Highland Valley union demands more of everything from Teck

Vancouver – “Ask not what you can do for Teck, but what Teck can do for you.” Such is the current motto of United Steelworkers Local 7619, which represents roughly 1,050 of the 1,250 workers at Teck Resources‘ (TCK-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 they wanted, Boyce playfully replied, “Did we get all we wanted? We never get all we wanted. We believe strongly we’ve gotten our members a really good deal, and we’ll be recommending acceptance.”

Boyce would not disclose any precise terms of the deal but said a tentative 5-year agreement was reached with the help of a mediator on the morning of Sept. 30. Union members will then vote on it sometime in mid-October. When asked if the deal is similar to those recently signed by other B.C. mines operated by Teck, Boyce laughed and said, “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 the price of copper rising to reach an all-time high of $4.60 earlier this year, revenues from the Highland Valley mine have never been higher – and the union’s bargaining position never 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 have made a few additions as well.

“We have asked for increases in wages, shift diffs, weekend premiums, training rates, additional stat holidays, additional floaters, more vacation pay and time off, improved pensions, medical benefits, banked overtime and the list goes on and on. Now, will we get it all? Not likely. 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, however, have Highland Valley’s workers. The lowest-paid worker in the union, a student, currently makes $26.54 an hour or roughly $55,000 before taxes, benefits, a pension and bonuses (assuming a standard 40-hour per week work schedule and not including over-time pay rates). This is up from a starting wage of $22.69 an hour in 2006. The second-lowest paid employee, an entry-level janitor, does even better: he or she earns $27.32 an hour or roughly $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 also do not take into account the “copper bonus” included as part of the 2006 agreement, made when copper prices were much lower. Currently, whenever copper is above $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 he said was, “Not going to happen!”

Boyce further noted the top concern of union members is hanging on to their pensions, as “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 they retire. “We recently had a member that terminated and moved elsewhere to work. He was 29 yrs old and had 3 1/2 yrs at the mine. Rather than defer his pension until he retired, he choose 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 a 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 5-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 5-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 potential 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, about one-half of which went to enhancements of pension and postretirement 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, United Steelworkers leaders 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,” wrote Boyce on Sept. 8.

“For us it is about getting a fair piece of the pie… The history here at HVC, since 1981 when I got involved, is first we meet, then the talks stall out, the Company request a mediator [sic], 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. Time for Teck to get their concession off the table [sic] 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 approximately 9% of the company’s total revenue in 2010 and about 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 worries o
f a double-dip recession. The metal traded for approximately US$3.15 per lb. on Sept. 30.

Teck announced on Sept. 22 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 were trading for slightly higher on Sept. 30 at $30.61. The next collective bargaining agreement Teck faces in B.C. is for the United Steelworkers union at its Trail smelter. The union’s current 4-year agreement is set to expire on May 31, 2012.

[The first three paragraphs of this story were updated on Sept. 30 to account for a tentative agreement having being reached.]