News: RIO UPDATE 1-BHP's Escondida talks to striking union, eyes new offer -source

(Adds union comment, details on source comments, background)

Chile's Escondida copper mine, the largest in the world, has had a preliminary conversation with its union as a first step towards ending a month-long strike, a source with knowledge of the situation told Reuters Friday.

Escondida, controlled by BHP Billiton (BHP), is preparing a new contract offer that seeks to address some of the concerns of the union, the source said, without giving details on the fresh offer.

However, union spokesman Carlos Allendes said the company had not yet been in contact with the union.

The strike, which began Feb.9 and has lasted for 30 days, is the longest in Escondida's history. With stoppages also in place at other important copper mines worldwide, global copper prices CMCU3 have risen on tighter supply expectations.

Legally, workers can break from the union stance and individually agree to accept the existing company offer after 30 days. The company already has the legal right to use temporary replacement workers, but has previously said it would not exercise that right for the first 30 days, as it seeks to keep a lid on simmering tensions.

The company flagged earlier this week that it might begin to use temporary labor after the 30 day deadline, making the decision on a day-to-day basis.

However, the source said Friday that Escondida had no current plans to begin replacing the around 2,500 unionized workers.

The strikers remained determined to push for a good deal, Allendes said, and were unlikely to jump ship and take the company offer.

Escondida produced over 1 million tonnes of copper last year, around 5 percent of the world's total, and economists are expecting an impact to Chile's economy in February as a result of the strike, which has meant that no copper is leaving the site.

Contract talks collapsed after the union and company disagreed on a number of points, including the treatment of new workers, changes to shift patterns, and the level of a one-off bonus.

A government-mediated attempt to bring the two sides together last month ended in failure after just a few hours, and there has been no concrete sign since of a rapprochement, although both have repeatedly said that they are open to returning to the table.

BHP declined to comment, but reiterated its desire to return to talks.

Escondida is majority-controlled by BHP. Rio Tinto (RIO) and Japanese companies including Mitsubishi Corp <8058.T> hold minority interests.