July 9 (Bloomberg) -- A union at Dona Ines de Collahuasi, Chile's third-largest copper mine, plans to begin a strike over wages today, adding to labor unrest in Latin America that may curb global supplies of the metal and drive prices higher.

``The strike is definitely on,'' union President Hernan Farias said yesterday. The walkout is set to start at 8 a.m. local time at the mine, which accounts for 2.6 percent of global supply, Ferias said. The planned stoppage follows more than a month of talks with owners Xstrata Plc and Anglo American Plc.

Latin American workers are seeking higher wages and improved conditions as rising metal prices have boosted company profits. Contract miners at Chile's Codelco, the world's biggest copper producer, have been on strike since June 25.

``If this goes on it will definitely be supportive of higher prices,'' Cheng Xiongfei, a senior analyst at Minmetals Star Futures Co. in Shenzhen, said today. ``The wage talks this time have dragged on for much longer because they are negotiating long-term contracts.''

Copper for delivery in three months on the London Metal Exchange gained $70, or 0.9 percent, to $7,930 a metric ton at 3:42 a.m. Santiago time. The contract, which last traded above $8,000 a ton on May 10, has gained 6.1 percent since June 25, when Codelco's contract workers first walked out.

`Higher Prices'

``The strikes can potentially act as a trigger for a push above $8,000'' a ton, said Wang Zheng, an analyst at Fubao Metal Co. in Shanghai. The strikes ``may force more shorts to cover,'' said Wang, referring to investors who had bet that prices would fall, buying back copper contracts to cover their positions.

Copper for September delivery on the Comex division of the New York Mercantile Exchange rose as much as 3.7 cents, or 1 percent, to $3.6315 a pound, the highest level since May 10. The contract traded at $3.6225 a pound at 3:41 a.m. Santiago time.

Mexican mine workers went on strike July 5 at Grupo Mexico SAB, the world's seventh-largest producer of copper, which is used to make pipes and wires. In Peru, about 110,000 miners may walk off the job from tomorrow for a two-day strike to protest companies' efforts to restrict the creation of new unions, the Mining Federation, an umbrella group for mine workers, has said.

At Collahuasi, the management's proposal on July 6 to increase wages by 4 percentage points above inflation was too low, said Farias, the union president. A spokesman for the mine didn't return a call yesterday seeking comment.

The mine is forecast to produce 433,000 metric tons of copper this year, the state-run Chilean Copper Commission said in April. Xstrata, based in Zug, Switzerland, and London-based Anglo American each own 44 percent of Collahuasi. A group led by Tokyo-based Mitsui & Co. owns the rest.

Stockpiles Decline

``Stockpiles fell consistently last week and people are concerned there won't be enough to go around,'' said Feng Baojun, an analyst at GF Futures Co. in Guangzhou, said today.

Inventories of copper tracked by commodity exchanges in London, New York and Shanghai shrank 7.4 percent last week to 208,636 metric tons, the equivalent of five days of global use.

``The possibility of supply problems due to industrial disputation remains a significant concern,'' David Thurtell, an analyst at BNP Paribas, said in a quarterly report e-mailed today. ``With stocks still relatively low in historical terms, a prolonged strike could quickly erode stocks.''

Global copper consumption will exceed output by 237,000 tons this year, London-based metals consulting company Bloomsbury Minerals Economics said in a report on July 6. That compares with a 54,000 ton surplus last year, the company said.

Ten of 18 people surveyed by Bloomberg News on July 5 and July 4 forecast that copper prices will climb this week. Five expected a decline, and three were neutral.

To contact the reporters on this story: Heather Walsh in Santiago at hlwalsh@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

Last Updated: July 9, 2007 04:05 EDT