UPDATE 2-Chile miners end 42-day strike at BHP's Spence

* Spence workers to resume work "Wednesday or Thursday"

* End of strike eases wider BHP deposit disruption fears

* BHP sees Spence returning to normal output in January

* No major damage to equipment on BHP initial assessment (Adds company comments, copper prices and byline)

By Simon Gardner

SANTIAGO, Nov 23 (Reuters) - Workers at Chile's Spence copper mine voted on Monday to end a 42-day strike, defusing fears of wider output disruptions after agreeing to a wage deal with owner BHP Billiton, the union leader told Reuters.

The deal came after a leading Chilean mine union last week threatened to halt output at other mines owned by BHP Billiton (BHP.AX) (BLT.L) in solidarity with the Spence strikers, fanning fears of further supply trouble in the world's No. 1 copper producer Chile.

BHP later told Reuters it expected Spence to return to normal output levels in January, but saw harvesting of copper cathodes resuming as early as next week at the mine.

"They approved the wage deal and voted to end the strike," Andres Ramirez, president of Spence's worker union, said via telephone after the late-night vote to end one of the longest stoppages at a private mine in the South American country. The stoppage entered its 42nd day on Monday.

The global miner either has stakes in or owns three mines in Chile, including its Spence deposit, which together produced about 1.5 million tonnes of copper in 2008, or about 10 percent of world output, according to Chilean government data. [ID:nN20237127]

BHP has a majority stake in the world's biggest copper mine, Escondida.

Fears of supply disruptions in Chile helped keep copper prices high as the red metal has more than doubled this year on hopes that the worst of the financial crisis has ended.

Wider dollar weakness and gains in other commodities propelled copper prices to 14-month highs earlier on Monday. Three-month copper on the London Metal Exchange MCU3 was trading at around $6,965 a tonne after breaking $7,000 earlier in the day. [ID:nSP532811]

DAMAGE ASSESSMENT

BHP spokesman in Santiago, Mauro Valdes, said Spence's extraction and crushing operations would likely resume in early December and that "at first glance the damages are easy to overcome leading to the ramp up."

He added that workers will return to work later this week.

BHP has previously said daily output losses at the mine totaled 500 tonnes of copper per day since the strike started in mid-October, which put total losses at about 20,500 tonnes by Sunday night.

Spence produced around 164,000 tonnes of copper last year and had planned to reach 200,000 tonnes in 2009.

Union leader Ramirez said the workers would draw up their new contract on Monday, and once that was done would then lift the strike within 48 hours. He said he expected workers to resume operations "on Wednesday or Thursday".

Global miner BHP said late on Sunday the deal included a 4 percent pay hike for union workers during the duration of the 41-month contract, as well as bonuses and benefits. BHP had expected workers to resume work as soon as the deal was approved. (Additional reporting by Alonso Soto and Antonio de la Jara; editing by John Picinich) ((simon.gardner@thomsonreuters.com; +569-9818-8538; Reuters Messaging: simon.gardner.reuters.com@reuters.net))