Unionized workers at Chilean copper mine Spence, owned by global diversified miner BHP Billiton Ltd. (BHP), went on strike at the start of the first shift Tuesday.

The mining industry in Chile is closely following the negotiations process, as contracts at several other mines will expire later this year and in early 2010.

Over a three-day holiday weekend, the 560-strong union voted against the mining company's latest wage and benefits offer, union members said.

Ore extraction has been halted, but the copper processing plant's solvent extraction/electrowinning facilities are still operating, said BHP spokesman Mauro Valdes.

"Our main focus is an orderly mine shutdown, centering on maintaining our workers and our equipment safe," Valdes said.

He added that while local legislation allows for a company to replace workers as soon as the strike begins, BHP has opted to not exercise that right at the moment.

The union and mine management last week agreed to extend the five-day government-assisted mediation period in the hopes of reaching an agreement.

Contracts expired Sept. 30. The union sought a 5.5% wage increase, improved benefits and bonuses totaling 15 million Chilean pesos ($27,100).

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. 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. Last week, BHP offered the more than 2,000 members of the union at the latter mine an early wage and benefits package to avoid a possible strike. Earlier Tuesday, the Escondida union accepted the wage and benefits package for a 44-month term.

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