By Sean Schantzen
Twelve hundred workers at Kennecott Utah Copper are out of a contract and, possibly, a job as of Tuesday, Oct. 1.
Contract negotiations between Kennecott and the United Steelworkers of America have been going on since mid-July and neither side has come to an agreement.
The major subject of conflict in the negotiations is a proposed increase by Kennecott in costs of medical benefits to employees and retirees.
“The cost of medical benefits goes up between 15 and 20 percent each year,” said Louie Cononelos, Kennecott spokesman. “We have to find ways to control those costs, and the employees are going to have to share in some of those cost increases.”
The steelworker”s union feels that the proposals made by Kennecott are unreasonable and put undue strain on employees.
“Kennecott is trying to put more financial burden on those who can least carry it,” said Wayne Holland, United Steelworkers of America spokesman. “Many retirees were sure that their medical benefits would be take care of, but now they have no certainty of what is happening.”
“We are offering pay increases to help offset for our employees the rising cost of medical care,” Cononelos said. “This is something necessary not only for Kennecott”s short-term survival, but for our long term viability in the copper industry.”
Negotiations aren”t the only problem Kennecott faces; the entire copper industry has been hard-hit in the six years since the current contract was signed, Cononelos said. Copper prices have gone from $1.10 a pound to 66 cents a pound now.
“Fifty percent of the copper industry is shut down and probably won”t ever start back up again,” Cononelos said.
Copper prices have dropped because of many factors, including an increase in the recycling of copper, the current recession, and the fact that many of the copper mines with higher grade ore are located in Third World countries where labor is cheaper, said Richard Jackson, professor of geography.
According to the U.S. Copper Development Agency, between 40 and 50 percent of all copper is currently recycled.
“The ore that is mined from Kennecott is low grade, maybe 1.5 to 2 percent, whereas ore in higher grade mines is 3 to 4 percent copper,” Jackson said. “This means that Kennecott has to refine about twice as much rock as other mines in order to get the same amount of copper.”
While copper is used just as much now as in the past, Kennecott is disadvantaged by the grade of their ore and the fact that labor and overhead are dramatically more expensive in the United States, Jackson said.