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UPDATE 1-Barrick Chile mine workers sign contract, drop strike threat

Friday, 8 Nov 2013 | 3:10 PM ET

SANTIAGO, Nov 8 (Reuters) - Workers at Barrick Gold Corp's suspended Pascua-Lama gold mine in Chile signed a new contract on Friday, dropping a strike threat that could have delayed crucial construction of a water management system, a union leader told Reuters.

The deal also includes an unspecified number of layoffs, according to the union, in the wake of the decision by the world's largest gold producer last week to shelve the controversial project.

"Today we signed the contract proposal ... which was accepted by 96 percent of votes," said Alexis Spencer, the union's president. "The company confirmed there will be layoffs," he added.

Toronto-based Barrick confirmed a new contract deal valid for the next 27 months had been reached.

"The agreement reached with the (Pascua-Lama) unions does not mention any number related to people that will be demobilized in Chile as a result of the suspension of the Pascua-Lama project," Barrick said.

"Construction work needed for environmental protection and regulatory compliance will continue during the suspension project, but at this point we are not in a position to provide a specific number of the people that will be required to carry on with those activities," the company added.

Both Chile's Supreme Court and environmental regulator SMA had already halted the mine, which straddles the Chilean and Argentine border, until new infrastructure is built to avoid water pollution.

Last May, Chile's regulator told Reuters that it would be one to two years at the earliest before Pascua-Lama would be reactivated, given the time it will take to build the water management system.

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