Peruvian Miners Strike Freeport-McMoRan for Better Pay; Mining Work Continuing

Workers at Freeport-McMoRan's Cerro Verde mine in Peru went on strike for better pay on Thursday, but the company said there was no disruption from the mine that supplies 2 percent of the world's copper.

The government of leftist President Ollanta Humala plans to hold talks with both sides on Friday after negotiations on Wednesday failed. Union leaders said they were intent on forcing a halt to operations at the mine, which has not suffered a strike deemed legitimate by the government in its 40-year history.

Surging profits by miners have led workers at mines from Chile to Indonesia to hold walkouts and press for pay increases this year. Cerro Verde's labor contract expired Aug. 31 and its 1,100 workers had downed tools for five days earlier this month to force the company to sign a new contract.

Strikes in Peru normally only last a few days as the government often declares them illegal -- giving companies the right to hire temporary workers to keep production running smoothly and sanction employees who stay on the picket line. But the government has ruled that the current strike is legal.

Union workers say this could snarl production by preventing the company from calling in temporary staff. The company has appealed the ruling.

But if it is upheld, it would mark the first time in the 40-year history of Cerro Verde that a strike was deemed legal and show Humala is lending a sympathetic ear to organized labor.

Workers say they have prepared better this time around to paralyze output.

We already have workers on hold, William Camacho, of the Cerro Verde union in the southern city of Arequipa, told Reuters. We've done all the paperwork to ensure operations are suspended at the mine, he said.

But Freeport said production of copper and molybdenum have not been materially affected by the strike.

Peruvian precious metals miner Buenaventura also has a stake in Cerro Verde, which produced 312,336 tonnes of copper in 2010 in Peru, the world's No. 2 producer.

Freeport said it was relying on supervisory staff and personnel that volunteered to work during the strike at Cerro Verde. It also said it would continue to negotiate a new contract.

ECONOMY OVERSHADOWS STRIKE

Besides Cerro Verde, the miner is also suffering a strike at a big mine in Indonesia.Its shares were down 3.7 percent at $31.08 as it weathers two strikes and as shares of many miners slipped.

Though the Cerro Verde walkout could tighten the copper supply picture a bit, traders said doubts about weakness in U.S. and European economies were weighing on the market.

Benchmark copper was at $7,174 a tonne in afternoon trade in London, down from $7,250 at the close on Wednesday. Justin Lennon, analyst with Mitsui Bussan Commodities Inc in New York, said the strike was notable, but the broader macro picture is what is dominating the market right now.

Elsewhere in Peru, a strike halted operations at small Canadian miner Rio Alto's La Arena gold mine.