UPDATE 1-Chile Codelco's mine output at 73 pct despite strike

Mon Jun 13, 2011 12:42pm EDT

* El Teniente short-staffed on renewed protest violence

* Wage talks drag on as contractors' strike reaches day 20

(Updates with union comment, background)

SANTIAGO, June 13 (Reuters) - The world's No. 5 copper mine El Teniente, owned by Chile state copper giant Codelco, was processing at 73 percent of capacity on Monday amid a nearly three-week contractor strike, the company said.

The state miner had expected to return to full production over the weekend, but held many workers back from the 404,000 tonnes-a-year mine after contract workers pelted mine buses with stones on Thursday, union sources said.

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's [CODEL.UL] struggle to recover output may spark concerns of a prolonged supply disruption in Chile, the world's top copper producer, providing possible support for copper prices CMCU3, which are near three-week lows in London. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic-Top Chile copper mines: r.reuters.com/xer99r Column: Supply-side sparks not igniting copper [ID:nLDE7581FB] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Protest leaders met with employers on Friday to lay out demands for better wages and benefits, but said early on Monday they had received no answer.

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.

Chief Executive Diego Hernandez said on Thursday that the company had lost about 7,000 tonnes of copper.

In a statement last week, Codelco said renewed violence was keeping around 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. (Reporting by Fabian Cambero and Brad Haynes; Editing by Marguerita Choy)