UPDATE: Chile Collahuasi, Union Break Contract Talks; Strike Continues

Contract talks at Chilean copper mine Dona Ines de Collahuasi broke off Friday afternoon, with the company accusing union leaders of "intolerance and lack of realism" on the 29th day of the strike.

Talks had resumed earlier this week, after a Catholic Church leader brought both sides back to the negotiating table.

"The leaders' stance, which tarnishes the legal process, gives our workers unrealistic expectations, which implies unsustainable demands...worsening the conflict, which with a different attitude should have already been resolved," Collahuasi said in a statement.

The union, meanwhile, countered that talks haven't broke off. Rather, they are waiting for the company to respond to the contract proposal they presented this week.

"We're still negotiating; we're here waiting for a phone call from them," the union's secretary Juan Antonio Barraza told Dow Jones Newswires.

"Saying that talks collapsed is just the company's way of scaring the workers into accepting the offer," he added.

Barraza declined to discuss which were the sticking points of the proposal.

"There are several issues that we still have to agree on, but I really can't tell you what these are," he said.

The sole union at Collahuasi represents 1,551 workers, or 90% of the union-eligible workforce.

At day 29, the Collahuasi strike has now become the longest strike in the mining sector in recent history.

The mine, meanwhile, continues to operate on a contingency plan, which included the hiring of at least 100 replacement workers.

In addition, more than 220 union members broke away from the strike, accepted the company's last wage and benefits offer and returned to work, the company said.

Barraza says that only some 90 union members broke away.

Despite the strike, Collahuasi has been meeting its commitments, sending out several copper shipments in November to clients in Asia and Europe.

Collahuasi is controlled by diversified mining companies Xstrata PLC (XTA.LN) and Anglo American PLC (AAUKY, AAL.LN). Each ones hold a 44% stake in the mine. A consortium led by Mitsui & Co. (MITSY, 8031.TO) holds the remaining 12%.

It is one of the world's largest copper mines and is located 185 kilometers southeast of the port of Iquique, high in the Andes mountains at 4,400 meters above sea level.

Collahuasi produces about 500,000 metric tons of copper a year, or about 10% of Chile's annual output. The South American nation produces a third of the world's copper.

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

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