About 3,200 unionized workers at Codelco’s Chuquicamata copper mine in Chile downed tools on Friday after failing to reach a deal with the company, the world’s largest copper producer.

The state-owned miner’s final offer, put forward on Wednesday, included a 1.2% salary rise and a one-time benefits package, worth around $20,000, but didn’t address issues related to medical expenses, pensions and fair treatment of workers.

Codelco had said the contract proposed was the most “serious, responsible and realistic” it could make to avoid possible production disruption, in light of global copper supplies being  extremely tight this year.

The company is in the midst of a $5.6 billion project to turn century-old Chuquicamata, its second largest copper operation by size, into an underground mine.

The last blast at the bottom of the open pit was carried out in November, though copper extraction goes on. The company has said it plans to gradually decrease activities

Chuquicamata’s switch is part of Codelco’s 10-year, $39 billion-overhaul of its core assets, and is expected to extend the iconic mine’s life by at least 40 years. It will also allow the copper giant to keep up production rates, despite falling ore grades and increasing costs at its operations.

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