BHP faces arbitration in Port Hedland wage dispute

Workers at BHP’s (ASX, LSE, NYSE: BHP) Port Hedland operations are seeking binding intervention in a wage dispute that is deepening labour tensions at the world’s largest bulk export port.

The Combined BHP Ports Unions said Tuesday it will apply to Australia’s Fair Work Commission for an intractable bargaining declaration after more than nine months of negotiations failed to produce a four-year agreement.

An intractable bargaining declaration can be made when negotiations have reached an impasse after at least nine months. If the dispute remains unresolved after a declaration, the commission must make a workplace determination setting employment terms.

“BHP is unwilling to negotiate an agreement that reflects the specialized skills, extreme conditions and significant personal sacrifices of the people who generated the company more than $13 billion in profit this year,” the union said in a statement.

The union represents about 450 operators and maintenance workers at Port Hedland in Western Australia, the main shipping gateway for BHP’s Pilbara iron ore operations.

A union agreement would also mark a significant change in an industrial-relations model that has relied heavily on individual employment contracts across BHP’s Pilbara operations for decades.

Labour tensions

The dispute has already triggered several rounds of industrial action. Workers staged an eight-hour strike on July 16, the first at BHP’s Port Hedland operations since 2000.

About 150 workers took further action Aug. 8 and 9, first imposing a 24-hour ship-loading ban and then holding a 24-hour work stoppage. BHP said vessels continued to be loaded during the action.

The two sides have been meeting almost weekly in recent months, with the Fair Work Commission facilitating negotiations.

BHP tabled its latest offer last week. For most workers, the proposal includes a 17% pay increase over four years, higher roster allowances and an A$25,000 (US$17,800) transition payment spread over two years.

The unions argue about 40% of the workforce would be worse off under the proposal, citing differences in existing pay arrangements among employees doing similar work.

BHP shares closed 2.2% lower at A$59.25 in Sydney on Tuesday, compared with a 0.9% decline in the S&P/ASX 200.