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* Recommends industry collaborate on driverless mining vehicles
* Challenges include lower quality ore, labor relations
By Barbara Lewis
SANTIAGO, April 4 (Reuters) - Chile's copper industry needs to adopt new technologies and improve labor and community relations to keep its global standing, a senior BHP Billiton executive said on Tuesday.
Chile, which accounts for 30 percent of the world's copper supply, is grappling with falling productivity because much of its best quality ore has already been mined.
"In Chile, mining is indispensable - we are one country with mining, and a different one without it," said Danny Malchuk, a Chilean who is president of operations at BHP's Minerals Americas.
In a speech to CRU World Copper Conference in Santiago, he said Chilean mining sector's "massive challenges" include relations with labor.
BHP is still smarting from a bruising battle with its union at Escondida, the world's biggest copper mine, after a 43-day strike which ended in late March and cost the company around $1 billion in losses.
Malchuk, who is based in Santiago, recommended Chile's mining companies collaborate to adopt driverless vehicles and other innovations and be open to employing technology from any manufacturer.
"If we don't take a proactive approach, the copper industry in Chile will reduce its global position in the next 25 years in line with the diminishing quality of our assets," he warned.
In addition, Malchuk called for public-private partnerships to work on issues such as training and relations with communities where mines are based and more diversity, which is a flagship policy for BHP.
The United States was the world's biggest copper producer until its ores declined in quality and Chile took over the number one position in 1982.
Malchuk said the United States still has a copper industry because it incorporated technology that boosted worker productivity and cut costs.
Copper accounts for more than half of Chile's exports.
The importance of the industry was underscored on Monday when the country's central bank said the Escondida strike would knock an entire percentage point off gross domestic product growth in the first quarter. (Reporting by Barbara Lewis Editing by W Simon)