News From USW: Grupo Mexico Threatens to Scuttle Labor Agreement at ASARCO

Business Wire, Feb 10, 2007

USW Members Ratify New Labor Pact

PITTSBURGH -- News From USW: More than 1,600 ASARCO, LLC workers at five plants in two states voted overwhelmingly this week to ratify a contract with the copper mining company. The deal with the United Steelworkers also has the approval of ASARCO's current managers and now only awaits the approval of the court in ASARCO's bankruptcy case.

However, the company's foreign owner has threatened to scuttle the deal.

Asarco, Incorporated, owned by Mexico City-based Grupo Mexico, has asserted in the bankruptcy case that it will likely ask the court to reject the settlement. Objections in the case are due on Monday, February 12.

If Asarco, Incorporated objects, the USW, along with attorneys for ASARCO and other key constituents in the case, will argue in favor of the pact.

ASARCO filed for bankruptcy protection in August 2005. Since then, copper prices have risen to historic highs, as ASARCO has continued to work toward reorganization. Workers represented by the USW, meanwhile, agreed to extend the old contract for one year. That contract expired December 31, 2006, and is replaced by the new agreement.

"Our new labor agreement is a fair and just contract that serves both the company and its workers well," said Terry Bonds, Director of USW District 12 who chairs the union's Nonferrous Industry Conference. "The improvements for workers are particularly justified at a time when the price of copper remains at record levels," he added.

With more than 1,300 workers voting, the final count was 99 percent in favor of the contract.

"In addition to the economic improvements, this new contract provides the opportunity for improved relations and productivity so that ASARCO will survive if copper prices drop in the future," Bonds said.

Bonds warned, however, that Grupo Mexico's attempt to destroy the deal is a cynical plan to improve its profits at the expense of American workers and ASARCO's creditors. He asserted that Grupo Mexico owns mines outside the United States, and if the reversal of the new labor agreement caused another strike, the price of copper could rise even higher as supply dwindled. Then Grupo, the third largest copper producer in the world, would stand to make even bigger profits from its foreign mines.

In the meantime, American workers would be idle, the ASARCO facilities in Texas and Arizona would be shut, and ASARCO's creditors would be further away from collecting anything on their bankruptcy claims against the company.

"No one who has a stake in ASARCO's success is interested in that result," Bonds said, "and that is why we expect that every key participant in the bankruptcy case will join us in asking the court to approve our new agreement."

"We believe ASARCO's creditors have a keen interest in keeping the firm running during the current hot market for copper," Bonds said. "Right now, the company is making money and has the ability to invest in new equipment and in improving its mines," he said.

"We saw what Grupo was like when they were in charge," Bonds said, "The business failed and they created a hostile relationship with the workers. All that has changed since we got a new, independent board of directors and a new chief executive officer who has been committed to working constructively with our members."

The newly-ratified agreement covers workers at ASARCO facilities in Amarillo, Texas; and in four Arizona towns, Hayden, Sahuarita, Marana and Kearny. These include the Mission, Silver Bell and Ray copper mines and the Hayden Smelter and Amarillo refinery.

Under the new agreement, ASARCO workers will, in many cases, receive their first wage increase since 2003, and will pay no additional amount for health care or prescription drugs. In addition, the new deal would restore to retirees most of the health care benefits that under Grupo Mexico's control, ASARCO unilaterally cut off in August 2003.