The owner of Broken Hill’s silver, lead and zinc mine has asked workers to sacrifice $1.8 million in wage increases promised for 2014 after reporting an operating loss of $20 million in the first half of the year.
The Perilya mine workforce was set to receive a four per cent pay increase in 2014, however management wrote a letter to employees on Friday explaining that it cannot afford the $1.8 million raise.
Management is set to brief the workforce in coming weeks, with a vote expected to be held next month, ABC reported.
"Our position requires some urgent and quite drastic action ... to maximise our chances of a successful 2014,” mine manager David Hume said.
"Quite honestly, $1.8 million would only be a component of the improvement we need to make in terms of the cost improvement and performance enhancement that is required.
"I think this is going to be a game of increments and we will need to find savings across the board.”
Hume said low metal prices and a high Australian dollar had impacted the Broken Hill operation.
"We reported an operating loss for the first half of the year... in excess of $20 million," Hume said.
"We will need to pull out all stops in terms of improving our production performance and every contribution to improving our bottom line performance is going to be crucial.
"We are continuing to make vigorous efforts to reduce our operating costs as well as to improve our production levels and we have seen some improvement in those levels," Mr Hume continued.
The region’s CFMEU vice-president Greg Braes said the move to freeze wages had workers worried about the future of the operation.
"If this can be put forward because things are going bad, then I'm a bit concerned about the future of agreements," Braes told ABC999 Broken Hill's morning program Outback Outlook.
"If that is the case - when times get better - can the workers go back and say; 'why can't we vary it now and ask for more money'.
He said the request had been met with mixed reactions by employees.
"I've had a few people say; 'no way, this isn't happening'," CFMEU vice-president Greg Braes revealed.
"I've also had a lot of other people say they are happy to sit down and listen and then make a decision when they have the full facts.
"This is a local initiative unrelated to the proposed change of ownership," he said.