Strike action sends major copper producer’s shares lower

Shares in Capstone Copper Corp (ASX: CSC) fell on Friday after the company confirmed that strike action, which started on January 2, was continuing and had halted some production processes.

Reports in international media said the strike was now blocking access to the desalination plant at the company’s Mantoverde mine in Northern Chile, leading to the suspension of processing operations.

Capstone said in a statement to the ASX on Friday that this was indeed the case.

During the evening of January 18, individuals entered the desalination plant facilities, located 40 kilometres from the Mantoverde mine, while workers were inside performing regular duties. Subsequently, interference with the desalination plant’s electrical system resulted in the interruption of water supply to Mantoverde. Striking union members are preventing access and the restart of facility operations at the desalination plant. At Mantoverde, on-site water reserves continue to be used for essential services. Sulphide operations are temporarily halted while oxide operations are expected to continue until tomorrow, at which point they will be temporarily halted unless water supply is restored.   

Resolution being sought

Capstone said it was seeking “judicial support” to regain access to the desalination plant and to resume normal operations.

The company said it “remains willing to engage in discussions to seek a resolution with Union #2”.

Capstone added:

The company will continue to adhere to legal procedures, respecting the rights of all its employees, inviting the union to engage in a constructive dialogue, and providing the authorities with all requested information. Capstone Copper is committed to the highest standards for integrity and transparency and looks forward to returning its focus to safe and responsible mining at Mantoverde, which brings great benefits to the workforce and surrounding communities.

Capstone owns 70% of the Mantoverde operations, with Mitsubishi Materials Corporation owning the rest.

The company has said in previous press releases that Union #2 represents about 22% of the total workforce at Mantoverde.

The company said on January 12 that at that point it expected to be able to continue operations at a level of up to 30% of production while the strike continued.

Capstone has already successfully negotiated three-year collective bargaining agreements with the three other unions at Mantoverde.

Capstone on January 15 announced record production for 2025, with the company producing 224,764 tonnes of copper for the year.

Mantoverde was responsible for 95,115 tonnes, or 42.3% of this total.

Capstone shares were 4.1% lower in early trade at $14.83 on Friday.

The company was valued at $14.98 billion at the close of trade on Thursday.

The post Strike action sends major copper producer’s shares lower appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.