Jul 27, 2011 (Dow Jones Commodities News via Comtex) -- --Force majeure clause invoked for concentrate shipments
--Mining company reiterates strike is illegal
--No estimate for when contract suspension could be lifted
(Updates with additional information on legal status of strike in paragraphs six through nine)
SANTIAGO (Dow Jones)--Chilean copper mine Escondida, controlled and operated by global miner BHP Billiton Ltd. (BHP, BHP.AU), on Wednesday invoked force majeure on its copper concentrate shipments as a result of a near week-long strike.
The force majeure contract suspension allows a company to temporarily halt its commitments due to an event beyond its control.
In a filing to the local SVS securities regulator, Escondida called the workers' strike illegal and noted the walkout was "producing an impact on the production of copper concentrates."
Escondida, the world's largest copper mine, produces copper in concentrates and, to a lesser degree, large sheets of 99.99% pure copper called cathodes.
The company noted that it can't estimate how long the contract suspension will be in place as it depends on the duration of the strike.
The mine's sole union, comprising 2,375 members, went on strike Thursday to protest what it calls unmet contract terms. Union leaders say the strike is legal as they contest they are renegotiating terms of the 2009 collective bargain.
The mining company, meanwhile, called the strike illegal and declined an invitation earlier this week to assist a goverment-mediation round of negotiations. Current contracts expire in July 2013.
According to Chilean labor laws, unionized workers can only legally down their tools when contract negotiations have reached a standstill. Legislation also allows for employers to fire workers who strike illegally.
Earlier this week, a BHP official told reporters the company was prepared to deal with a prolonged strike. Last year's 33-day strike at the Collahuasi mine has been the longest ever at a privately held mine in Chile.
BHP holds a controlling 57.5% stake while Rio Tinto PLC (RIO, RIO.LN) holds 30%. 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.