Chile's Collahuasi Mine Strike Enters Seventh Day

As the strike at Chilean copper mine Dona Ines de Collahuasi entered its seventh day Thursday, operations remain normal, a company spokeswoman said.

The 1,551 unionized workers at the mine went on strike Friday after contract negotiations, which included five days of government mediation, broke off.

Workers demand better wages and benefits as a result of a big increase in global copper prices.

The company offered them real wage increases of 2%-3%, improved social benefits and a contract signing bonus of around $27,000 per worker.

The mine has a contingency plan in place to ensure operations continue while the strike lasts.

"Our operations remain normal due to the contigency plan in place," the spokeswoman said.

While the company has officially declined to detail the plan, a person close to mine operations said replacement workers are on site and several copper shipments went out ahead of schedule last month in anticipation of the strike.

Union leaders, meanwhile, said on their website the mine is operating at just 20% capacity, with the Rosario ore crusher and the molybdenum plant shut.

Ahead of contract negotiations, copper mines in Chile sometimes stockpile copper-containing ore so as not to halt production during walkouts.

The sole union at Collahuasi is preparing for a long walkout and will charge its members a penalty of around $10,000 if they break away from the strike and return to work, La Tercera newspaper reported Thursday. Union leaders weren't immediately available for comment.

Collahuasi, one of the biggest copper mines in the world, is owned by diversified mining companies Xstrata PLC (XTA.LN) and Anglo American PLC (AAUKY, AAL.LN), each with a 44% stake. A consortium led by Mitsui & Co. (MITSY, 8031.TO) holds the remaining 12%.

The mine produces about 500,000 metric tons of copper a year, or about 10% of Chile's annual output. Chile is the world's leading copper producer, accounting for about 35% of global output.

The mine is located in Chile's northernmost First Region. It's 185 kilometers southeast of the port of Iquique, high in the Andes mountains at 4,400 meters above sea level.

-By Carolina Pica, Dow Jones Newswires; 56-2-715-8919; carolina.pica@dowjones.com

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