* Nearly half of strikers quit action, take wage deals
* Staff workers say to return to work on Friday
* El Teniente output seen at normal level on Saturday
* Wage talks with remainder of strikers resume on Friday (Adds latest estimate of output loss)
By Alonso Soto
SANTIAGO, June 9 (Reuters) - Output should return to normal in days at the world's No. 5 copper mine, El Teniente in Chile, after thousands of contractors abandoned a 16-day strike that seems near its end, the company said.
Staff workers also decided to return to work on Friday after strikers began wage talks with their employers to resolve a sometimes violent 16-day walkout that is losing strength.
Mine owner Codelco [CODEL.UL] confirmed the mine was producing at 51 percent capacity on Thursday.
German Gonzalez, head of an umbrella group of service companies, said about 4,000 workers or 40 percent of strikers have signed individual wage deals and quit the walkout.
He said dissenting contractors are gradually returning to the 404,000 tonne-a-year mine as fears over violence persist.
Protest leaders denied so many temporary workers had returned to work, but acknowledged hundreds have quit striking in recent days. More wage negotiations between contractors and their employees are scheduled for Friday after talks restarted on Thursday.
"We will continue tomorrow. No deal has been struck yet," said strike leader Luis Nunez. "We decided on a truce on violence during negotiations."
Codelco had to slow production at El Teniente to 40 percent over the weekend to protect staff workers amid escalating violence by protesters.
Codelco Chief Executive Diego Hernandez said on Thursday the company has lost about 7,000 tonnes of copper so far due to the strike.
Julio Jalil, head of El Teniente's No. 7 staff union, said the mine's nearly 4,000 full-time staff workers agreed to return to work on Friday. However, he warned workers would halt operations again if violence flares up again. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic of Chile's top copper mines:
r.reuters.com/xer99r Column: Supply-side sparks fail to ignite copper
WAGE DEAL SEEN
Strikers are demanding higher wages and better benefits.
Juan Cristobal Silva, a labor ministry official in the region acting as mediator, said both sides are showing signs they want to reach a deal soon to end the walkout.
"If they are meeting again, it is because they both want to end this soon," he said. "This conflict is taking a toll on all sides."
Codelco said earlier this week the disruptions at El Teniente had cost the state giant at least $30 million in lost revenue and up to 4,000 tonnes in output.
The company is suing protest leaders for damage to private property after protesters threw rocks at buses carrying staff workers to the mine.
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. The mine's 4,000 staff workers are directly linked to output operations.
The protest drew comparisons to a violent demonstration by contractors in 2007-2008 that forced Codelco to halt work at El Teniente and two other mines. Risk of contagion was seen low at the moment, but companies are monitoring for any wage demands among contractors at their mines, union and company sources said. (Reporting by Alonso Soto; Editing by Lisa Shumaker and Carol Bishopric)