Bloomberg News

Freeport Strikers to Rally After Government-Led Talks Stall

September 26, 2011

Sept. 26 (Bloomberg) -- Workers at Freeport-McMoRan Copper & Gold Inc. in Indonesia’s Grasberg mine will rally on Sept. 29 after failing to agree on pay increases in government-brokered talks last week, as the strike continues, a union official said.

About half of 8,000 non-staff workers at Grasberg in Papua province, who have walked out of jobs since Sept. 15, will join the protest, said Virgo Solossa, head of organizational affairs at PT Freeport Indonesia’s labor union.

Workers in Peru, Chile, Bolivia and Indonesia have gone on strike at copper, gold and zinc mines this year, seeking improved conditions and a bigger slice of record profits after metal prices more than doubled since the end of 2008. The strike at Grasberg, which has the world’s largest recoverable reserves of copper, has raised concern it may widen a global deficit and boost prices.

“We have conducted a peaceful stoppage in the 12 days of strike, but the management doesn’t appreciate that and has declared that our activity is illegal,” Solossa said in a telephone interview from Timika, the closest town to Grasberg. “We want to show that we remain solid and will question the ‘no work no pay’ note from management as well as sanctions against several strikers, to the manpower office in the rally.”

Freeport, based in Phoenix, will uphold its legal right not to pay employees on a day where workers do not report to work, Freeport Indonesia said in an internal newsletter posted on its website dated Sept. 22. The right is stated in the 2003 labor law, Ramdani Sirait, a Jakarta-based spokesman at Freeport, said in a mobile-phone text message today.

Freeport and the union at Grasberg ended 38 days of talks over 2011-2013 contract terms on Aug. 26 after failing to agree on wages. Negotiations started after the workers put down tools for eight days in July. The mine is located in Papua province, 1,940 miles (3,120 kilometers) east of Jakarta.

Estimated Loss

Three-month delivery copper declined 4.6 percent to $7,020 a ton on the London Metal Exchange at 3:03 p.m. Jakarta time. The metal fell as much as 7.6 percent earlier.

Freeport will lose 3 million pounds (1,361 metric tons) of copper and 5,000 ounces of gold a day because of the strike, the Phoenix-based company said Sept. 21. Indonesia’s government estimated a potential loss of 230,000 tons of ore a day.

Copper production at the mine fell to 1.22 billion pounds (553.4 million kilograms) last year from 1.41 billion pounds in 2009, according to Freeport’s website. Gold output declined to 1.79 million ounces from 2.57 million ounces.

Grasberg workers are seeking an increase in wages to between $17.50 and $43 an hour from $1.50 to $3.50, Solossa said Sept. 14. The union had initially sought a raise of $35 to $200 an hour. Freeport offered a compensation package that includes an increase in basic wages of 22 percent over a two-year period, Sirait said on Sept. 5.

--Editor: Greg Ahlstrand

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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