Bloomberg News

Freeport, Workers Fail to Resume Talks as Pay Offer Rejected

October 01, 2011

Oct. 1 (Bloomberg) -- Freeport-McMoRan Copper & Gold Inc. and its labor union in Indonesia failed to resume talks to end a strike at the company’s Grasberg mine in Papua as workers turned down a government-proposed salary increase.

Freeport’s condition for talks to resume was for workers to accept the government’s offer, Virgo Solossa, head of organizational affairs at the labor union, said by telephone today. The government proposed a 25 percent salary increase, compared with Freeport’s offer of 22 percent, Solossa said. Ramdani Sirait, a Jakarta-based spokesman at Freeport, didn’t return two calls to his mobile phone.

“Under the labor law, the salary structure should be based on inflation or the ability and condition of the company,” Solossa said. “The government refers to the mining industry to maintain the average rate, and that’s not what the law says.”

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 metal deficit and boost prices.

About 8,000 employees, or 70 percent of the Freeport workforce at Grasberg, started a stoppage on Sept. 15. The workers initially sought a raise to $35 to $200 an hour from the current $1.50 to $3.50. Freeport offered a compensation package that includes basic payment increase of 22 percent over a two- year period, Freeport’s Sirait said Sept. 5.

--Editors: Terje Langeland, John Chacko

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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