Over 700 workers at Antofagasta Minerals' Centinela mine in Chile went on strike on October 7 after negotiations collapsed, triggering an immediate rise in copper prices. The walkout, involving 22% of the mine's workforce, led to a roughly 1% increase in three-month copper prices on the London Metal Exchange, reaching $14,614.50 a tonne. US copper futures also climbed past $6.61 a pound, nearing the record high of $6.80 set a month earlier.
The dispute centers on parity in benefits between two unions, Minera Esperanza and Distrito Centinela, rather than wages. Antofagasta argues that separate bargaining schedules have been in place since 2020. The unions warn that processing plants can operate temporarily but warn of a potential 50% drop in output by November if the strike continues. Antofagasta maintains its production outlook for 2026 but refuses to comment on the unions' estimates.
The strike highlights the fragility of the copper market, already strained by AI data center demand and grid upgrades. Global stockpiles are at multi-year lows, with no new mine capacity to offset supply disruptions. Earlier issues at Indonesia's Grasberg mine compounded market tensions before the Centinela strike.
In a market with limited spare supply, traders react swiftly to labor disputes, pricing in risk immediately. This behavior underscores the exposure of the AI industry's hardware costs to labor negotiations at mines like Centinela. Antofagasta remains open to discussions, but the outcome before November remains uncertain.