chileans gain nearly nothing from the boom in
natural resource exploitation in their country. The situation reveals
the need to consider nationalization, or at least the establishment of
a realistic royalty fee.
The Escondida Mine, which is controlled by the Anglo-Australian mining
group BHP Billiton, reported first-semester profits of over $2.9
billion dollars—a 211.5% increase over the same period last year.
Projected over 12 months, profits could reach $6 billion, or 4.2% of
Chile's total Gross Domestic Product (GDP). This semester's profits
eclipsed those reported in 2005 ($937 million) for the same period, in
part because of increased copper prices, but also because of
significant increases in production. BHP Billiton was the second most
profitable company in the nation that publicly report earnings, just
behind the national copper company, Codelco. The Anglo-Australian
company is required to report its earnings because it holds debt
securities in the national financial market. Its first-semester sales,
in real terms, jumped 157.8%. Three years of similar earnings from the
Escondida Mine would exceed the amount paid in the largest mining
transaction the world has ever seen—the acquisition by Swiss Xstrata
of the high-profile Canadian consortium Falconbridge.
Escondida Mine's profits represent an affront to the country. During
the first semester, the average price per pound of copper in the
international market was $2.756 a pound, up 82.5% from the same period
last year. In May, the rate reached $3.650. A substantial percentage
of the sales income remained in the hands of BHP Billiton. At $3.55 a
pound for its copper, the company makes $28 million a day, of which
78.6% ($22 million) ends up as before-tax profits. With taxes of
approximately $7 million, the company comes away with $15 million of
profit each day, 53.6% of the sales income. These extraordinary
numbers are achieved by pillaging the country's natural resources.
Codelco's profits go directly to the State, including resources
earmarked by law to acquire weapons for the Armed Forces. Through
these budget mechanisms, the revenue from the State-owned mining
company directly translates into a high budget surplus.1 On the other
hand, the profits from the Escondida Mine are taken abroad or spent
financing new investments to increase future profits, taking advantage
of the fact that the country charges practically no royalty fees for
the extraction of a resource that belong to all Chileans. As such,
average Chileans are excluded from the mining boom taking place within
their own national territory.
The earnings attained by Chile's private mining industry, which
exploits almost two thirds of the country's most valuable natural
resource, will approach $10 billion this year. The South African
company AngloAmerican earned $991 million in the first semester—a
139.5% increase. Its total income in the country reached $2.24
billion, double last year during the same period.
The first semester results from Escondida Mine were revealed under
special circumstances—workers had just begun a strike. This fact puts
the issue in a different light. The strike carried out by Escondida
Mine's 2,052 workers has undeniable national and worldwide
ramifications. International observers expressed concern that the
labor conflict could have ramifications on international copper
prices. Financial Times covered the story of the strike on the front
page of its Internet edition immediately after it began.
As the largest copper deposit in the world, the question at the heart
of the Escondida Mine strike is: who will benefit from the enormous
revenues, and how much should the work force be compensated? The
strike creates the possibility of staunching the flow of resources
outside the country
[...]
full: http://americas.irc-online.org/am/3510
--
Colin Brace
Amsterdam
