Global diversified miner BHP Billiton Ltd (BHP) sweetened the contract it is offering the unionized workers at its Spence copper mine in Chile, a union leader said Tuesday.

The two sides are currently in the middle of a five-day government mediation period. The latest contract expired on Sept. 30.

If talks fall through, workers can legally go on strike on Thursday.

"There's still room for this to be a substantially better offer, but we have to admit that we've advanced in our negotiations," Spence union spokesman Francisco Aravena told Dow Jones Newswires.

Spence's representatives didn't immediately return calls seeking comment.

The 560-member union wants at 5.5% real wage increase, health and social benefits as well as several bonuses.

The open-pit Spence mine, which came on line a few years ago, produced about 165,000 metric tons of copper cathodes last year.

This is Spence's second collective bargaining process as workers - the first was negotiated in 2006 before the mine went into production.

BHP also owns the Cerro Colorado mine and controls and operates the Escondida copper mine in Chile. The latter will begin wage negotiations later this year.

A local newspaper reported that BHP seeks to begin contract talks early at Escondida in the hopes of averting a strike.

In 2006, when copper prices were booming, Escondida workers went on strike for nearly a month, bringing the world's largest copper mine to a standstill as they sought higher wages and production bonuses.

-By Carolina Pica, Dow Jones Newswires; 56-2-820-4244; carolina.pica@dowjones.com