Union rejects company offer at Ekati mine

As a worker strike drags on at the huge Ekati Diamond Mine in Northwest Territories, local businesses are beginning to worry whether the dispute could have a detrimental effect on the territory's image as a good place for mining companies to do business.

The Ekati mine, one of three diamond producers in the region, is 186 miles northeast of Yellowknife and 124 miles south of the Arctic Circle.

About 375 members of the local bargaining unit of the Public Service Alliance of Canada walked off the job April 7 when talks broke down with mine owner and operator BHP Billiton after 14 months of trying to negotiate a first contract.

Representatives of Local X3050 of PSAC's Union of Northern Workers said BHP Billiton, a multinational mining giant, failed to address any of the workers' major concerns about wages, seniority and benefits.

BHP Billiton, however, said it bargained in good faith, and would continue to operate the Ekati mine during the strike with its 1,300 other employees and contract workers. Since then, Ekati has reported record diamond production for two consecutive months and 40 percent of the striking workers have returned to the job.

The company also made a "final" offer May 30 to its unionized employees for a contract that would expire August 2007. It included two annual wage increases totaling 8 percent, a $1,000 back-to-work bonus and a lump sum retention bonus for employees who remain on the job through 2006.

At first the union accepted major aspects of the proposal, but ended up rejecting the offer May 31 without allowing a member vote. Talks broke off when BHP Billiton asked that union members who have already returned to work not be penalized. The union refused, saying it will fine the strikebreakers.

BHP Billiton also responded to a Canada Industrial Relations Board ruling May 3 that the mining company erred in changing the company's pension plan without the union's consent. Ekati mine officials met with the union May 23 and agreed to return to a defined benefit plan for existing employees in the union. The company said it had changed its pension program to a defined contribution plan for all employees in its operations worldwide before the union was certified to represent workers at Ekati.

Union launches ad campaign

PSAC, meanwhile, has mounted a publicity campaign to bring the world's attention to the strike. The union took out full-page advertisements in the New York Times, Wall Street Journal and other key publications in mid-June, urging consumers to boycott diamonds produced at the Ekati mine.

Ekati, Canada's first diamond mine when it opened in 1998, currently produces 6 percent of the world's diamonds by value, or 4 percent by weight and yields 3 million to 5 million carats annually.

"BHP Billiton is going to feel increasing heat around the world until it reaches a fair contract with Ekati diamond mine workers," said Jean-François Des Lauriers, PSAC Executive Vice-President-North. "We will be telling readers of the New York Times and the Wall Street Journal that they should not buy

Canada's own conflict diamonds - diamonds being produced despite a labor conflict."

Des Lauriers said BHP Billiton has been marketing Ekati diamonds as "conflict free" compared to diamonds produced in war-torn African nations but potential buyers are not yet aware of the strike by Ekati's workers and the company's failure to negotiate a fair contract.

No impact on economy

So far, the strike has had little or no impact on the local economy in the Northwest Territories.

"We haven't heard our companies say anything about the Ekati strike. We've had no indication that it is causing any concern," said John Carter, executive director of the Northwest Territories Chamber of Commerce. "But that doesn't mean the economies of some of the villages may not feel an impact." Carter said his 865-member organization is comprised mainly of the largest companies in the territory, including mining companies.

Smaller businesses, likewise, have no complaints about a direct impact of the strike. However, they are becoming increasingly worried that the strike could take a toll on the region's investment climate in the future, officials say.

"There's been a lot of rhetoric and our members are concerned about the future impact it could have on the image of the territory internationally," said Marino Casebeer, executive director of the Yellowknife Chamber of Commerce.

Future trouble?

"Depending on how long the strike goes on, it could have an indirect impact if global investors perceive it is difficult to do business here," he said.

Casebeer said the chamber's 400 members are trying to remain neutral as the dispute drags on, but "it's hard for local businesses to be pro-union."

"There have been no other companies who have invested as much in the North as the three diamond companies," he said. "Through various regulations and affirmative action policies, they have been very pro-local business." Rather than hiring lots of workers from other areas, the mining companies have chosen to hire local contractors who, in turn, hire and train workers who live in the territory.

"The companies support contractors in the community so they will leave an economy behind when they go," Casebeer said.

Moreover, Ekati mine employees earn an average of C$70,000 a year for what amounts to 24 weeks of work, given the remote mine's two weeks on/two weeks off schedule. Officials say the local community has difficulty feeling sympathetic to strikers who earn such a generous wage.