By Rhiannon Hoyle

 

SYDNEY--The ramp-up of production at BHP Billiton Ltd.-run (BHP.AU) Escondida, the world's largest copper mine, is progressing smoothly following an expansion of processing operations there, an executive said on Friday.

Daniel Malchuk, president of BHP Minerals Americas, also said wage talks have begun with workers at the mine, located in the Atacama Desert in northern Chile, but that it was too early to speculate on the outcome.

BHP has been increasing production at Escondida, which accounts for about 5% of the world's copper output, after building a desalination plant that has enabled it to run three concentrators at the site.

Copper production at Escondida increased 29% to 583,000 metric tons in BHP's fiscal first half, the six months through December. The miner forecast output would rise again in the fiscal second half to meet a full-year goal of between 1.13 million and 1.23 million tons, up from 772,000 tons in fiscal year 2017.

"We continue to do very well" and the ramp-up "is proceeding as planned," Mr. Malchuk said in an interview. "We don't foresee any challenges at this time."

BHP is scheduled to publish its quarterly operations report on April 19.

The Escondida mine, roughly 100 miles southeast of Antofagasta in Chile, is 57.5% owned by BHP Billiton. Rio Tinto PLC (RIO) has a 30% stake, and the remainder is owned by joint ventures comprising Mitsubishi Corp (8058.TO), JX Nippon Mining & Metals Corp. and Mitsubishi Materials Corp. (5711.TO).

The threat of another strike at the operation, where union employees downed tools for 44 days last year amid a dispute over pay and conditions, has been supporting copper prices globally.

Mr. Malchuk said the latest round of wage negotiations began on Tuesday, after being brought forward by company and union officials. The existing labor agreement is due to expire in August.

"The benefit of having an advanced process is the fact that you have a bit more flexibility and you can have a complete dialogue," he said.

Credit Suisse projected the Escondida talks would be "very influential in determining the stance of other mines and union in Chile."

Mr. Malchuk said BHP was keen to reach a deal "in a reasonable timeframe," but declined to comment on the company's offer to workers.

"Any change in labor cost must be financed with gains in productivity," he said. "Otherwise, it is not sustainable."

 

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com.

 

(END) Dow Jones Newswires

April 06, 2018 13:44 ET (17:44 GMT)

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