May 3, 2007 / 2:55 AM / 12 years ago

UPDATE 3-Peru wants mining deal by Thursday, union doubtful

(Updates with talks to continue Thursday, union leader’s pessimism)

By Maria Luisa Palomino and Hilary Burke

LIMA, May 2 (Reuters) - Peruvian miners and government officials will continue negotiations on Thursday morning to end a nationwide mining strike, but a union leader cast doubt on whether a deal could be reached.

“There are advances but they are not very significant,” Luis Castillo, secretary general of the National Federation of Metallurgic and Steel Miners, told Reuters. “I think perhaps we might not have an agreement in the end.”

The union federation launched the strike on Monday to demand better job benefits, early pensions and improved conditions for contract workers.

Three joint commissions created to quickly address the miners’ demands met throughout much of the day on Wednesday.

“We are concentrating all our efforts in advancing the talks and arriving at an understanding that will allow the strike to be lifted by Thursday, at the latest,” a Labor Ministry negotiator, Jorge Villasante, said in a statement.

Some mines have been affected by the indefinite strike, including Southern Copper Corp. (SPC.LM) PCU.N. One of the world’s largest copper producers, the company said its Peru output slipped to between 90 and 95 percent of normal levels after the protest began. [ID:nN02416692]

But workers at many of the country’s other top pits have reported for duty as usual.

Castillo had pledged to consult with member unions on Thursday about the possibility of ending the strike, depending on progress made in the talks.

However, he vowed late on Wednesday to call them to Lima for street protests instead if the negotiations stalled by midday on Thursday.

Metals markets were watching the strike because Peru is among the world’s top two silver producers and is the No. 3 copper and zinc miner as well as the No. 5 gold producer.

As of Wednesday, none of Peru’s major mining companies had been obliged to declare force majeure — the legal protection invoked when unforeseen events hinder a company’s ability to carry out normal operations.

The Labor Ministry has said less than 5 percent of the mining sector’s 120,000 workers joined the strike, while the union federation has estimated the number of protesting workers at 27,000 workers.

Peru’s mining federation is made up of 74 unions, representing about 22,000 workers.

STRIKE ONGOING

A partial strike at Southern Copper’s Toquepala and Cuajone mines and its Ilo smelter continued on Wednesday, union leaders said. The two mines produced more than 325,000 tonnes of copper last year, according to government data.

Southern Copper, controlled by Grupo Mexico (GMEXICOB.MX), said it had hired contract workers to help avoid disruptions.

“The mines are producing, the issue is how we get this product to the smelter to smelt it. And if that becomes difficult, as a last resort we will sell concentrates,” Chief Executive Oscar Gonzalez told Reuters.

Union leaders at Southern Copper said a government-mediated meeting with the company was scheduled for Thursday.

Buenaventura (BUEv.LM) (BVN.N), the largest Peruvian precious metals miner, said the only unit affected by the strike was its main silver mine, Uchucchacua.

“Production has not been affected yet,” said Carlos Galvez, Buenaventura’s finance manager, adding that the company’s stocks could last another day or two.

Union leaders at several units of Volcan VOL_pa.LM, the country’s No. 1 zinc and silver producer, said they continued striking on Wednesday. But company officials were not available to discuss the walkout’s impact.

At Yanacocha, Latin America’s largest gold mine, workers had not joined the general strike. But the union’s top official there said workers could walk off the job on Thursday or Friday if the company does not respond to its wage demands.

Mining is one of Peru’s main economic drivers and accounts for more than half of export earnings.

The majority of the country’s mines are controlled by large multinational companies, whose profits have surged on high metals prices. Workers’ demands for a greater share of those profits have also intensified.

The last nationwide strike took place three years ago, when miners stopped work for 48 hours to protest the previous government’s labor policies. (Additional reporting by Marco Aquino and Jean Luis Arce)

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