SANTIAGO, Aug 13 (Reuters) - Mining giant BHP

said on Tuesday it had started removing workers on strike at its

Escondida copper mine in Chile, deepening tensions at the site

after a powerful union rejected the company's latest invitation

for talks on pay.

The strike at the world's largest copper mine was declared

hours earlier after negotiations collapsed and could lead to a

major hit to production.

"After a new invitation from the company to reach an

agreement, Union No. 1 declined to restart talks," BHP said in a

statement, referring to the labor group that represents about

2,400 people.

Escondida, which produced 1.1 million metric tons of

copper last year, said the mine was continuing to operate but

did not specify how much operations had been scaled down.

BHP said it began removing striking workers when it

activated a contingency plan that allows for "minimum services"

and for non-union members to keep working.

Mines typically have plans to reduce operations without

affecting facilities or equipment.

Workers walked out as they demanded a bigger slice of copper

profits, which have been buoyed by recent high prices.

The union maintains it is willing to return to

negotiations, and accused BHP of violating strike terms by

replacing workers who walked out, who it said were essential to

basic operations.

"We demand the company immediately end this grave anti-union

practice," the union said in a statement.

The strike, after the union encouraged members to reject

BHP's offer, has stirred up memories of the last major Escondida

walkout in 2017, which hit BHP's copper production and pushed up

global prices of the metal, which is used to make wiring and

nearly every single electronic device.

Analysts said the market was so far staying calm, with hopes

for a quick resolution and weaker demand from top copper

consumer China dampening the impact. BHP's U.S.-listed shares

edged down and copper futures were stable.

"The market is taking it in its stride," said Chris

LaFemina, a metals and mining analyst at Jefferies, though he

flagged the potential for the strike to encourage other labor

disputes in Chile.

"If you get a series of mine disruptions, that can have an

impact on the market."

London-listed shares of BHP and copper prices

each fell less than 1% on Tuesday.

Workers from one of three unions at Lundin Mining's ( LUNMF )

Caserones copper mine in Chile also went on strike on Tuesday

over failed pay negotiations.

While the Escondida strike is unlikely to affect Caserones,

the outcome could influence future negotiations at other mines,

said Benchmark Mineral Intelligence, a UK-based provider of

critical minerals pricing and data.

They also noted that Escondida processes 400,000 tons of ore

a day, a pipeline that could be disrupted shortly after workers

walk out.

BHP offered a $28,900 bonus per worker, compared with the

union's demand of 1% of shareholder dividends for the mine,

which would amount to roughly $36,000.

"We made every responsible effort to reach an agreement, but

that wasn't possible," the union said in a statement ahead of

the strike's start at 8 a.m. (1200 GMT).

FOUR PROPOSALS

BHP defended its contract as one of the best in the

industry, and said it had offered four proposals in response to

points raised by the union. The labor group "on the last day of

mediation presented new requirements," BHP said in a statement.

BHP, one of the world's biggest miners, owns more than half

of Escondida in northern Chile, along with Rio Tinto and

JECO Corp.

Rio Tinto declined to comment. Representatives for

Mitsubishi ( MSBHF ), the controlling shareholder in JECO, were not

immediately available.

Some 60% to 70% of Escondida's copper concentrates are

shipped to China, a source with knowledge of the matter said. A

cutoff of Escondida concentrates could hit supply chains of

Chinese smelters, which produce half the world's refined copper.

Union President Patricio Tapia told Reuters previously that

a strike would see BHP unable to produce copper, because

replacement workers are prohibited by law.

Along with seeking higher pay, the union, which has

repeatedly clashed with BHP, is pressing for better conditions

for workers who lose their jobs due to outsourcing and

automation as well as health benefits, bonuses and more.