Another round of negotiations, on this year’s employee pay increases, with trade union representatives demanding a 10% pay rise and promotion of 30% of staff to higher wage brackets and with management offering a 3% pay rise and promotion for 20% of staff, ended without reaching compromise on Friday. Another round of talks is scheduled for 8 February, where we expect both sides to reach some agreement. However, we do not expect any improvement on the cost containment front this year, due to the environment of continuing strong copper prices, which makes such an efforts virtually hopeless.
We count on only a modest improvement in the quality of management, as the date of AGM, which would make changes to company’s Supervisory Board, approaches this Tuesday. Nonetheless, we reiterate our Buy rating on the stock, based on anticipated strength of the copper and expected outperformance of silver prices this year.