Peru mining strike support collapsing

By Jean Luis Arce and Dana Ford

LIMA (Reuters) - Support was collapsing for Peru's nationwide mining strike on Friday as employees at several big mines returned to work, against the wishes of labor federation leaders who vowed the walkout would continue.

At a time when metals prices are sky-high, Peru's miners want the national Congress to pass a bill that would lift caps on profit-sharing. They also want a shorter work day and improved retirement rules.

The protests are the latest sign of calls on President Alan Garcia to spread the wealth from the country's six-year economic boom or risk losing support of labor and the poor for his free-market policies at a time when leftist parties are positioning for elections in 2011.

So far, the nationwide strike has hit some key mines but affected production at only a few as a number of companies used temporary workers.

Disagreements among unions in the federation about whether to continue the strike led government officials to say it would end soon. But the leader of the walkout said it would go on until Congress promises to act on a bill that would give workers a bigger slice of profits.

"No union should take a position that differs from that of the federation," Luis Castillo, leader of the federation, told Reuters. "We have punished ... unions that have negotiated or lifted their strikes without permission from the federation."

Despite internal differences, he said the walkout that started Monday would carry on, adding: "The strike continues."

Global copper prices MCU3 rose to record highs before easing back this week amid worries that supplies would be crimped from Peru, the world's No. 2 supplier.

Workers at the copper-zinc mine Antamina on Friday chose to end their strike, becoming the sixth mine or smelter to drop out of the nationwide walkout.

"Saturday we will return to work," said Francisco Marinas, head of the union at Antamina, owned by Xstrata (XTA.L) and BHP Billiton (BHP.AX) (BLT.L), among others.

Peru's Labor Ministry has said about 10 percent of all mine workers downed tools in the strike while production was hit by a smaller percentage.

Laborers also returned to work on Friday at the Cuajone mine of Southern Copper (PCU.N), Peru's biggest producer, a day after ending a strike at its Ilo smelter, both the company and union said.

The walkout was also lifted at iron ore miner Shougang Hierro Peru (SHP.LM), according to labor and company officials.

Workers at Freeport-McMoRan's (FCX.N) Cerro Verde copper pit, Peru's third biggest, scrapped plans to join the national strike, but the union might hold its own walkout next week.

Laborers at Volcan's (VOL_pb.LM) Andaychagua zinc mine have also ended their strike.