UPDATE 1-Inmet says strike at mine to hurt production

Wed Apr 7, 2010 11:04am EDT

* Says work action started on April 1

* Says work action due to retention bonus issues

* Co, labor union and govt labor body in talks

* Sees 2010 copper, gold production hurt

April 7 (Reuters) - Canada's Inmet Mining Corp IMN.TO confirmed that a mine in Papua New Guinea was subject to what it called "illegal work action" by unionised employees a week ago which would also hurt its 2010 production view.

The work action by union employees at the Ok Tedi mine was due to concerns on distributions under an employee retention bonus arrangement that was not part of the industrial agreement, Inmet said in a statement.

Inmet said that the Papua New Guinea Department of Labour and Industrial Relations, called in to facilitate talks between the company and the union, indicated that the strike action is "unlawful" and that employees should return to work.

The base metals miner said that discussions between the parties were continuing and that it was currently not possible to say how long the work action will last.

Toronto-based Inmet's estimated that for each day the work action continued, its 2010 copper production would be hurt by 80 tons a day, while its gold production would be hurt by 300 ounces a day.

Inmet estimates that it has already lost about 0.4 percent of its forecast 2010 copper production and 1 percent of its forecast 2010 gold production to date.

In January, Inmet had said its expected share of copper production at Ok Tedi would be 39,300 tons, while gold production would be 109,3000 ounces.

Inmet shares were down 1.3 percent at C$59.70 in morning trade on the Toronto Stock Exchange. (Reporting by Isheeta Sanghi in Bangalore; Editing by Savio D'Souza)

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