January 10, 2017 / 9:37 PM / 2 years ago

UPDATE 2-Operations at Yamana gold mine in Chile suspended late last week

(Adds quote from union leader, paragraph 8)

By Anthony Esposito and Antonio De la Jara

SANTIAGO, Jan 10 (Reuters) - Operations at Canadian miner Yamana Gold Inc’s El Peñón mine in Chile have been suspended for five days after one of its two unions representing underground workers went on strike and blockaded access to the mine, a union leader said on Tuesday.

Workers affiliated with union No. 2 at the mine in Chile’s arid north rejected the company’s final offer, downed tools and blocked access to El Peñón, the union president, Eduardo Puelles, told Reuters.

The strike started seven days ago. Two days after that, workers blocked the access roads, said Puelles, whose union represents 500 workers.

El Peñón is Yamana’s second biggest gold mine by output. It produced 164,445 ounces of gold in the first nine months of 2016, equal to about 17 percent of the company’s gold output.

“The company wants to cut benefits we already got in prior negotiations, so we cut access roads to the mine five days ago ... operations are completely suspended,” said Puelles.

Union No. 2 asked for an 8 percent pay increase and other benefits, but the company was only willing to offer a 2 percent salary increase, he added.

Yamana’s final offer took into account current commodity prices, the production and cost outlook for the mine and recent collective bargaining settlements at other mines in Chile, Yamana said in a statement late on Monday.

“It’s true that copper prices have seen its ups and downs, but this mine produces gold and silver and those prices have been more stable, they have remained near their average of the last few years,” Puelles said.

The gold price, which rose sharply in the first half of last year, has fallen about 10 percent in the past four months.

The other union at El Peñón will begin government-mediated talks with the company on Thursday, the last chance for both sides to reach a deal before those workers can legally strike.

Puelles said that if those talks fail, “they will join us in the strike.”

Representatives at the other union were not immediately available to comment.

Yamana said on Monday that striking workers had been picketing and damaged some equipment.

Asked if further talks with the unions were planned, a company spokesman said Yamana was “committed to reaching a resolution.”

The Toronto-based company also said it had reached collective bargaining agreements with workers at its Minera Florida operation, also in Chile, and that the mine and plant were operating at full capacity.

Shares in Yamana finished 0.72 percent higher at C$4.22 on the Toronto Stock Exchange, in line with other gold stocks. (Additional reporting by Nicole Mordant in Vancouver; Editing by David Gregorio and Peter Cooney)

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