(Adds union leader's comments, background)
SANTIAGO, Jan 30 (Reuters) - Unionized workers at Chile's Sierra Gorda mine, controlled by KGHM Polska Miedz SA, reached an agreement with the Polish company on collective contracts and won't go on strike, union president Humberto Vidaurre told Reuters on Friday.
Amid tense contract negotiations, workers had voted last week to go on strike, but Chilean law allows for a five-day negotiating period, which is mediated by a special government agency.
The 450-member Union 2 was asking for higher salaries as well as improved education, health, housing and transportation benefits. The mine has a total of some 1,100 workers.
"We managed to get improvements on the most critical points," said Vidaurre.
He said 80 percent of the workers had accepted the offer, which included wage increases of 4.5 percent, as well as one-time bonuses and loans of over $21,000 each.
Sierra Gorda, a joint venture 55 percent owned by Europe's No. 2 copper miner KGHM and 45 percent by Japan's Sumitomo Metal Mining Co Ltd, kicked off operations late last year. It is slated to produce 120,000 tonnes of copper annually by the end of its first ramp-up phase in 2015.
Reporting by Fabian Cambero; Writing by Anthony Esposito; Editing by Alden Bentley and Bernadette Baum