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* Workers demand 66 percent pay hike
* Plant to operate at 65 pct capacity
* Government advises workers to return to site on Tuesday
May 14 (Reuters) - Australian uranium miner Paladin Energy Ltd said most local employees at its Kayelekera mine in Malawi, southeast Africa, went on strike on Friday demanding higher pay.
Production was shut down for 22 hours and restarted midday on Saturday, said Paladin, which also mines uranium in Namibia.
The plant is expected to operate at about 65 percent capacity until the employees return to work, the company said in a statement.
The workers are demanding a 66 percent pay hike following the recent 50 percent devaluation of the national currency by the government of Malawi, the company said.
Paladin, which in January maintained its full-year production forecast of 7.4 million to 7.9 million pounds, said the Kayelekera mine produced 632,000 pounds in the October-December quarter, up 60 percent from the previous quarter.
"While it will have some impact on the company's total annual production results, we do not believe this will be significant if our national employees heed the advice of government officials and return to work on May 15," Chief Executive John Borshoff said.
Expatriate workers, contract staff and some other local employees remained at or have returned to work, the company said.