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Last Updated: Tuesday, 8 August 2006, 10:09 GMT 11:09 UK
Chilean copper mine hit by strike
Copper mine workers protesting over pay
Workers say they are committed to winning their strike action
A strike at the world's largest privately-owned copper mine has cut production by almost two-thirds.

BHP Billiton is majority-owner of the Escondida mine in Chile where workers downed tools late on Monday over pay.

The 2,000 workers want a 13% pay rise - but have been offered 3% - and a bonus of 16m pesos ($29,400; 15,500).

BHP Billiton has declared "force majeure" giving it legal protection and letting it miss contracted agreements, such as delivery of copper concentrate.

The company said it was meeting deliveries from its stockpiles and would need to keep in touch with customers over when and if there would be any disruption to its schedules.

'First real strike'

The Escondida mine produces about 8% of the world's copper and daily production has dropped by almost two-thirds because of the strike.

According to local media reports, miners turned off machines overnight after many of them had not turned up for their shifts.

A prolonged strike would have the potential for a significant impact on copper prices
Martin Petch, Commonwealth Securities

Instead they gathered in a square at the northern town of Antofagasta, about 1,600 kilometres (995 miles) north of Santiago, for a planned march.

Reports said that other workers had blocked an access road to the mine with parked vehicles and rocks.

"This is the first real strike in the company's history," said Pedro Marin, a trade union spokesman. "We do not know how it will turn out, but we are ready to hang in there."

Workers are determined to push for the better pay conditions as the price of copper has surged to record levels and companies, including BHP Billiton, are reporting good profit growth.

'Not a lot of supply'

The surge in commodity prices is down to strong demand among emerging nations such as China and India at a time when supplies are tight.

Copper mine
Copper mining is a massive and cost-intensive business

As a result, analysts said that a long-running industrial dispute could push the cost of copper even higher.

"There is not a lot of supply coming on stream generally this year and therefore a prolonged strike would have the potential for a significant impact on prices," said Martin Petch of Commonwealth Securities.

BHP Billiton owns 57.5% of the Escondida mine, with Anglo-Australian rival Rio Tinto holding 30%. The remaining equity is controlled by a Japanese-led group, with a small stake in the hands of International Finance Corp.

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