* Deal before year-end would be 'very good news' -CEO * Chuquicamata, Escondida labor contracts up in 2013 * Early talks suggest strike threat lower than feared SANTIAGO, Dec 5 (Reuters) - Codelco, the world No. 1 copper producer, is hopeful about reaching a new labor deal with its union at the massive Chuquicamata mine, Chief Executive Thomas Keller told Reuters on Wednesday. "We're optimistic. It's a complex negotiation but we're hoping that with good will on both sides we can reach a deal," Keller told Reuters on the sidelines of a year-end event organized by the government's mining ministry. "It would be very good news" to reach a deal before year-end, he added. Most unionized workers at the state miner's century-old Chuquicamata deposit voted to start early contract negotiations in November, suggesting the sides could be poised to sign a new deal. The labor contract at Codelco's Chuquicamata, which produced around 443,000 tonnes in 2011, is set to expire on Feb. 28, 2013. A union leader had told Reuters he expected there would be the beginning of an agreement within the first 15 days of December. The labor contract at Escondida, the world's biggest copper mine, also expires next year. Many in the copper market were bracing for fierce labor actions next year, but some now see a lowered strike risk as unions at both mines have agreed to hold early labor talks. An uptick in labor action in Chile hit copper output in 2011, so collective labor talks are closely watched by the mining industry. During the last contract negotiation in 2009-2010, Chuquicamata's union staged a two-day strike. Chuquicamata is symptomatic of Chile's ageing, tired mines. The deposit's production has been cut in half since 2007 amid sharply dwindling ore grades, while costs have doubled. The mine's transformation into an underground operation will trigger layoffs, but the union says health benefits are the key issue in negotiations.