The BHP Group Ltd (ASX: BHP) share price could be under pressure on Monday following lower iron ore prices and a potential worker strike at its Chilean copper mines.
It might be worth noting that the BHP share price is listed on the New York Stock Exchange, where it tumbled 2.09% on Friday night.
Why the BHP share price could come under pressure
Global output for copper could come under pressure after BHP workers at its Escondida copper mine in Chile rejected the company’s final wage offer.
According to BHP, the Escondida mine is “the world’s largest copper producer”, responsible for producing 1,068 kt in FY21.
Copper is a major earner for the BHP share price, contributing US$7,067 million of the Group’s US$25,639 million revenue in 1H21.
Bloomberg reported that “… 99.5% of 2,175 members of the main union at Escondida choose to pressure BHP into offering better terms in a new three-year contract, the union said in a statement late Saturday. Labor rules in Chile give either side the option to utilise at least five days of government mediation before a strike can begin. BHP confirmed it will request mediation in a bid to reach a deal.”
The Escondida union leaders are accusing BHP of offering “large one-time bonuses in exchange for longer hours and new demands” to lift productivity and drive profits.
If BHP is unable to reach an agreement in the coming days, a strike would follow.
BHP copper production at risk
BHP released its fourth quarter and full year FY21 activities report on 20 July, citing a well rounded performance supported by record iron ore prices.
The company reported that Escondida copper production decreased by 10 per cent to 1,068 kt driven by COVID-19 related issues, lower concentrate feed grades and lower cathode production.
Looking ahead, BHP forecasts copper output between 1,000 and 1,080 kt in FY22.
The BHP share price could be in for volatile August given the uncertainty around its Chilean workforce.
Copper prices are already on edge, with spot prices rallying almost 4% in the last two weeks from US$9,300/tonne to US$9,700/tonne.