World no.2 iron ore miner Rio Tinto lost a court fight on Friday which could see unions regaining power at the company's highly profitable iron ore mines in Western Australia as well as at rival BHP Billiton's mines.
The High Court of Australia on Friday refused a request by Rio Tinto to appeal a ruling by the Federal Court which established that a 2008 agreement Rio Tinto had with its Pilbara iron ore miners in Western Australia, bypassing unions, was not valid.
The result clears the way for unions to recruit Rio Tinto workers in the Pilbara iron ore region, where miners have shunned union representation for many years, and could flow through to other companies with similar agreements.
Rio Tinto was not immediately available to comment on the decision, however Chief Executive Tom Albanese said on Thursday he was worried about escalating labour costs in Australia, now one of the most expensive places the company is operating.
Throughout Australia we've been impacted by rising costs and what I'm concerned about is declining productivity, he told reporters after the company reported a 6 percent drop in underlying earnings for July-December.
BHP Billiton is facing a one-week strike next week at its Bowen Basin coal mines in Australia, where CEO Marius Kloppers said this week union demands go beyond wages and conditions and will affect the company's expansion plans.
The Construction, Forestry, Mining and Energy Union (CFMEU), which brought the case against Rio Tinto, welcomed the decision.
This is potentially quite significant for the unions, Andrew Vickers, general secretary of the CFMEU, told Reuters.
He said it would take some time for workers in the Pilbara to digest the ruling and decide whether they wanted to join the union and let the union represent them in bargaining with Rio Tinto.
(Reporting by Sonali Paul; Editing by Richard Pullin)