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The share price of BHP Group Ltd (ASX: BHP) experienced a jolt in early trading on Wednesday, currently down 1.03% at AU$43.29 per share. This movement comes amid news that the Mining and Energy Union (MEU) has filed several applications with the Fair Work Commission concerning three of BHP's coal mines.
BHP Share Price Impacted as Union Files Suit
The MEU has initiated legal action against BHP, aiming to secure higher pay for 1,700 labor-hire workers at BHP’s Peak Downs, Saraji, and Goonyella Riverside coal mines. The union is pushing for "same job, same pay" orders, which could see these workers’ annual pay increase by AU$10,000 to AU$40,000.
These mines are part of the BHP-Mitsubishi Alliance (BMA), which operates five coal mines in Queensland. While the enterprise agreement for these sites, established in 2022, governs the pay rates for directly employed workers, it does not cover labor-hire workers. The union's applications cover workers employed by WorkPac, Chandler Macleod, and BHP subsidiary Operations Services.
Union's Allegations
The MEU claims that BHP's current labor hire practices suppress wages and reduce job security, calling it a "labor-hire rort." MEU Queensland president Mitch Hughes commented:
Potential Disruptions and Increased Costs
There is no current indication of whether the union’s actions will disrupt BHP's operations or significantly increase labor costs. As of the time of publication, BHP has not responded to the union's applications.
Implications for BHP
The MEU intends to extend its "same job, same pay" campaign across the coal industry, targeting other BHP operations and potentially affecting thousands of workers. This move could set a precedent impacting labor hire practices industry-wide.
Despite these legal challenges, the fundamental outlook for BHP remains robust. Goldman Sachs recently reinstated coverage of BHP shares with a buy rating and a price target of $49.00, suggesting a potential upside of 13% over the next 12 months. Goldman Sachs highlights BHP's strong position as Australia’s largest miner, supported by solid fundamentals and favorable market conditions.
Market Performance
BHP shares have traded within a tight range over the past 12 months and are down 2% in that period. Year-to-date, while the S&P/ASX 200 Index (ASX:XJO) has risen around 1.5%, BHP shares are down 14%.
