Repairs to a faulty SAG mill at Chilean copper mine Escondida will be completed mid-August, bringing the mine's Laguna Seca concentrator plant back to capacity, a BHP Billiton Ltd. (BHP) executive said Tuesday.

According to Escondida's initial estimates, some 15% of concentrate production at the mine was lost because of the problem at the Laguna Seca SAG mill, which crushes copper-containing ore into smaller pieces. Cathode production at the mine wasn't hurt.

Mill repairs began in July and will be completed in the 45-day repair schedule, Diego Hernandez, chief executive of BHP's Base Metals Division, told reporters.

BHP holds a 57.5% stake in Escondida and acts as its operator, while Rio Tinto PLC (RTP) currently holds a 30% stake. A Japanese consortium made up of Mitsubishi Corp. (8058.TO) (60%), Mitsubishi Materials Corp. (5711.TO) (20%) and Nippon Mining & Metals Co. (20%), hold a total 10% stake in Escondida, while International Finance Corp. (IFC.KW), the private-sector unit of the World Bank, has the remaining 2.5% interest.

Production at Escondida fell 30% year-on-year in the first quarter of 2009 to 234,229 metric tons of copper, due to the combined effect of lower ore head grade, increased hardness of the ore treated which resulted in lower copper recovery, and the production problems at the Laguna Seca concentrator plant.

As to upcoming labor talks at Escondida, Hernandez said labor negotiations with Union No. 1, whose contracts expire in early December, will likely start on schedule in October.

"In all likelihood, (talks) will follow the legally established terms," Hernandez, hinting the company won't push talks forward.

In 2006, the Escondida Union No. 1 walked off the job for almost a month, bringing production to a standstill while labor talks dragged on.

With regards to international copper prices, Hernandez reiterated that prices in the first half of the year were being mostly driven by three factors - the lack of scrap in the market, fabricators restocking previously low stock levels and relatively normal consumption in China.

"These were the factors that helped copper prices do surprisingly well in the half," he said.

The executive said it is not clear if current gains will be maintained. "We don't know if this is a temporary phenomenon or not and as long as Western economies begin (to recover) and China holds at this current rhythm, (prices ) should begin to normalize," he said.

Earlier this week, copper hit a nine-month high around $2.45 a pound and is currently trading at near $2.42/lb, according to Chilean state copper commission Cochilco's daily market report.

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