Mining Companies Face Higher Labor Dispute Risks

Labor disputes such as strikes are more likely to become a problem for Mexican mining companies, as workers are requesting higher bonuses on the back of rallies for resource prices and reforms to profit-sharing regulation.

Under the Mexican law, mining workers used to be eligible to receive a 10 percent profit sharing sum, but when the government forbid subcontracting last year, they payments were capped at the greater of three-year trailing average payments or three months’ worth of salary. Nonetheless, mining unions are strongly seeking to secure the full 10 percent share because profit margins have skyrocketed as a result of strong metals prices, for example for gold, silver and copper.

Last month, the National Mining Union of the Confederation of Mexican Workers (CTM) reached a series of agreements with Grupo México for the payment of profit sharing at the company’s Buenavista mine, also known as Cananea, Mexico’s biggest copper producer project. However, there are still disagreements with workers who, due to the outsourcing reform in 2021, lost out on profits. Consequently, the company is trying to negotiate with them to avoid strikes.

Considering its legal responsibility and the high prices of copper, Grupo México agreed to pay out a legally mandated share of its profits for 2021, which stand at around MX$700,000 (US$35,190) per worker. Javier Villareal, Secretary General, CTM Sonora, explained that the payment negotiations began after the modification of the outsourcing law in April 2021 to ensure the company complies with all its legal responsibilities.

However, Villareal commented that not all workers are satisfied with the new agreements. For instance, at a plant in Nacozari, Sonora, workers were dismayed enough to plan a strike on May 18.  “Even though the distribution of profits would be 10 percent in Nacozari, this figure was similar to last year’s. The workers were displeased, especially because the price of copper has skyrocketed, benefiting the company significantly,” Villareal said.

Subsequently, CTM resumed its negotiations with Grupo México and reached a new agreement similar to that of Cananea, with which the strike was cancelled. “A good agreement was reached as in the case of Cananea, where each worker received a share of their US$35,190 in profits,” said Villareal. The CTM also highlighted that Nacozari workers will also get additional benefits and a 7.5 percent wage increase.

Grupo México is not the only company in Mexico facing these challenges. Americas Gold and Silver’s mining operations have been blocked by its union members under the argument that the company must improve the working health conditions of its workers. However, on several occasions, Americas has explained that claims are based on false accusations and that the real objective of the group was to illegally obtain a collective agreement and other contracts related to mining activities, as reported by MBN.

Furthermore, in March, the National Metallurgical Mining Union (FRENTE), also referred to as the Platosa Union, initiated labor action at Excellon Resources' La Platosa mine in Durango after the company refused to increase workers' wages. FRENTE argued that there was a violation to the Collective Work Contract because salary increments corresponding to 2022 were not given. Excellon explained it was facing serious problems at its mine, such as drainage issues, price increases and legislative changes.

At the beginning of March, Excellon said that the company and the union had agreed on the terms for the 2022 collective bargaining arrangement, following numerous concessions, announced Brendan Cahill, President and CEO. Unfortunately, the agreement fell through, leading to union action. Nonetheless, on April 1, 2022 the enterprise announced it had resolved the issue.

On Wednesday, June 15, members of the National Labor Union of Mining Workers (SNTMM) Section 271 went on strike at the steel producing company ArcelorMittal’s plant located in Michoacan, after failing to reach an agreement regarding profit sharing.

According to the protesters, the company refuses to pay the 10 percent of 2021’s profit sharing corresponding to the 2021 tax year, which affects 3,500 direct workers and over 25,000 indirect workers of the plant. The company says the conflict is caused by dissatisfied employees that did not agree with the amount of money it offered on May 30, which was the equivalent of three months’ worth of salary.