C O N F I D E N T I A L BOGOTA 005384

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/13/2016
TAGS: ELAB EMIN EINV CO
SUBJECT: IMPASSE ON DRUMMOND COAL STRIKE

REF: A. BOGOTA 4686

B. BOGOTA 4971

C. BOGOTA 5067

D. BOGOTA 5175

Classified By: CDA MILTON DRUCKER FOR REASONS 1 (B) AND (D)


1. (C) Summary: Drummond has suspended talks with its coal
workers, citing a lack of good faith negotiating on the part
of union leaders. While both sides remain far apart on
compensation issues (salary and benefits), negotiations
appear to be stalled over a "just cause" provision,
protecting workers from termination without cause. Such a
provision was granted as a concession in the recent
settlement of the Glencore strike (Ref D), but appears to be
a non-starter for Drummond. The company considers the
situation at an impasse and is requesting immediate
arbitration from the GOC. End Summary.

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Talks Suspended
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2. (C) On June 12, Charge met with Drummond Coal President
Michael Tracy and Drummond Colombia President Augusto Jiminez
to discuss the ongoing coal strike against the U.S. company
(Ref A). According to Tracy, Drummond has done all it can to
get a "fair" contract with the union, but he expressed
frustration at the union's "unwillingness" to negotiate in
good faith. As a result, Tracy announced Drummond had
suspended negotiations and would be seeking binding
arbitration from the GOC. Under Colombian law, a strike
lasting over 60 days automatically goes to government
mediated binding arbitration. Under certain circumstances,
the Minister of Social Protection with the concurrence of the
Colombian Supreme Court, can call for arbitration earlier
than 60 days. Union leaders have told Laboff they do not
want arbitration, and it is unclear if the GOC will agree to
the Drummond request. Supporting Drummond, the embassy will
ask the Minister of Social protection to accept Drummond's
request.

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The "Just Cause" Clause
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3. (C) According to Francisco Ramirez, Secretary General of
the industry federation representing the miners' union, labor
stability is one of the key issues impeding progress toward
resolution of the strike. The recent Glencore settlement
included a provision restricting termination without cause, a
common practice in coal operations. The unions are demanding
a similar clause in their contract with Drummond. When
Laboff raised the "just cause" issue in the meeting with
Tracy, he said a coal mine could not operate without the
flexibility to adjust its workforce, and Drummond has only
fired 27 workers (in a workforce of over 2500) "without
cause" over the past two years.

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Salaries and Benefits
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4. (C) Drummond claimed it is making "more than generous"
salary concessions. Drummond further insists the union
leadership is out of sink with its workers who want to accept
the pay increases and return to work. According to Tracy,
Drummond is offering a 12.2 percent increase in salary and
benefits over an employment package already considered to be
the best available for coal miners in Colombia. The union is
seeking additional increases in salary and benefits,
representing a 28 percent increase in the total compensation
package. According to Drummond, the union's request includes
a significant increase in the housing allowance, three
union-controlled medical clinics and a no cost cafeteria for
residents who do not work for Drummond but live in the mining
community. Drummond insists the union demands escalate
everytime a settlement appears within reach.

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Comment
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5. (C) Drummond is frustrated over the lack of progress
toward ending the work stoppage. The difference between the
parties on issues related to salary and benefits do not seem
insurmountable. The question of a termination without cause
provision, however, appears to be more complicated. The
union's position appears to be strengthened by the Glencore
settlement. Drummond's push for binding arbitration could
result in a settlement that maintains the company's current
termination practices. The union believes arbitration
generally favors the employer in Colombia, and will try and
keep the dispute out of arbitration as long as possible. End
Comment.
DRUCKER

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