Antofagasta signs deal in Chile to end protests at mine

(Adds comments from protest leaders)

By Fabian Cambero

SANTIAGO, May 18 (Reuters) - Antofagasta (Other OTC: ANFGF - news) said on Wednesday it had signed an accord with a community that has long-opposed the tailings dam at its Los Pelambres flagship copper mine in Chile to bring their protests to an end, but not all the protesters said they were on board.

Residents of the small town of Caimanes in central Chile have blamed the dam for drying up the local river valley. They took Antofagasta to court and blockaded roads in a case that has threatened work at one of the world's biggest copper mines.

The case has been emblematic of the challenges facing Chile, a leading copper producer, as communities and mining try to coexist and vie for shrinking water resources after years of drought.

The deal, reached with representatives of Caimanes, "addresses certain requirements set down by courts in Chile and will see Los Pelambres invest in future water supply solutions, safety measures, community development projects and compensation," company Chairman Jean-Paul Luksic told shareholders at the annual general meeting in London.

One protest leader, Juan Olivares, told Reuters that "the community decided in meetings that it would be best to make progress" on a deal. "We have to learn to live together," he said.

However, other protest leaders said that not everyone in the community had agreed to the deal, and litigation to have the dam demolished will continue.

"The company has promised a solution with a payment ... but that doesn't resolve our problems," said Cristian Flores.

Another community leader, Alvaro Badillo, said: "The community is split ... This agreement does not stop the legal action in any way."

An Antofagasta spokesman said that around 81 percent of the community had already signed the agreement, and that number would likely rise. However, the court action did not form part of the deal, he said.

Antofagasta, which is majority owned by Chile's wealthy Luksic family, produced 630,300 tonnes of copper last year, more than half of which came from Los Pelambres. The company is seeking permits to expand the mine and build a desalination plant. (Reporting by Fabian Cambero, Writing by Rosalba O'Brien; Editing by Lisa Von Ahn and Alan Crosby)