A work stoppage at Chile's Collahuasi mine has reduced copper output.Igor Dmitriev/Getty Images/iStockphoto
Chile's giant Collahuasi mine halted its output of copper concentrate Tuesday after a labour dispute that erupted Monday.
The world's No. 3 copper mine implemented a contingency plan after roughly 10 per cent of its workers downed their tools, the company said in a statement.
The work stoppage has also limited copper cathode output, but its Patache port is operating normally, the company added.
The idled workers at Collahuasi, which produces about 3 per cent of the world's copper, took action due to fear of coming layoffs. The company later on Monday announced it had laid off a "limited" number of workers in response to a partial one-day strike in October, a move that could stoke tensions between management and the union.
Collahuasi, which is owned by miners Xstrata PLC and Anglo American PLC, produced 504,000 tonnes of copper in 2010, when output was hit by a month-long strike.
Output this year had so far been little affected by a 24-hour strike in July and the stoppage in October. Union members would have to vote for this week's stoppage to legally become a strike, according to Chilean law.
Union leaders on Tuesday said both cathode and concentrate output was paralyzed, stockpiles were controlled by workers and that the union was digging in for a long labour action.
"There's no production. No one is working," union leader Manuel Munoz said. "There's no time frame for the stoppage. It's indefinite until the workers are hired back."
Copper prices edged down on Tuesday ahead of a meeting of euro zone finance ministers, while a successful Italian government bond auction and ongoing supply constraints, including the Collahuasi stoppage, calmed sentiment and contained losses.
Chile's mining sector has been plagued by disruptions in recent months due to harsh weather, equipment failure and strikes as workers tap into a wider vein of growing discontent among Chileans demanding a bigger share of an economic boom fuelled by high international copper prices.
Collahuasi will not be able to make up all of the output lost due to disruptions earlier in the year, CEO Giancarlo Bruno told Reuters last week.
Some workers at Collahuasi held the partial one-day strike in October over bonus payments, but the company said production was not affected.
That in turn followed a 32-day strike over pay by workers at Collahuasi that began in November last year, the longest ever at a private mine in Chile. Analysts say union posturing due to internal politics has also been a factor.
A Japanese consortium led by Mitsui & Co. Ltd. is a minority stakeholder in Collahuasi.