Strike averted at Teck’s Highland Valley

Vancouver — Teck Cominco (TCK.B-T, TCK-N) and Local 7619 of the United Steelworkers of America have averted a strike at the Highland Valley copper mine, 60 km southwest of Kamloops, B.C., with workers voting to accept a last-minute deal that was struck with the help of a mediator.

Strike notice was served in September by the union, which represents more than 800 workers at the massive open-pit operation. In 2005, when the mine produced 179,000 tonnes (395 million lbs.) copper and 6.3 million lbs. molybdenum, it generated a record operating profit of $613 million for Teck Cominco, largely due to soaring copper prices and increased metal output.

The previous labour agreement expired at midnight on Sept. 30, with 99.8% of union members voting in favour of a strike.

Highland Valley is forecast to produce 178,000 tonnes (392 million lbs.) copper and 3.5 million lbs. molybdenum this year. The company expects to spend about $65 million on capital expenses in 2006 — mostly on new mine equipment. Teck Cominco is also proceeding with a 5-year mine-life extension for Highland Valley, to 2013 that will cost about $40 million, plus an estimated $150 million in stripping costs to push back the Valley pit wall.

Teck Cominco posted record earnings of $1.1 billion for the first half of this year based on soaring commodity prices (copper, zinc, lead, gold and coal).

Recent labour unrest significantly reduced copper production from one of Chile’s largest mines. A 25-day strike at the Escondida mine, owned 57.5% by BHP Billiton (BHP-N) and 30% by Rio Tinto (RTP-N), saw more than 2,000 workers shut down operations at the world’s largest copper producer, which accounts for about 8% of worldwide output. A number of upcoming labour negotiations involving Chilean state copper company Codelco could cause further disruption to the world copper supply, possibly driving its price higher in the face of continued strong demand.