Timing is everything for Highland Valley union

Ask not what you can do for Teck, but what Teck can do for you.” Such is the motto of United Steelworkers Local 7619, which represents 1,050 of the 1,250 workers at Teck Resources‘ (TCK.B-T, TCK-N) Highland Valley copper mine near Kamloops, B.C. Led by union president Richard Boyce, a former heavy duty mechanic at the mine, the union voted 99.5% in favour of strike action on Sept. 26, and struck a tentative agreement with the company a few days later.

When asked by The Northern Miner if his union got what it wanted, Boyce good-naturedly replies, “Did we get all we wanted? We never get all we want. We believe strongly we’ve gotten our members a really good deal, and we’ll be recommending acceptance.” 

Boyce would not disclose precise terms of the deal, but said a tentative five-year agreement was reached on Sept. 30 with
the help of a mediator. Union members will  vote on it before November.

When asked if the deal is similar to those signed by other B.C. mines operated by Teck, Boyce laughs and says, “We’ve done a better deal than they did. I think we’ve got some bragging rights now. I’ve been razzing the guys [at Fording and Elkview] already this morning.”

With copper prices reaching an all-time high of US$4.60 per lb. earlier this year, revenues from the Highland Valley mine have never been larger – and the union’s bargaining position has never been sweeter. 

“We have asked for improvements in just about everything that has to do with money that is presently contained in the collective agreement,” Boyce wrote in a Sept. 13 note to union members. “And [we] have made a few additions as well. 

He said they asked for increases in wages, shift differentials, weekend premiums, training rates, additional statutory holidays, additional floaters, more vacation pay and time off, improved pensions, medical benefits, banked overtime, and the list goes on.

“Now, will we get it all? Not likely,” wrote Boyce. “Not because they can’t afford it. They can. In the history of the metals market, copper has never been higher and this mine has never made so much money.”

Neither have Highland Valley’s workers. The lowest-paid worker in the union, a student, makes $26.54 an hour – or $55,000 per year – before benefits, pension benefits and bonuses, assuming a standard 40-hour work week, and not including overtime pay. This is up from a starting wage of $22.69 an hour in 2006. The second-lowest paid employee, an entry-level janitor, earns $27.32 an hour, or $56,800 a year. A second-level mill services utilityman makes $30.07 an hour; a shovel operator or tire repairman, $31.17 an hour; an experienced mobile crane operator or leach plant operator, $33.21 an hour; and, at the top, a certified journeyman – such as a welder holding an “A” ticket – metallurgical technician or an experienced warehouseperson earns $38.91 an hour, or nearly $81,000 per year. 

These calculations do not take 2006’s “copper bonus” into account, which was part of the agreement when copper prices were lower. Whenever copper is above US$1.27 per lb. as quoted on the London Metal Exchange, union workers are entitled to a 6% bonus payment on their wages, paid into their pension benefits. Boyce noted earlier in September that Teck was trying to “gut” the copper bonus out of this year’s agreement, something that he said was “not going to happen!”

Boyce emphasized that the top concern of union members is hanging on to their pensions, because “it is by far the best of the best, when it comes to the different types of pensions out there.” Workers are currently entitled to a pension of $79 per month per year of service, according to Boyce, so an employee with 10 years work experience would be entitled to $790 a month when he or she retires.

“We recently had a member that terminated and moved elsewhere to work. He was twenty-nine years old and had three and a half years at the mine. Rather than defer his pension until he retired, he chose to take the commuted value and lock it in. He picked up $16,700.”

USW Local 7619 is now the fourth B.C. union to threaten strike action against Teck in  little over a year. The first strike was from August to September 2010 at Teck’s Coal Mountain mine in southeastern B.C. Around 170 members of the United Mineworkers of America there demanded higher wages in-line with other coal mines in the province operated by Teck, and got it, eventually. 

Next, almost 700 workers who are part of the United Steelworkers at Teck’s Elkview coal mine in the Kootenays walked off the job in January 2011 at the end of their five-year collective bargaining agreement. Work resumed in mid-April, but only after each Elkview employee received a $5,000 cash bonus and a 3% raise backdated to Nov. 1, 2010 under a new five-year deal. Wages will increase by a further 15% over the term of the agreement, which also contains a number of other concessions by Teck concerning higher pensions and benefits. 

In May, Teck fended off another strike by signing a new collective bargaining agreement with members of the United Steelworkers at its Fording River coal mine, also in the Kootenays. 

The concessions were similar, with Teck incurring a one-time charge that quarter of $40 million, half of which went to pension enhancements and post-retirement benefits.

Union leaders at Highland Valley no doubt caught on to the trend. They may have even received a few good pointers from their counterparts at Elkview and Fording during their annual Teck Chain meeting early in September. There, leaders at United Steelworkers from four of Teck’s largest mines in B.C. met to discuss “just how we can assist one another when it comes to getting the best deal possible for our members,” Boyce wrote on Sept. 8. 

“For us it is about getting a fair piece of the pie . . . The history here at Highland Valley Copper, since 1981 when I got involved, is first we meet, then the talks stall out, the company requests a mediator and we conduct a strike vote in order to obtain a motivational tool. Then, it is back to the table to crunch a deal.”

In 2006, just before the last collective bargaining agreement was set to expire, workers at Highland Valley similarly voted to strike. They reached a deal before walking off the job, however, a week or two after the initial vote to strike. This time proved little different, with union president Boyce again trying to wring as many concessions from Teck as possible, according to his Sept. 26 statement to union members. 

“Now, it is your committee’s job to go back to the table and get the best deal possible. [It is] time for Teck to get their concessions off the table and come up with significant numbers when it comes to increases in wages, benefits and pensions. We know we got a good deal in 2006. They are making a third more in profit. We will settle for nothing less than a better deal. With their plans for expanding the mill, it won’t be long before they are making even more money. Without us they can’t get there.”

Teck’s 97.5%-owned Highland Valley mine accounted for 9% of the company’s total revenue in 2010 and 11.5% of its operating profit before depreciation and amortization. The mine produced 99,000 tonnes of copper in 2010, down from 118,000 tonnes in 2009 and 119,000 tonnes in 2008. And while revenue from the mine in the first half of 2011 increased to $460 million from $420 million in the same period last year, gross profit only rose to $213 million from $210 million. According to Teck’s June 30 financials, “significantly higher copper prices in the quarter were offset by higher operating costs and the effect of the stronger Canadian dollar.” Higher operating costs in the second quarter mainly resulted from increased waste stripping and higher consumable costs, such as diesel and grinding media, Teck reported. 

The price of copper has also dropped off sharply in the third quarter, tied in with economic w
orries of a double-dip recession. The metal traded for US$3.15 per lb. on Sept. 30. 

Teck announced on Sept. 22 that it plans to invest $475 million in Highland Valley over the next few years to modernize its 40-year-old mill. The investment will extend the life of the mill until at least 2025, matching the expected life-of-mine plan. 

Teck’s shares sank to a new 52-week low at $29.60 on the morning of Sept. 26, the same day Highland Valley workers voted to strike. They traded on Sept. 30 at $30.61.

The next collective bargaining agreement Teck faces in B.C. is with the United Steelworkers union at its Trail smelter. The union’s four-year agreement is set to expire on May 31, 2012.