VZCZCXYZ0015
PP RUEHWEB

DE RUEHBO #4686/01 1461351
ZNY CCCCC ZZH
P 261351Z MAY 06
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC PRIORITY 5283
INFO RUEHCV/AMEMBASSY CARACAS 7755
RUEHLP/AMEMBASSY LA PAZ MAY LIMA 3804
RUEHQT/AMEMBASSY QUITO 4443
RUEHGL/AMCONSUL GUAYAQUIL 3564
RUEHGV/USMISSION GENEVA 1354

C O N F I D E N T I A L BOGOTA 004686 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 05/24/2016 
TAGS: ETRD ELAB PGOV PHUM CO
SUBJECT: DRUMMOND COAL STRIKE 
 
REF: BOGOTA 4537 
 
Classified By: Milton K. Drucker. Reasons: 1.4 (b) & (d) 
 
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SUMMARY 
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¶1. (C) On May 22, approximately 4,000 coal workers from Drummond, Inc. in Cesar Department began to strike (reftel), joining 300 workers already on strike at nearby Swiss coal mining company Glencore.  According to Drummond, the strike is capitalizing on the timing of the May 28 Presidential election and the company intends to return to the negotiation table the following week.  Drummond estimates daily losses to the company to be 3.5 million USD.  End Summary. 
 
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UNION EXPLAINS DEMANDS 
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¶2. (C) On May 22, Laboff met with XXXXXXXXXXXX of Energy Workers 
(FUNTRAENERGETICA), who explained the demands of striking workers at Drummond, Inc.  FUNTRAENERGETICA is an energy sector trade federation that represents the union, the National Union of Mine and Energy Workers (SINTRAMINENERGETICA), whose 2,200 affiliates at Drummond began to strike on May 22, along with 1,800 non-unionized Drummond employees.  Some 300 SINTRAMINENERGETICA workers also began to strike at Swiss coal mining company Glencore on May 17.  The Drummond mine is located in La Loma, Cesar Department and the Glencore mine is located nearby in La Jagua.  According to XXXXXXXXXXXX, SINTRAMINENERGETICA was demanding a 25 percent salary increase, more investment in community programs by the company, the establishment of a special pension fund, and an improved worker safety program. According to XXXXXXXXXXXX, the union's demands would cost Drummond approximately 5 million USD, annually.  He called this figure "reasonable," considering Drummond's revenues.  XXXXXXXXXXXX explained, "We don't want to have problems with Drummond," and said the union was willing to accept a salary increase as low as 10 percent. 
 
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FEAR OF "STRIKE BREAKING" 
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¶3. (C) XXXXXXXXXXXX explained that Glencore was bringing in outside personnel under military escort to replace the striking workers, and expressed his concern that Drummond would do the same.  According to XXXXXXXXXXXX, such use of outside personnel constitutes "strike breaking," and is not permitted under Colombian law.  He explained that if temporary workers were to damage equipment or property, the union would be held responsible.  XXXXXXXXXXXX also expressed concern that the military, which operates a base next to the Drummond mine, would harass striking workers. 
 
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DRUMMOND WILLING TO NEGOTIATE, BUT "WITHIN REASON" 
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¶4. (C) On May 23, the Deputy Chief of Mission met with XXXXXXXXXXXX of Drummond's Colombian operations, who called the union's demands "unreasonable." He said such demands include joint administrative control of the company, a profit-sharing scheme, a severance/pension package after 10 years employment, and a new pay scale. XXXXXXXXXXXX claimed the union was also trying to "take credit" for Drummond's social investment programs in order to "build political ties and influence" within the local community.  He said Drummond was offering a salary increase of 7 percent and pointed out the coal industry standard was 6 percent.  He also claimed Drummond minimum monthly wages were the highest in the industry at 2.5 million Colombian pesos (approximately 1,000 USD). 
 
¶5. (C) XXXXXXXXXXXX said SINTRAMINENERGETICA was capitalizing on the May 28 Presidential election, and explained Drummond would return to negotiations beginning the week after the election.  "If we return to the negotiating table today, we will set a bad precedent," explaining he didn't want to encourage a "culture of striking."  XXXXXXXXXXXX explained that Drummond owner Gary Drummond wanted to offer the union concessions and had authorized XXXXXXXXXXXX to negotiate.  XXXXXXXXXXXX said he believed he had a package the union would accept. "We want to settle the problem, but we have to be reasonable," he added. 
 
¶6. (C) XXXXXXXXXXXX agreed with FUNTRAENERGETICA'S allegation that Glencore was using temporary personnel with military assistance, saying Glencore was "playing hard ball," with the objective of "breaking the union."  He claimed that Drummond did not share this goal.  XXXXXXXXXXXX said Glencore's strategy was to "wait it out" until the two month strike period expires and the conflict goes to arbitration.  XXXXXXXXXXXX explained Glencore had failed to show up to a mediation meeting held by Minister of Social Protection Diego Palacio and quoted Glencore as stating, "We refuse to negotiate." XXXXXXXXXXXX said the relations between Drummond and the union, on the other hand, were generally good. 
 
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DRUMMOND FACING SEVERE FINANCIAL LOSSES 
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¶7. (C) Although XXXXXXXXXXXX said Drummond was not yet "deeply concerned" over the strike, the company, its contractors, and the national economy are facing significant financial losses. He doubted that the company would be able to make up for lost production as the company was already operating at 100 percent capacity, and estimated that the company is suffering daily coal production losses of approximately 70,000 tons, with lost revenue to be about 3.5 million USD daily. According to the company, its domestic and international suppliers are losing approximately 2.8 million USD daily and the GOC is suffering over 250,000 USD daily losses in sales, income, and import tax revenue. 
WOOD