Global mining giant Rio Tinto is currently in negotiations with workers at its Oyu Tolgoi copper operations in Mongolia to prevent further industrial action following significant wage reductions that led to a strike in May. The Oyu Tolgoi mine, one of the world’s largest copper-gold deposits, moved to underground operations in March last year and aims to produce approximately 500,000 tons of copper annually by 2028. This production is valued at around $5 billion per year at current copper prices, which have fallen below $10,000 per ton after nearing $11,000 per ton in May.
The recalculations of employee allowances, triggered by changes in Mongolia’s Labor Law effective from the beginning of 2022, resulted in wage drops of up to 80%, according to the non-governmental organization OT Watch, which maintains contact with the mine workers. “A request to start negotiations was sent, and OT is expected to reply by July 5, 2024. Another strike is possible if 70% of key wage demands and 50% of other demands are not met,” OT Watch Director Sukhgerel Dugersuren stated in an email.
Workers demand that wages at Oyu Tolgoi be brought to levels comparable to those at other Rio Tinto mines. Currently, workers at the Mongolian site are paid $1,596 per month, a stark contrast to the average monthly mining salary in Australia, which stands at A$10,413 ($6,919), according to government data.
The strike from May 10-17 saw a complete halt in both open pit and underground mining operations, which, according to OT Watch, may have caused some structural issues underground. However, Rio Tinto reported that the stand-down did not affect mine operations or significantly impact production. The company stated that the strike involved a “small group of employees” who were “seeking to understand the impact of changes to the average salary components.”
Rio Tinto emphasized that negotiations are ongoing, and a new collective agreement is anticipated in the future. The company remains committed to addressing the workers’ concerns and ensuring fair compensation to avoid further disruptions at the Oyu Tolgoi operations.
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