Strikes are increasing in Australia's major export sectors

Labor unrest is rife in Australia's resource sector. The lucrative iron ores mines and ports are facing increased strike risks. This comes on top of high costs and bureaucracy that, according to majors such as BHP, are deterring investors from investing.

Since the Labor government passed a law, in 2022, giving mining unions the power to negotiate wage agreements that cover multiple employers and more scope to ask for flexible arrangements as well as allow industry-wide strike.

According to Australian Bureau of Statistics, the number of working days lost due to disputes in Australia increased to the highest level ever recorded since 2022. Workers were fighting for higher wages and job security as they battled against 4% inflation, and three rate increases over the last year.

In June, strike action disrupted the shipments of LNG from the Ichthys project in Australia, which represents 10% of Australia's output. Inpex, its Japanese operator, then reached an agreement with unions.

The next vessel to be subject to wage negotiations is Shell's floating LNG vessel Prelude. If it fails to reach an agreement, unions may apply to Australia’s labour umpire for strike action.

David Peetz, professor of employment relations at Griffith University, said: "Seeing union wins in the oil-and-gas sector in the area will show a lot of employees that being unionised makes a difference."

Workers in the oil and gas industry began to re-unionise prior to 2022's law changes. They also waged long wage battles between 2022 and 2023, to win big pay increases.

Top Export at Risk

The tension is rising at BHP’s Port Hedland operation, which is a major artery for iron ore. If an agreement cannot be reached by their next meeting, scheduled for July 7, the unions may consider taking coordinated industrial action.

Port 'Hedland is also used by Fortescue and Hancock and ships iron ore worth around $150 million a day, highlighting the potential impact on the top export earner of the country.

BHP's Australia head, Geraldine Slattery told a March conference that Australia could "lose its status as a leading mining destination" if it doesn't address costs and productivity.

Australian miners are among the best-paid in the world.

Analyst Jon Mills of Morningstar said that if increasing industrial action results in higher wages, BHP and Rio "will continue to automate to the maximum extent possible."

(source: Reuters)