Chile Codelco mine output up but violence flares

ANTOFAGASTA, Chile, June 13 (Reuters) – A three-week
contractor strike at the world’s No. 5 copper mine, Chile’s El
Teniente, will hit future output, Codelco’s CEO said on Monday,
as fresh protest violence raised the specter of a prolonged

Mine owner Codelco [CODEL.UL] has struggled to normalize
output at the world’s top underground operation after having to
slow operations over a week ago due to violence by contractors
demanding higher wages.

The 404,000 tonne-a-year mine was producing at 73 percent
of capacity on Monday as more workers reached the mine, the
company said.

The strike weakened after thousands of contractors broke
off, but sporadic violence flared again on Monday at a march in
the northern city of Rancagua, when demonstrators pelted a bus
with stones and police said they arrested about 15 people,
including prominent protest leader Jorge Pena.

The risk of a prolonged disruption in the world’s top
copper producer could provide support for copper prices
CMCU3, which hit three-week lows in London.

Negotiations between the remaining contractors and their
employers failed to resume on Monday because of the fresh

“We are going to lose future production,” Codelco’s CEO
Diego Hernandez told Reuters at a mining forum in the northern
city of Antofagasta, in Chile’s mining heartland.

“Development (of the mine) is falling behind, and that is
going to affect us,” he added. He said it was too soon to say
if the mine would fall short of its annual output target.

Hernandez said last week the company had lost about 7,000
tonnes of copper due to the protest.
The state miner had expected to return to full production
over the weekend, but held many workers back after contract
workers pelted mine buses with stones on Thursday.

Some full-time staff have returned to work in extended
shifts to minimize bus trips, but union leaders said staffing
and production are still below half capacity.

“Output running at 70 percent is impossible,” said Juan
Meneses, head of El Teniente’s largest worker union, adding
operations could only recover once more staff reach the mine.

Codelco Chairman Gerardo Jofre said on Friday that El
Teniente could miss its output target for 2011 after the mine
output dropped to 40 percent of capacity amid renewed violence.

Still, he said there were no plans to break off contracted
shipments with a declaration of force majeure.

In a statement last week, Codelco said renewed violence was
keeping about 6,000 contractors, more than half the total, from
returning to work after agreeing to sign new wage deals.

Protest leaders denied that so many contractors had
abandoned the strike, but acknowledged that hundreds had
returned to work.

El Teniente employs more than 10,000 contractors, most of
whom support non-production operations, such as reinforcing
tunnel walls, repairing machinery and distributing food, while
the mine’s 4,000 staff workers focus directly on production.

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