The price of copper moved towards $6,000 a tonne on Tuesday as traders bet that workers at the giant Escondida mine in Chile would reject a pay deal and go on strike.

Copper for three month delivery on the London Metal Exchange advanced $138 to $5,989 a tonne amid claims from union representatives that miners were voting against the offer made by Escondida’s owner BHP Billiton.

Escondida is the world’s biggest copper mine and a prolonged stoppage could have a significant impact on the market, according to analysts.

The last time workers went on strike in 2011 it sent shockwaves through the industry. During a two-week stoppage 40,000 tonnes of copper supply was lost. A similar level of disruption is forecast this time if miners down tools.

“At [current] anticipated production, we estimate that 3,400 tones of output would be lost for each day of stoppage,” said Nicholas Snowdon analyst at Standard Chartered, noting the longest strike at Escondida was in 2006 and lasted 25 days.

However, industrial action is a not a foregone conclusion. BHP has 48 hours to request government mediation if it looks likely workers will reject its offer.

That would lead to further a five days of talks with the possibility of an extension.

The unions are calling for the same benefits achieved in the last wage negotiation, notably a $49,000 bonus. BHP, however, says pay deals must reflect the current reality of the industry.

Escondida is controlled and operated by BHP through a 57.5 per cent stake. A further 30 per cent is owned by Rio Tinto and the rest by Japanese investors.

The impact of strike action at Escondida could, however, be tempered by a pick-up in supplies from Indonesia, said traders.

Freeport–McMoran, the world’s biggest publicly listed copper producer, was forced to halt exports from its Grasberg mine in the country earlier this month after new mining law came into force.

But on Tuesday, officials in Jakarta said Freeport would be allowed to resume shipments while it negotiates converting its existing contract to a new mining licence.

“A temporary export permit would help Freeport’s near term cash flow but be a mild negative for the copper price,” said Christopher LaFemina, analyst at Jefferies.

Indonesia wants all foreign companies to a sign a new mining licence, commit to building smelters and agree to sell a 51 per cent stake in their mines to local owners.

Freeport is unwilling to convert its contract of work to a new operating licence unless it can get the same level of legal and fiscal certainty it has under its existing agreement.

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