A strike at the Escondida copper mine in Chile could spark copycat action across the mining sector as workers seek a bigger share of their employers' record earnings, Fitch Ratings said.

The Escondida mine is owned 57.5 pct by BHP Billiton PLC, with Rio Tinto PLC holding 30 pct and the Mitsubishi Corp-led Japanese consortium owning 10 pct.

'It would appear that mine workers are seeing the record profits generated by the large mining companies and are demanding a bigger slice of the pie,' said Peter Archbold in the Fitch report.

Yesterday, BHP Billiton posted a record full-year net profit of 10.45 bln usd, as it benefited from booming demand for commodities driven by growth in China.

The price of copper has almost doubled this year and reached a record 8,800 usd a tonne on May 11. Today, it stood at 7,680.00/tonne on the London Metal Exchange.

While strikes have affected mining companies in all mineral segments, the copper sector seems to have been affected more than most, Fitch said. Other producers of copper will be closely monitoring the outcome of negotiations at Escondida, Fitch said.

The miners' union there has now scaled down its demand from a 13 pct pay raise and a 30,000 usd bonus linked to record copper prices to an 8 pct raise and a 19,000 usd bonus. The company says it will not budge from its offer of a 4.0 pct raise and 18,000 usd bonus.

Fitch said several other major copper producers, including the world's largest player, Codelco, are understood to be renegotiating labour contracts over the next few months. This makes further industrial action likely to result, it added.

Despite their current record profits, the cyclical nature of the mining industry means that mining companies are reluctant to lock in wage rates that may not be sustainable in the next industry downturn, it added.

In the past couple of years, mining companies have suffered rising energy prices and shortages of virtually every type of mining equipment and supplies, but in recent months, there has also been an increasing number of pay-related work stoppages at mines worldwide, Fitch said.

Strikes have the potential to affect the financial profile of mining companies significantly, said the rating agency. The Escondida strike is unlikely to have a material impact on the credit profiles of BHP and Rio Tinto, given their scale, operational diversity and strong financial resources, Fitch said. For single-operation companies, though, the impact of industrial action could clearly be more significant, it added.