Labor Showdown in the California Desert -- Mineworkers Stand-up to Multinational Rio Tinto
Continued from previous page
In Australia, where the company exploits some of the world's most important iron, coal and uranium reserves, it has uprooted traditional unions, cut real wages and (as it is now trying to do in Boron) replaced collective bargaining with variable individual contracts.
Aussie miners and train drivers, however, have fought back with wildcat strikes and new organizing campaigns. Their defiance has led the company to an extraordinary solution: a fully automated "mine of the future" that won't require unruly miners or railroad workers. A working prototype is being developed in the remote Pilbara iron range: eleven mines with robotized drilling, automated haul trucks and, soon, driverless ore trains, all controlled from an operations center in Perth, 800 miles away.
Industry analysts debate whether this automated mining revolution will be feasible outside the largest, near-surface iron and coal deposits, so Local 30 probably doesn't need to worry about any imminent augmentation of scabs with robots. But they're urgently trying to decipher the complex and ruthless game that Rio Tinto and other mining superpowers are playing on a world stage.
The industrial revolution in Asia is bringing to a climax the struggle for ownership of the earth's strategic metals and minerals that began in the late nineteenth century. For instance, a single merger, between Rio Tinto and the even larger BHP Billiton, would create the world's third-largest corporation (after ExxonMobil and GE), with unprecedented power to set prices for exports of iron, aluminum, copper and titanium.
To put it another way, such a mega-merger could exact enormous rents from the future industrial growth of China and the rest of Asia--something that Beijing, at least, has no intention of allowing to happen (iron ore is China's second most costly import, after oil).
What Forbes called "the Battle for Rio Tinto" began two years ago, at the end of the 2000s mining boom, when cash-flush BHP attempted a hostile takeover that was countered by multibillion-dollar blocking offers of new investment from the government-controlled Aluminum Corporation of China.
But as resource prices slumped after the Wall Street crash, Rio Tinto share values were immediately pulled under by the weight of the $38 billion debt the company had incurred to buy Alcan (before BHP did) in 2007. BHP, faced with Rio Tinto's inability to sell its Alcan debt as bonds, as well as the subsequent downgrading of its credit, temporarily called off the attack, while the still ardent Chinese were rudely rebuffed by Rio Tinto's rebellious shareholders, supported by xenophobic Australian politicians.
Rio Tinto managed to survive the first year of recession by cutting thousands of jobs and selling off $10 billion of nonessential assets while retrenching in its core mission of exploiting "large, low-cost ore bodies." Mine managers in its minerals division, which includes borates, were told that future investment in their operations would only reward dramatic cost-cutting and higher earnings, not status quo profits. Labor, it seems, is an especially "compressible" cost.
In the specific case of Boron, the financing of a project called "the Modified Direct Dissolving of Kernite," advertised as the key to the mine's long-term profitability, was made conditional upon achieving "flexibility and accountability in our work practices"--that is to say, scrapping the old collective bargaining agreement with Local 30.
In negotiations, Rio Tinto took the intransigent stand that the crisis in world mining had made such union contracts obsolete. Yet since last fall, Rio Tinto and other ore giants have surfed spectacular recoveries on the wave of China's renewed growth, with iron prices expected to rise by as much as 50 percent this year.