2nd 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 repeated 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.

Following the schedule dictated by local labor laws, workers could break away from the industrial action and negotiate individually with the company as of Friday, Fernandez said.

"We are preparing an attractive offer" for those workers that decide to break the strike," she said.

Through its Atipana newsletter, the union slammed the company and its executives, and called for the nationalization of privately held copper mines.

The union is using this strike action to promote a unionified umbrella group for private miners, in the vein of the Federation of Copper Workers, which groups the unions at state-owned copper giant Corporacion Nacional del Cobre.

"With a powerful mining [umbrella group], no international company will be able to plow right through us, and sooner than later, we'll recover the copper for all Chileans," the union said.

Many of Chile's copper mines are owned by some of the largest global diversified miners.

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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