Workers at BHP Billiton’s Cerro Colorado copper mine in Chile have launched an indefinite strike following a breakdown in contract negotiations.

Reuters reported a union official and the company saying that a new wage agreement concluded without agreement last week.

The union rejected the latest offer of a 1% wage increase by BHP Billiton, which represents nearly 700 people working at Cerro Colorado.

Following the strike announcement, all operations at the open-pit mine have come to a halt.

"Production is completely paralysed."

The union said in a statement that workers were ‘camped out on the road leading to the mine during the first hours of the strike and the production is completely paralysed’.

Located 125km east of the port of Iquique, the mine is wholly owned by BHP Billiton and has capacity to produce 80,000t / year of copper cathode through leaching and electro-winning.

Chilean state copper commission Cochilco said that Cerro Colorado produced 55,600t of copper from January to September 2015.

BHP Billiton said in a statement: "The company deeply regrets the decision of the workers, as the proposal made every effort to reach a mutually beneficial agreement that would ensure the sustainability of Cerro Colorado."

Commercial production at the mine started in mid-1994, with expansion following in 1995 and 1998 to increase its crushing capacity, leach pad area and mine fleet.

After these expansions, production at the mine was increased to 100,000t per year.