SANTIAGO - Workers at two mines owned by Chile's Codelco company, the world's biggest copper mining concern, went on strike Monday demanding higher pay and better work benefits.

Miners at the Chuquicamata and Mina Sur mines, which together account for four percent of the world' s copper production, are calling for a 7.5 percent pay hike, as copper prices hit a 17-month peak Monday at more than 7,500 dollars per tonne.

Analysts said copper prices were sent higher by the strike, amid fears that market supply of the commodity will become tighter.

Both mines belong to the state-owned Chilean group Codelco, the National Copper Corporation of Chile, which produces around 1.6 million tonnes of copper per year and employs around 5,600 workers.

About a third of the unionized miners failed to show up when their shifts began at 5 am (0800 GMT) Monday.

Union leaders said 95 percent of the work force at the two mines joined the strike.

"From the start of the day we' ve been monitoring the general situation and it is peaceful," Codelco' s human resources chief Humberto Fernandois told reporters.

Some banners posted outside mining headquarters said: "All of Chile is benefiting from copper except Calama," referring to a town near Chuquicamata, the biggest open-pit copper mine in the world.

Codelco said it has contingency plans to cope with the strike, but offered no details. La Tercera daily said the company has enough copper reserves for 30 days and will be able to honor all its January contracts.

The government regretted the strike action in one of the treasury' s biggest revenue-generating sectors.

"We did everything possible to avoid it but it could not be done. This is not good for the country," said President Michelle Bachelet as the strike got under way.

Codelco said it was willing to continue negotiations with the strikers. "There' s room for a solution. Management is ready to talk today with union leaders," said Fernandois.

Codelco has been beset by strikes and other worker actions in recent years, which have forced concessions from the company.

Codelco could lose eight million dollars per day of strike action. It has proposed a 3.8 percent pay rise and a bonus.

The miners' demands for more concessions come as the price of copper, which fell significantly during the global economic crisis, has jumped in recent months amid renewed demand from China, the world' s largest copper consumer.

Copper prices have rocketed by more than 130 percent since the start of 2009, driven by signs of global economic recovery after the steep worldwide downturn.

Chile in 2008 had a copper output of some 5.3 million tonnes, and was estimated to have produced a similar amount in 2009, accounting for about one-third of global production.