UPDATE: Chile Collahuasi Strike In 12th Day; Mediation Sought

As the strike at Chilean copper mine Collahuasi entered its 12th day Tuesday, the company said it's seeking government mediation in the hopes of reaching a new contract deal shortly.

The 1,551 unionized workers downed their tools on Nov. 5 after wage negotiations and a five-day government mediation period ended in a stalemate.

Earlier in the week, a regional government official volunteered to mediate the conflict and a Collahuasi spokeswoman said the company has asked her to mediate.

The union has yet to answer the call to mediation and union leaders didn't immediately respond to requests for comment.

The spokeswoman said production remains normal, despite the strike, as a result of the mine's contingency plan. She said a copper shipment bound for Europe left earlier this week.

"We are going to meet all the company's copper commitments for the month of November," spokeswoman Bernandita Fernandez said.

She added that the company had taken legal action against the union for its demand that members agree to a penalty of 5 million Chilean pesos ($10,343) should they break ranks during the strike.

BHP Billiton Ltd. (BHP) filed and won a similar suit when the union at its Spence copper mine, following a late 2009 strike, forced its members to agree to large penalties should they break the strike.

According to local labor laws, a striker can break away from the industrial action and negotiate individually with the company on the 16th strike day.

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--located 185 kilometers southeast of the port of Iquique, high in the Andes mountains at 4,400 meters above sea level--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.

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

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