UPDATE:Chile Escondida Declines Govt Mediation In Labor Conflict

Jul 26, 2011 (Dow Jones Commodities News via Comtex) -- --Escondida mine operator BHP declines government mediation in strike

--Escondida holds unionized workers' stoppage is illegal

--Coloso port still operating, but unclear if copper shipping out

(Updates with comments from BHP official Maria Olivia Recart starting in the third paragraph.)

By Carolina Pica

Of DOW JONES NEWSWIRES

SANTIAGO (Dow Jones)--Escondida, the world's largest copper mine, declined the Chilean government's offer of mediation in its labor conflict, BHP Billiton Ltd (BHP, BHP.AU) officials said Tuesday.

The sole union at the mine, representing 2,375 workers, went on strike late Thursday to protest what it says are unmet labor-contract terms.

"While thanking the Labor Office's efforts, the company declines the invitiation [to mediation] as long as the illegal and unjustified work stoppage continues," BHP Base Metals Division's vice president of external affairs Maria Olivia Recart told reporters.

She added that the mining company won't negotiate with the union as there's currently no active collective bargaining process.

"We'll resume talks when workers return to their posts," she said.

Recart said the Escondida mine itself wasn't operating, but that workers at the Coloso port where copper is shipped from is still open. She declined, however, to say whether copper was currently shipping out from the port.

The BHP official noted that the mining company was prepared to endure a prolonged labor conflict.

Escondida saw one of the longest strikes in Chile in 2006, when workers downed their tools for 25 days after contract talks reached a standoff.

In 2009, BHP averted a strike at Escondida after workers signed an early contract deal.

Unionized workers now claim some of the terms of that 2009 contract have gone unmet and claim their strike is legal as they are trying to renegotiate these same terms.

Escondida, meanwhile, maintains the strike is illegal, which means employees can be fired after failing to show up for work for two consecutive days. Recart declined to comment on whether Escondida would fire strikers.

Global diversified miner BHP holds a controlling 57.5% stake in Escondida and operates it. Rio Tinto PLC (RIO, RIO.LN) holds 30% and the remaining 12.5% is held by a Japanese consortium led by Mitsubishi Corp. (MSBHY, 8058.TO).

Last year, the open-pit mine located in northern Chile produced 1.086 million metric tons of copper, a 1% drop from its 2009 output.