Antofagasta signs community deal in Chile, ending mine legal battle

SANTIAGO, May 18 (Reuters) - Chilean copper miner Antofagasta (Other OTC: ANFGF - news) said on Wednesday it signed an agreement with a local community that has long opposed the tailings dam at its Los Pelambres flagship mine, ending protests and a legal battle that sought to have the dam demolished.

Residents of the small town of Caimanes in central Chile (Stuttgart: 704599.SG - news) had blamed the dam for drying up the local river valley, taking Antofagasta to court and blockading roads in a case that threatened work at one of the world's biggest mines.

The company has reached agreement with representatives of Caimanes, chairman Jean-Paul Luksic told shareholders at the annual general meeting in London.

The deal "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," Luksic said, without giving further details.

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

Antofagasta, majority owned by Chile's wealthy Luksic family, produced 630,300 tonnes of copper last year, over half of which came from Los Pelambres. The company is seeking permits to expand the mine and build a desalination plant.

(Reporting by Rosalba O'Brien and Fabian Cambero; Editing by Meredith Mazzilli)