BHP Billiton plans $3 billion buyback amidst strike at Escondida mine

22 August 2006

Mining major BHP Billiton is planning to buy back shares worth nearly $3 billion ($4.75 billion) from shareholders amidst a strike over pay at its copper mine in Chile.

BHP had already bought back shares worth $11 billion in the past five years. It now owns 57.5 per cent of Escondida and the announcement of the share buy-back could worsen the situation at the mine.

The Rio Tinto Group and Mitsubishi also hold stakes in the world's largest copper mine.

The strike at Escondida, which produces eight per cent of the world's copper, started on August 7 and the mine is now almost completely closed. Mine officials estimate the strike cost at $16 million in lost profit a day.

Chile's government stepped in to try and resolve the strike but without any great success. The two sides, however, agreed to continue negotiations.

BHP Billiton had raised the wage offer to four percentage points above inflation from three percentage points earlier, and a bonus of as much as 9.5 million pesos, or $17,900, for a 36-month contract. BHP also offered to raise pay by an additional 1.3 per cent and pay a bonus of 13 million pesos in the fourth year if workers signed a 48-month contract.