VZCZCXYZ0023
PP RUEHWEB

DE RUEHBO #5384/01 1651555
ZNY CCCCC ZZH
P 141555Z JUN 06
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC PRIORITY 6012
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

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. 

--------------- 
Talks Suspended 
--------------- 

¶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. 

----------------------- 
The "Just Cause" Clause 
----------------------- 

¶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. 

--------------------- 
Salaries and Benefits 
--------------------- 

¶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. 

------- 
Comment 
------- 

¶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 

=======================CABLE ENDS============================