BHP deal meets Escondida mine workers needs- union

Mercado said the offer was "interesting" and that workers will decide on next week, marking a positive tone in negotiations.

"I think that in general terms the offer responds to the needs of our members," said Mercado, adding that around 600 workers voted for the proposal and more are expected to do so in different shifts in coming days. The union has around 2,250 members.

If the offer proves successful, the negotiation could set the tone for upcoming key labor negotiations in Chile, the world's No. 1 copper producer, and ease supply worries that have helped to nearly double the price of the industrial metal this year.

Collective contracts are due in mines that represent nearly a quarter of Chile's total output, raising the specter of world supply disruptions.

BHP spokesman in Chile, Mauro Valdes, told Reuters the "agreement is one of mutual benefit that mirrors the level of maturity labor relations have reached inside Escondida."

BHP has a majority stake in Escondida, which produced 1.25 million tonnes of copper in 2008, or 5 percent of the world's total copper output.

Another Escondida union leader told Reuters on Thursday workers are likely to approve an offer he dubbed as "historic" and avert a strike before the contract expires on Dec. 5.

BHP started early talks with top union officials to avoid a stoppage similar to the 25-day strike at the wake of the last contract negotiation in 2006 that hampered production and lifted world copper prices.

The company offered to a single wage hike of 5 percent over the 44-month contract plus quarterly inflation adjustments and bonuses and benefits worth around $25,000 per worker, the union source said.

The offer could set a high bar for other companies gearing up for collective contract negotiations.

Chilean state miner Codelco is scheduled to start collective contracts talks at its Andina copper mine later this month and with workers at its massive Chuquicamata mine in December.

(Reporting by Alonso Soto; Editing by Marguerita Choy)