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Workers at Chile's Escondida copper mine to strike Thursday: Union

Heavy equipment at work at Escondida mine in Antofagasta.
Francesco Degasperi | AFP | Getty Images

The main union at BHP Billiton's Escondida copper mine, the world's largest, told Reuters on Tuesday that negotiations mediated by the Chilean government with the company have failed and that workers will go on strike on Thursday.

Workers warn that a strike at the Chilean mine would nearly halt production and could be lengthy, potentially affecting global supplies of a metal used in everything from construction to telecommunications.

"The company doesn't want to change its position, so we understand that there is nothing left to negotiate ... there is nothing left to talk about, we've already talked a lot and we are definitely going on strike," said union spokesman Carlos Allendes.

The strike is planned to start at 8:00 a.m. (1100 GMT).

BHP Billiton said it could not immediately comment but expected to put out a statement later in the day.

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Copper prices have spiked in recent weeks over fears of a strike at Escondida, which produced 6 percent of the world's supply in 2015. One tonne of copper was trading at $5,795.00 at 7:18 p.m. local time (1018 GMT), up from a morning low of $5,786.

A strike would reduce production at the mine to "practically zero," Allendes had said earlier on Tuesday.

The two sides on Friday started a five-day government-mediated period of negotiations that effectively delays a work stoppage the Escondida Union No. 1 voted for last week.

As no talks took place on Sunday, Wednesday will be the last day of the negotiations, unless both parties agree to an extension. If talks fail, a strike can only legally begin as of Thursday.

Allendes said the union has decided not to sit down to negotiate with the company on Wednesday.

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Copper better inflation hedge than gold: Pro

"There will be no talks tomorrow," Allendes said.

In a statement on Monday, the union said BHP had not committed to a benefits scheme that places new and longtime workers on equal footing. The union, which considers equality of benefits essential to any agreement, added that it tried to discuss the issue with the company, which asked to put it off to the end of negotiations.

Labor negotiations at Escondida are seen as a benchmark for the industry at large. The last wage talks four years ago, when copper prices were considerably higher, ended with Escondida offering each worker a bonus worth some $49,000, the highest ever offered in Chile's mining industry.

Falling profits at Chile's copper mines because of lower prices of the metal have caused belt-tightening that makes labor negotiations trickier. Labor problems at Escondida could portend tough negotiations this year at other Chilean copper mines, such as Anglo American and Glencore's Collahuasi and Antofagasta's Los Pelambres.

Escondida is majority-controlled by BHP, with Rio Tinto and Japan's JECO also holding stakes.

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