Chile mine chaos deepens

SANTIAGO: Workers at the world's No. 3 copper mine, Chile's Collahuasi, put down their tools over labour demands, their union said on  Saturday, compounding labour unrest as a strike at top global copper mine Escondida entered a ninth day.

Labour action in top copper producer Chile has fueled supply worries and spurred global copper prices.

Escondida, majority owned by BHP Billiton, extracts 7 percent of the world's copper, while Collahuasi accounts for 3.3 percent.

However, the stoppage at Collahuasi, owned jointly by Xstrata and Anglo American, appeared to be an isolated example of contagion feared by markets, as workers at Chile's state copper giant Codelco  have ruled out an immediate strike.

Escondida workers said late on Friday they were close to a deal with the mine to end their strike, but that the sides were deadlocked over a bonus demand. Collahuasi workers say they have separate issues, which also include bonuses.

"We have our own demands," a Collahuasi source told Reuters. A Collahuasi union leader said workers had begun a stoppage, but there were no details on how long the labor action would last. The union also announced the stoppage on its official Twitter page.

Labor negotiations in Chile have been volatile as worker demands have increased with copper prices near record highs.

Higher copper prices have emboldened workers from Indonesia to Zambia and Chile to demand a bigger slice of the record earnings of global giants like BHP, Freeport McMoran and Anglo American.

Copper prices in London jumped early on Friday to three-month highs on supply fears stemming from Escondida.

But copper gave back most of those gains late on concern about the US economy and a potential default as Washington faces an Aug. 2 deadline to raise the debt ceiling.

Strikers at Escondida on Friday snubbed the latest compensation offer by mine owner BHP Billiton, but said they were near a deal and asked the company to raise a bonus linked to earnings.

Union leaders said BHP has since refused to raise the bonus or meet again to negotiate a deal.

The Escondida strike took Chile by surprise, coming outside the collective wage agreement process, and is seen raising the possibility of more unpredictable labour action.

Escondida has declared force majeure a clause that frees it of liability for shipment delays on most of its output this week. It said the length of the force majeure hinged on the strike.

Some in the copper industry fear that if BHP agrees to demands for a higher bonus, workers at other mines in Chile could make similar demands.

On July 11, Codelco union workers staged their first general, one-day strike in nearly two decades to demand a bigger say in restructuring at the world's top copper miner.

Copyright Reuters, 2011