Escondida, the world’s largest copper mine, has been hit with strike action from workers demanding a pay rise, with Goodyear conceding rising commodity prices are causing problems when it comes to wage negotiations.

The mine, which produces about 3500 tonnes of copper per day at full production, was shut down last week, but partial production resumed over the weekend after unions agreed to a fresh round of negotiations.

“We are seeing a significant rise in commodity prices, which as we approach wage negotiations, are certainly causing an issue as we try to work through those and come up with reasonable with regard to wages,” he said.

“They [Escondida] are running at something like 40% of their nameplate capacity in terms of production … I think in the BHP Billiton family on an absolute basis that is a significant number, on a relative basis to the BHP Billiton family it is still manageable within that.”

Elsewhere, Goodyear said the Ravensthorpe project was “under review”, with the $US1.8 billion ($A2.3 billion) nickel laterite operation facing its second capital increase.

“We do expect an increase in the estimated capital cost of Ravensthorpe of at least 30%, we would hopefully look to finalise that towards the end of the calendar year,” he said.

Ravensthorpe is more set to produce its first nickel in the second quarter of 2007, reaching its full production rate of 50,000 tonnes per annum in late 2008.