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An acrimonious battle with unions is threatening to derail one of Henry Walker Eltin's biggest long-term mining contracts worth hundreds of millions of dollars at BHP Billiton's Yandi iron ore mine in the Pilbara. A four-year deal, conservatively valued at $360 million in 2000, expired on June 30. Despite months of negotiations with BHP Billiton, HWE has so far been unable to secure a formal extension and has been operating on a month-by-month basis since July 1. HWE has held the contract since mining began at Yandi in 1991, making it a centrepiece of the contractor's vast business in WA.
The delay in securing an extension comes amid a long-running battle with the Australian Manufacturing Workers Union, Australian Workers Union and Communications, Electrical & Plumbing Union over the offer of individual contracts to HWE's 215 Yandi workers during negotiations for a new collective agreement. Union sources said HWE was now at risk of losing the contract because BHP Billiton would not extend the deal until the contractor had sorted out its industrial relations problems at the mine.
BHP Billiton is an aggressive supporter of individual contracts, and has introduced them at all its other WA mines. However, it is also desperate to keep production at full capacity to cope with runaway iron ore demand. The dispute at Yandi has already led to several stoppages, culminating in HWE's move to "lock-out" its workers for 24 hours early last month. Unions then complained to police, accusing HWE of illegally detaining its workers inside the Yandi campsite.
The unions claimed the lockout came after 85 per cent of Yandi workers rejected HWE's offer of "significant financial inducements" to switch to individual contracts.
BHP Billiton spokesman John Crowley confirmed that HWE was working on a month-by-month basis, but denied the delays in signing a new contract were directly due to HWE's dispute with workers.
Contract extensions often took some time to negotiate, he said, adding that BHP Billiton had developed a strong relationship with HWE through its long involvement at Yandi. "They've been there for 13 years, and that mine has performed extremely well over that time," he said. However, Mr Crowley said "continuity of production" was a major issue at all of BHP Billiton's operations and that it would be "inappropriate" to comment on whether the contract would be extended while talks were continuing.
HWE investor relations manager Kate Shea also refused to comment on HWE's chances of retaining the Yandi contract, or whether talks had been stalled by the industrial dispute. The dispute at Yandi is not the only fight involving HWE and unions in the Pilbara.
An on-off dispute between unionists and HWE-controlled Simons Engineering, coupled with a widespread shortage of skilled workers, has been blamed for commissioning delays at Newcrest Mining's $1.2 billion redevelopment of the Telfer gold mine. Having earlier tipped production could start as early as last month, Newcrest has warned first production from the mine would be delayed until next month.