BHP BHP Group Limited

By Ryan Dube 

Workers at BHP Billiton Ltd.'s majority-owned Minera Escondida mine in Chile will end a strike at the world's biggest copper operation this weekend, a union leader said Thursday.

Patricio del Rosario, the president of Escondida's largest union, Union No. 1, said workers agreed to implement Article 369 of Chile's Labor Code, which allows them to return to work with their current collective agreement for 18 months.

"On Saturday we are returning to work," Mr. Del Rosario said by telephone.

Workers at Escondida, which accounts for about 5% of the global copper production, went on strike February 9, halting production at the mine and sending copper prices higher on concerns about a supply shortage.

Talks for a new collective agreement, which expired Jan. 31, fell apart as the union rejected offers for a new deal that they said would reduce their benefits.

The union's decision to implement Article 369 follows a BHP statement Thursday saying negotiations had broken down after successive attempts to reach a deal. BHP said the implementation of the article by the union will require the company to "evaluate its operational and production strategy and will adjust its short and medium-term plans since this would imply significant changes in current conditions at the operation."

BHP operates and owns 58% of Escondida, located in Chile's northern Atacama desert. Rio Tinto PLC and Japan's Mitsubishi Corp. have minority interests in the operation.

Labor disputes have flared up in Chile's mining sector over the past year as worker demands conflict with company efforts to cut costs by reducing benefits and laying off employees due to lower commodity prices.

The strike at Escondida is expected to weigh on Chile's economic growth in the first quarter after a sluggish 2016, economists say. Last year, Chile's economy expanded 1.6%, its weakest annual growth rate since 2009.

Chile is the world's biggest producer of copper, which is the country's main export earner.

Write to Ryan Dube at ryan.dube@dowjones.com

(END) Dow Jones Newswires

March 23, 2017 14:03 ET (18:03 GMT)

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