Xstrata halts output at Australia mine over strike

PERTH - Xstrata, the world's largest producer of thermal coal, said a strike at one of its Australian coal mines over a wage dispute has been extended by 24 hours and will significantly interrupt operations.

The labour action at the Bulga mining complex in eastern Australia, which comes on top of a 48 hour strike over the weekend, will halt production on Tuesday but will not affect shipments, the firm said on Monday.

"The union could plan more strike action if the wage dispute is not resolved. We are constantly assessing its impact on production," Xstrata's spokesman James Rickards said.

"Coal shipments are not affected by the strike yet," he said.

Workers from the Construction Forestry Mining and Energy Union are demanding higher wages and have rejected Xstrata's offer of a 15% in base salary over three years.

Bulga produces around eight-million tons of thermal coal used in power generation and semi-soft coal for steelmaking for export. Australia's total coal exports are around 270-million tons a year, one of the top earners for the commodities-driven economy.

The Bulga operation is 87,5% owned by Oakbridge, in which Xstrata holds a 78% shareholding. Nippon Steel owns the remaining 12,5%.