Strike Continues At Peru's Cerro Verde; Union Sees Little Progress

Oct 14, 2011 LIMA (Dow Jones)--Striking union workers at one of Peru's biggest copper producers, Sociedad Minera Cerro Verde SA (CVERDEC1.VL), continue to see little progress to end an indefinite walk out following unsuccessful negotiations this week, a union official said.

"The strike continues. The situation is becoming more difficult each day," National Mining Federation President Luis Castillo told Dow Jones Newswires on Friday. He added that talks are scheduled in Lima early next week.

Workers at Cerro Verde have been on strike since Sept. 29 as they seek higher pay amid negotiations for a new collective agreement. The previous collective agreement expired on Aug. 31.

Cerro Verde has said that it is continuing operations as it has been running the facilities with supervisors and other personnel. Union officials have said that this violates labor regulations and their right to strike.

Earlier this week, inspectors from the Labor Ministry issued a report that called on Cerro Verde to stop the use of the temporary workers or face a fine.

Daniel Mori, a mining analyst at brokerage Inteligo SAB, said that despite Cerro Verde's use of temporary workers, the company's financial and production results could still be affected in the fourth-quarter.

"While the strike goes on, we could see a bigger impact in the fourth-quarter of this year," Mori said during a telephone interview.

Cerro Verde is Peru's third biggest copper producer and operates in Arequipa region. It turned out 170 million pounds of copper in the second quarter of this year, up from 166 million pounds in the same period in 2010.

Freeport-McMoRan Copper & Gold Inc (FCX) has a majority stake in Cerro Verde. Compania de Minas Buenaventura SAA (BVN, BUENAVC1.VL) and a subsidiary of Sumitomo Corp. (SSUMY, 8053.TO) also have an interest in the company.

Peru is the world's second biggest copper producer.