* No deal reached after mediation, but progress made
* Union expected to decide on Saturday on strike
* Cerrejon, workers have been in talks since early Dec (Updates that no deal but progress made, adds details, comment, byline)
By Monica Garcia
BOGOTA, Feb 4 (Reuters) - Colombian coal workers and the nation's largest exporter, Cerrejon, failed to reach a deal on Friday but made progress in pay talks after the government scrambled to avoid a looming strike, officials said.
Cerrejon produces on average 85,000 tonnes a day of high-quality thermal coal, and any prolonged stoppage at the mine would hurt output at a time when global supplies are tight due to issues in almost all major thermal producers.
Sintracarbon union President Igor Diaz said that the syndicate would present the company's proposals to workers on Saturday. "It's the workers who will decide what will happen next," he told reporters.
"There were advances in some areas," he said, adding that the company had increased the salary increment to 6.5 percent for the first year from 6.3 percent previously.
The union has a midnight Saturday/Sunday deadline to decide whether to walkout, accept the deal or workers would have to vote again on a strike, according to Colombian law.
"We've made great progress ... now it's in the hands of the union," Cerrejon President Leon Teicher told reporters. "You have to let things take their course."
Graphic on Cerrejon's exports:
Factbox on Cerrejon: [ID:nN05192802]
Top coal stories worldwide by region: [ID:nLDE70N0XE] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Cerrejon and workers have been in talks since Dec. 9. If workers strike, it will be the first walkout in twenty years, according to the company.
Colombian Vice President Angelino Garzon held an hours-long meeting on Friday with Cerrejon executives and union leaders to try to hash out a compensation deal.
"I'm optimistic that due to the willingness of the company and the union, we're very close to a deal," Garzon said.
Cerrejon -- unlike privately owned Drummond and Glencore, Colombia's other top coal producers -- has listed partners, BHP Billiton (BLT.L), Anglo American (AAL.L) and Xstrata XTA.L, to keep happy as well as its customers.
Adding to pressure to reach a deal with workers, its partners have had lower output from mines in Australia due to flooding and would not want to lose any more production in such a tightly balanced market set to go higher.
Global coal markets have been vulnerable to supply disruptions in many important exporting countries, such as Australia, and that has boosted prices. (Additional reporting and writing by by Jack Kimball; Editing by Gary Hill)