By: Dorothy Kosich, Mineweb -
http://www.mineweb.net/int_beat/937288.htm

18-AUG-06

RENO, NV (Mineweb.com) — BHP Billiton Friday temporarily closed operations at Escondida, the world’s biggest copper mining operation, and ended negotiations with striking workers.

Spot copper prices were up as much as 2.45% to $3.4319 a pound in early Friday morning trading since the decision was made to temporarily shut down the mine, which supplies roughly 8% of the world’s copper supply.

Union workers have blocked all access roads to the mine located in Chile’s Atacama Desert. BHP Billiton spokeswoman Emma Meade told Australian press that “this heightened union activity means we no longer feel that we are able to unequivocally guarantee the health and safety of our people or the integrity of the operations infrastructure.”

“As a result, Minera Escondida has today closed its operations and ceased negotiations with the union,” she said. BHP Billiton accused the union of carrying out illegal activity and vowed to take legal action against the union. Of the mine’s permanent staff of 2,930, 2,052 workers are believed to belong to the union.

The 12-day old strike had already reduced Escondida’s output to 40% with limited production being maintained through the use of contract workers. BHP Billiton had already declared force majeure on concentrate production and halted copper cathode production.

While negotiations on health benefits, housing and education were making progress, an impasse over wages brought negotiations to a halt. BHP has offered to raise wages by 3% while the union has reduced its demand from their original 13% hike to a 10% increase.

Union representatives were scheduled to meet with Chilean President Michelle Bachelet on Thursday to ask the government to mediate in defense of their rights. Prensa Latin reported that the union insisted that the government can not remain on the sidelines of the dispute and have criticized the President’s insistence that “it’s a private matter.” Bachelet said she would only mediate to facilitate an agreement in the negotiation.

However, the government, through its ownership of the world’s largest copper miner Codelco, has its own interests at stake in the conflict. Labor negotiations which would impact three of Codelco’s copper mines are scheduled to begin later this year. It is feared that as much as 18% of world copper supplies could be hurt by upcoming mining negotiations in Chile, Peru and Canada.

The union blamed the government for any events that may happen from now, especially if the conflict escalates.