Global mining giant Rio Tinto (RIO.AX) is currently engaged in negotiations with workers at its Oyu Tolgoi copper operations in Mongolia to prevent further industrial action following a significant decline in wages that sparked a strike in May.
Rio Tinto commenced underground operations at Oyu Tolgoi, renowned for its vast copper-gold reserves, in March last year with plans to scale up production to approximately 500,000 tons of copper annually starting from 2028.
At current copper prices, estimated below $10,000 per ton from a record high near $11,000 per ton in May, the production is anticipated to generate approximately $5 billion annually.
Changes in Mongolia’s Labor Law, effective from January 2022, necessitated Rio Tinto to reassess employee allowances, resulting in reported wage reductions of up to 80%, as highlighted by non-governmental organization OT Watch, which maintains contact with the mine workers.
According to OT Watch Director Sukhgerel Dugersuren, negotiations were initiated with Rio Tinto, with a deadline for response set by July 5, 2024. Dugersuren emphasized the possibility of another strike if key demands related to wages and other stipulations are not met, citing worker dissatisfaction with current pay rates of $1,596 per month for demanding work away from home.
OT Watch further underscored that workers’ primary demand is parity in wages comparable to those received by counterparts in other Rio Tinto mines. By comparison, the average monthly salary for mining personnel in Australia stands at A$10,413 ($6,919), according to government figures.
During the strike period from May 10-17, which halted all open pit and underground mining activities, OT Watch reported potential localized structural issues underground. Rio Tinto, however, asserted that the strike involved a limited number of employees focused on understanding the implications of average salary adjustments, emphasizing no substantive impact on mine operations or production.
Rio Tinto continues to navigate discussions with workers to address ongoing labor concerns and maintain operational stability at Oyu Tolgoi amid evolving regulatory and market conditions.
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