Chile Chuqui workers vote to strike, smelter hit too

CHUQUICAMATA MINE - Workers at Chile's Chuquicamata copper mine, one of the world's largest, rejected a wage deal and voted to strike, fanning supply fears that have helped boost global prices.

The move comes just hours after union workers on Monday began an indefinite strike at Chile's Altonorte smelter, where owner Xstrata cut output at the facility for nearly a month for maintenance work.

Strikes and stoppage threats have buffeted Chile this year as workers sought a bigger slice of windfall profits after copper prices rebounded from global financial crisis.

Union leaders, who had expected the wage offer to be accepted, said early on Tuesday that workers had voted to reject Codelco's wage offer by a slim margin.

Codelco can now opt to call for 5 days of government mediation to try to broker a deal before the strike begins. If the company opts for mediation, and fails to clinch a deal with workers, a strike would likely begin in early January.

"The workers have voted to strike," said Victor Galleguillos, head of one of the three unions that negotiated jointly with Codelco. "If the company does not ask for mediation, the strike would begin on Dec. 31."

A strike at Chuquicamata, which marks the last major stoppage risk at world No.1 copper producer Codelco for nearly a year, would inflict production losses just as the company is set to break years of dwindling output in 2009 thanks to an aggressive investment plan to upgrade older mines like Chuquicamata.

A Codelco official told Reuters on Wednesday the company would be able to honor all its contracts early next year even if workers at Chuquicamata strike, as bigger-than-expected output in 2009 gave the company a cushion.

The workers' rejection of the wage offer underscores rank and file disenchantment with their union leaders. However, while a strike at Chuquicamata would be a major setback for Codelco, it doesn't face another round of major collective wage negotiations until late 2010.

Copper prices jumped to 16-month highs on Monday, supported by the supply interruption at Altonorte and the threat of stoppage at the Chuquicamata complex, which produces nearly 4 percent of the world's mined copper.