Champion Iron Ltd (ASX: CIA) shares are having a tough time on Tuesday.
In afternoon trade, the ASX 200 mining stock is down 6% to $6.22.
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Why is this ASX 200 mining stock sinking?
While the mining sector is admittedly struggling today, there's more to this decline than just that.
This morning, the Canadian iron ore miner revealed that unionised employees have voted against the company's proposed terms towards a new collective bargaining agreement (CBA).
Instead, they have voted in favour of a strike action mandate. This mandate means that these workers can initiate a strike if the ongoing discussions do not conclude in a new agreement.
And given that unionised employees represent 63% of its workforce at the Bloom Lake mine, this could have a major impact on its production during the quarter.
The ASX 200 mining stock advised that it believes it has proposed fair and equitable terms for a new CBA. It highlights that its offer carefully balances the needs of its employees to protect their individual buying power, considering inflationary pressures, and reflects industry competitive dynamics.
Clearly the unionised employees don't agree with this. And it's not like Champion Iron is struggling for cash right now.
Last week, the ASX 200 mining stock reported third quarter revenue of C$507 million and EBITDA of C$247 million. The latter was up 109% year on year.
One positive, though, is that the company advised that it has significant liquidity and stockpiled iron ore concentrate. As a result, it believes it is well positioned to mitigate the impacts of a potential strike on its operations and financial position.
Champion Iron's CEO, David Cataford, commented:
We are disappointed that we could not reach an agreement with the union following recent discussions and a mediation process. We always have the well-being of our employees at heart, whether unionized or not. As such, we aim to create the best possible work conditions to retain, attract and develop the best talent, while ensuring our Company can navigate volatile economic environments.
Our latest global offer submitted to the Metallos [union] meets this objective in every aspect. We have shown a great deal of transparency with the Metallos since the beginning of negotiations and we are confident that its members recognize our significant efforts in offering a healthy work environment and competitive terms towards a new CBA.
