The global iron ore supply chain is being tested! After labor negotiations failed, some BHP Billiton (BHP.US) Port Hedland employees went on strike today

Zhitong Finance App learned that after last-minute negotiations failed to avoid industrial action, employees of BHP Billiton (BHP.US) in Port Hedland, Western Australia, will go on strike for the first time since 2000 at the company's Pilbara iron ore hub. The shutdown involved about 200 operators and maintenance workers, represented by the “BHP Billiton Ports Joint Trade Union”. The strike will begin at 2 p.m. local time on Thursday and will last for 8 hours. According to a statement issued by the union, workers and their families will also hold a community activity day at that time.

The strike is one of the largest trade union actions in BHP Billiton's iron ore business in recent years. Traders will be watching closely to see if this incident will turn into a long-term impasse and have a substantial impact on iron ore shipments at the world's largest bulk export port. Earlier this week, the price of iron ore futures in Singapore once hit 102 US dollars per ton, the highest level since July 2.

A BHP Billiton spokesperson said in a statement on Tuesday that the company has formulated relevant plans to ensure safe and continuous operation. Last year, about 575 million tons of iron ore were exported through the Port of Hedland. The port also serves other mining companies, whose operations will not be affected by Thursday's strike.

Under the auspices of the Australian Fair Work Commission, the two sides held five-hour negotiations on Tuesday, but failed to reach a breakthrough. A BHP Billiton spokesperson said at the time that although the company believed that negotiations had made some progress, the strike would continue and was “disappointed”. The two sides plan to resume negotiations on July 21.

The union said they had been in negotiations with BHP Billiton for more than six months. The core of the dispute is the company's adoption of an individual employment contract system. The trade union believes that this practice results in a lack of uniformity in the terms of employment and working conditions for employees, which are determined unilaterally by the company.

BHP Billiton said on Thursday that in the three months to the end of June, the company's iron ore production fell 3% year on year, but the company's iron ore production remained stable throughout the year. If Port Hedland's operations are disrupted, the economic losses could be significant. In the last fiscal year, BHP Billiton exported 290 million tons of iron ore through Port Hedland. According to the latest available financial reports and budget data, the mining giant could face losses of between $110 million and $126 million per day. Additionally, any export interruption could cost the Western Australian Government $6.85 million in mining royalty revenue per day.

Earlier, CRU Group iron ore analyst Liz Gao said: “If the strike lasts only 8 hours, the impact on the market should be limited.” She added that the current high iron ore stocks in Chinese ports could provide a buffer for short-term supply disruptions, “but if the strike continues for several days, it could lead to substantial supply disruptions.”