Rio Tinto Group (RIO.US), a global mining giant, is engaged in intense negotiations with workers at Oyu Tolgoi copper mine in Mongolia to prevent a new round of strikes that may be caused by a significant reduction in wages, which has already led to strikes in May.
In March 2023, Rio Tinto Group plans to begin underground mining at Oyu Tolgoi, one of the world's largest copper and gold mines, and plans to increase copper production to about 500,000 tons per year from 2028, which will bring Rio Tinto about $5 billion in revenue each year, according to current market prices. Although the price of copper has fallen from a historical high of nearly $11,000 per tonne in May to below $10,000 per tonne.
According to OT Watch, the change in Mongolian labor law that came into effect in early 2022 prompted Rio Tinto to reassess its employee allowances, leading to an 80% decrease in wages. Sukhgerel Dugersuren, director of OT Watch, revealed, "Rio Tinto has requested the start of negotiations, and OT Watch will respond before July 5, 2024. If the core pay demands of 70% of workers and 50% of other demands are not met, we may face another strike."
OT Watch pointed out that the workers' main demand is to raise wages to the same level as other types of work at Rio Tinto's other mines. They added that the workers "work away from home with a meager salary of only $1,596 per month," which is in stark contrast to the average monthly salary of Australian miners of AUD 10,413 (approximately USD 6,919).
OT Watch also mentioned that, according to workers' feedback, all open-pit and underground mining activities were suspended during the strike from May 10th to 17th, which may have led to some potential problems in the underground structure. However, Rio Tinto responded that the strike did not affect the operation of the mine or cause any substantial impact on production. Rio Tinto emphasized that the strike only involves "a small portion of workers" and they want to understand the impact of changes in the average wage components.
"Negotiations are underway, and we expect to reach a new collective agreement in the future," said Rio Tinto. This indicates that the company is committed to resolving this labor dispute to ensure the long-term stable operation and production of Oyu Tolgoi copper mine.