Strike at Bolivia silver mine drags, markets calm

* Union continues indefinite strike, talks yet to begin

* Workers ask gov’t to intervene in negotiations

* Impact on silver market seen extremely muted – analyst

LA PAZ, March 31 (Reuters) – A nine-day-old strike at
Bolivia’s largest silver mine continued to halt output and
exports on Thursday with no talks in sight, but the dispute was
seen having little impact on prices for the precious metal.

Bolivia’s San Cristobal is the world’s third-largest silver
producer and the sixth-largest producer of zinc, according to
Japan’s Sumitomo Corp (8053.T: Quote, Profile, Research), which owns the mine.

Union members are demanding better working conditions and
the firing of several company officials as well as improved
medical services at the mine’s remote location after the death
of a miner in early March.

“Nothing has changed. We haven’t begun talks yet,” a San
Cristobal spokesman told Reuters.

San Cristobal, some 13,000 feet (4,000 meters) high in the
Andes in Bolivia’s central Potosi region, produced some 620,000
kilograms of fine silver in 2009, according to official data.

But Suki Cooper, a precious metals analyst at Barclays
Capital, said the mine would have to be shut down for months to
have a significant impact on markets.

“Silver remains the precious metal most detached from its
fundamentals, and is still in surplus,” Cooper said. “If the
mine was off line for a year we would then see the first year
silver production hasn’t hit a record high since 2003.”

Silver gained 22 percent in the first quarter, taking the
price to 31-year highs above $37.00 an ounce (XAG=: Quote, Profile, Research) — buoyed
by global economic growth, geopolitical risk and demand from
investors seeking a safe-haven alternative that is cheaper than
gold. [ID:nLDE72U15O]

Demand has been great from exchange-traded funds (ETFs),
which back each security issued with physical stocks of a given
commodity.

“If the investment demand slows down, then we believe the
mine closure would become more important,” Cooper said.

Although the government of leftist President Evo Morales
has kept from intervening in the strike, it has asked company
managers to promptly resolve the conflict, which costs the
state almost $400,000 per day in lost tax and royalty revenue.

Union leader Cesar Lugo said “workers hope the government
will intervene to force the company to engage in talks without
setting any preconditions.”

Lugo said earlier this week the mine still had a
“significant quantity” of mineral concentrates stored on site,
but he said exports via Chilean ports were paralyzed because
strikers were blocking the mine’s entrance.

Labor disputes are common in mineral-rich Bolivia, a
significant global exporter of zinc, silver, tin and lead.

A strike last year paralyzed several mines for almost three
weeks, including San Cristobal and Coeur D’Alene’s (CDE.N: Quote, Profile, Research) San
Bartolome, the world’s largest pure silver mine.
[ID:nN1674419]
(For a Factbox on Bolivia’s largest mines, click on:
[ID:nN30167493])
(Reporting by Carlos Quiroga and Claudia Soruco; Additional
reporting by Eduardo Garcia in Buenos Aires; Writing by Luis
Andres Henao; Editing by Hilary Burke and Marguerita Choy)

Strike at Bolivia silver mine drags, markets calm