Chile Codelco makes offer to defuse Chuqui strike

CHUQUICAMATA MINE - Chilean mining giant Codelco made a new wage offer to workers on Monday in a bid to defuse a day-old strike at the world No.1 producer's huge Chuquicamata complex, boosting copper prices worldwide.

Workers at the complex, the world's second biggest copper mine which accounts for about 4 percent of world output, began their strike early on Monday. The job action hit Codelco's production and boosted copper prices to 16-month highs.

But the disruption was expected to be short-lived, and workers are set to vote on the new wage offer on Tuesday.

The strike, the first at Chuquicamata since 1996, came hours after employees at the Altonorte copper smelter said they were close to reaching a wage deal with owner Xstrata to end a separate, near week-long stoppage that also fanned supply fears.

The strike comes a fortnight before a Jan. 17 presidential election run-off in Chile, the world's leading copper producer. If the stoppage drags on it could hurt the chances of the lagging government candidate and overshadow the achievements of the center-left coalition that has ruled for two decades.

"We are going to call an urgent assembly ... to announce the offer and should by law hold a secret vote on it tomorrow," said Hernan Guerrero, president of one of Chuquicamata's three unions.

Codelco sources have estimated the Chuquicamata complex in far northern Chile, which includes the Chuquicamata and Mina Sur deposits and produces around 4 percent of the world's mined copper, will lose up to 1 800 t of copper output per day and cost the state around $8 million per day in lost revenue.

Chuquicamata was expected to produce 565 000 t of copper in 2009.

The stoppage helped drive international copper prices to 16-month highs in London and New York, though a senior Codelco official said the state-owned giant has enough stocks to honor deliveries early this year.

The stronger copper price, coupled with a weak dollar, lifted Chile's peso on Monday.

Strikes at Codelco have historically been short-lived. Analysts expect the latest stoppage to be brief and cause little supply disruption, albeit while supporting market sentiment.

Codelco has said it was ready for the strike but has not specified how long its stocks will last.

The strike comes just as Codelco was set to break years of dwindling output. The company does not face another round of major wage negotiations until later this year.

Strikes and stoppage threats have buffeted Chile in recent months as workers sought a bigger slice of windfall profits as copper prices rebounded from a steep slump late last year.