Three unions at BHP Billiton (ASX: BHP) rejected on Thursday the latest workplace agreement offered by the giant miner. The unions want changes to the offer before they submit the deal for a vote to their 3,000 members assigned at BHP's coking coal mines in northeastern Australia.
Global miner BHP Billiton is facing a two-week work stoppage at its Illawarra Coal Appin Mine unit as some 50 supervisors demand for an 18 per cent increase in their pay.
The negotiations for a new agreement that would cover six mines in Queensland had been dragging for more than 18 months. The unions' decision contradicts a report by Justice Alan Boulton, senior deputy president of Fair Work Australia, who said in a report earlier this month that the mediation process between BHP and the unions had been successfully resolved.
The BHP-Mitsubishi Alliance venture offered in 2011 a 5 per cent annual wage increase for three years to the workers, but the unions battled the proposed changes in the agreement on housing and use of contract workers.
The employees had been holding rolling strikes in the mines for several months which led the alliance to declare a force majeure. However, the alliance withdrew the force majeure after it reached a tentative agreement with the workers in July.
Besides its problem with the unions, BHP is also battling the royalties increase made by the Queensland government because of its impact on research, investment and employment.
Queensland Premier Campbell Newman, who defended the 50 per cent increase in royalties, pointed to BHP's earnings before interest and tax of $10.9 billion from coal mining as justification for the increase in a bid to boost state coffers.
The increase in royalties comes amid reports that BHP will reduce sharply the price of its next coking coal contract with Japan by 24 per cent to $170 per tonne. BHP, however, declined to confirm that report.
If the plans are true, it would be the lowest price since the quarterly pricing system was adopted over two years ago. The new prices, which could lead to more job losses and closure of coal mines, would apply for the December quarter of 2012.
The reported new contract price is almost half of the record $330 per tonne price in the first half of 2011.
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