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Lundin to halt Candelaria mine in Chile

Candelaria is an open pit and underground copper mine in northern Chile. (Image courtesy of Minera Candelaria.)

Canada’s Lundin Mining (TSX: LUN) will suspend operations at its Candelaria copper mine in Chile after failing to reach a deal with a second union, representing about 550 workers, who will down tools on Tuesday.

AOS Union’s decision to walk out follows an unsuccessful mediation and comes on top of an ongoing strike by the Mina Workers Union, which began on October 8.

Lundin has withdrawn 2020 production, cash cost and capital cost guidance for Candelaria after the mine’s second union voted to strike

“Illegal and violent actions promoted under the guise of the legal strike of the Mine Workers Union, and the pending labour action of the Candelaria AOS Union, puts the safety of our Candelaria workforce at risk,” Lundin said in a statement, outlining its decision to suspend operations. 

“Critical works will continue to be executed to protect required onsite personnel, the operation and the environment,” the miner added. 

The Toronto-based company also said it had withdrawn 2020 production, cash cost and capital cost guidance for its 80% owned mine.

Lundin had expected Candelaria to produce 160,000-175,000 tonnes of copper and 90,000-100,000 ounces of gold this year on a 100% basis, according to revised guidance in April.

Lundin had said it would start collective bargaining with Candelaria’s two remaining unions, which together represented about 230 supervisors, later this month.

Mining Minister Baldo Prokurica in a statement on Monday encouraged both parties to reconvene to find a solution to the disagreement.

“I know this is difficult for them, and I think it is time to make a special effort,” he said.

Supply fears

While Candelaria produces far less copper than giant Chilean mines owned by BHP (ASX, LON, NYSE: BHP) and Chile’s Codelco, the collapse in talks underscores supply risks in a country that accounts for over a quarter of global production.

BHP avoided last week a strike at Escondida, the world’s biggest copper mine, after drawn-out wage talks.

Lundin Mining will release its September quarter results next week.