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Workers at Codelco held their first national strike in nearly two decades Monday, blocking access roads and challenging the Chilean government in a growing feud over the future of the world's top copper miner.

Union leaders fear that the ongoing restructuring of Codelco – ordered by conservative President Sebastian Pinera – could lead to benefit cuts, huge layoffs and the sale of world-class deposits that are key to the state's finances.

The day-long work stoppage is not seen hurting Codelco's output target, but it raised the risk of more labour strife in Chile, the world's top copper producer, which could disrupt an already fragile supply pipeline.

Subcontractors at Codelco have threatened to hold strikes on their own after the staff workers' walkout is over.

Employees of Codelco's No. 1 mine, Chuquicamata, in the country's arid north, were the first to halt work on Monday.

"All workers from the early shift are stepping down from buses outside the deposit's gate to support this nationwide strike," said Henan Guerrero, a union leader at Chuquisaca." The mine has started to halt operations."

They were followed by workers at the company's Tenet mine, where picketers blocked access roads to the underground deposit. Transportation routes were also blocked by workers at Codelco's Angina and Radom Tonic mines and the Ventages copper smelter.

Production at Chuquisaca and El Tenet, Codelco's top operations, was at minimum levels, company officials said.

Mr. Pinera had already been struggling with student demonstrations over state education funding.

The centre-right billionaire saw his approval rating fall to 31 per cent in a poll last week while he grappled with the student protests, the looming Codelco strike and a customer credit scandal at retailer La Polar, which has sparked criticism of government oversight.

Copper prices fell on Monday as concerns over Italy's sovereign debt curtailed risk appetite, but labour strikes in Chile and Indonesia highlighted supply constraints and lent support to prices.

Weather-related supply disruptions in Chile's copper-rich north, Codelco's labour tensions and a strike at Indonesia's Grasberg mine helped copper prices hit three-month highs last week.

Codelco kept a skeleton staff at its mines on Monday to handle only emergency maintenance, Mining Minister Laurence Golborne told Reuters.

"We have to wait until the end of the action to then start talks, a sit-down at the negotiation table," he said.

The union at Codelco's Gaby mine, in Chile's northern Atacama desert, blocked access roads with trucks. Strikers held signs saying "Codelco 100 per cent state owned" and "Gaby is not for sale."

Mr. Pinera, who broke 20 years of centre-left rule when elected in 2010, has backtracked from election pledges to bring private capital to Codelco as part of a plan to inject more efficiency after years of lacklustre results.

Still, he wants Codelco to shape up – and quickly.

Last year, the Pinera-backed Codelco board hired Diego Hernandez, the former base metals chief at global miner BHP Billiton, to lead the overhaul of a company that has lost ground against slimmer, private rivals.

"We are not making radical changes, but in general people find changes difficult to deal with and usually resist them," CEO Hernandez told the daily La Segunda last week.

Codelco, which produces about 1.7 million tonnes a year, or over 9 per cent of the world's mined output, expects to lose about 4,900 tonnes from the strike.

The most recent national strike by Codelco workers, in 1993, lasted half an hour and had little effect on output.

This time around, union leaders want the walkout to show a level of strength not seen since a 1983 labour stoppage held to protest the bloody dictatorship of General Augusto Pinochet.

"If the administration doesn't change things around, then obviously you will see more conflict," said Guillermo Medina, at union leader at El Teniente.

"We don't want to be co-administrators of the company, but we need to be included in human resources decisions."

In what could signal more trouble, Mr. Hernandez has said he will move ahead with plans to cut hundreds of jobs at the century-old Chuquicamata deposit and overhaul the workers' health system.





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