Global mining giant Rio Tinto is negotiating with workers at its Oyu Tolgoi copper operations in Mongolia to prevent further industrial action over a sharp drop in wages. This comes after workers staged a strike at the site in May, in response to changes in Mongolia’s Labor Law that led to wage reductions of up to 80%.
Oyu Tolgoi is one of the world’s largest copper-gold deposits, and Rio Tinto is ramping up production to reach around 500,000 tons of copper per year by 2028. At current copper prices, this output would be worth approximately $5 billion annually.
The labor dispute was triggered by the changes to Mongolia’s Labor Law, which came into effect at the start of 2022 and prompted Rio Tinto to recalculate employee allowances. According to the non-governmental organization OT Watch, which is in contact with the mine workers, this has resulted in wages dropping by as much as 80% for some employees.
OT Watch stated that the workers’ key demand is to have their wages brought back to similar levels paid for the same type of work performed at other Rio Tinto mines. In comparison, the average Australian monthly mining salary is around A$10,413 ($6,919), significantly higher than the “miserable $1,596 per month” that Oyu Tolgoi workers are reportedly earning.
During the 10-17 May strike, all open-pit and underground mining was halted, which may have led to some structural issues underground, according to OT Watch. However, Rio Tinto stated that the strike did not affect mine operations and there was no material impact on production.
Rio Tinto is now in negotiations with the workers, and a request has been sent to start negotiations, with OT expected to reply by July 5, 2024. OT Watch has warned that another strike is possible if at least 70% of the key wage demands and 50% of other demands are not met.
The ongoing negotiations highlight the challenges faced by Rio Tinto in maintaining labor peace and ensuring fair compensation for workers at its major mining operations, especially in developing countries like Mongolia.