Bloomberg News

Freeport Indonesia Workers to End Strike on Wage Increase

December 14, 2011

(Updates with union comment in second paragraph.)

Dec. 14 (Bloomberg) -- Freeport-McMoRan Copper & Gold Inc. agreed to increase the wages of its Indonesian workers, ending a three-month strike that crippled production at the Grasberg mine, labor union officials said.

PT Freeport Indonesia employees will receive a 24 percent increase for 2011 and another 13 percent for 2012, union spokesman Juli Parorrongan said in a mobile-phone text message. The increase will be effective October this year, he said. The workers will resume work on Dec. 17, said Virgo Solossa, head of organizational affairs at the labor union.

About 8,000 workers at Grasberg, which holds the world’s largest recoverable reserves of copper, have been on strike since Sept. 15, demanding higher wages. The stoppage, which Freeport said on Oct. 26 forced it to declare force majeure on some shipments, has raised concern it may widen a global metal deficit and boost prices.

“We’ll start mobilizing workers on Saturday after we sign the agreement,” Solossa said today by telephone from Timika, the town closest to Grasberg.

The current monthly wages range from 3.3 million rupiah ($361) to 5.7 million rupiah, he said.

Ramdani Sirait, a Jakarta-based spokesman for Freeport, didn’t answer two calls and a text message to his mobile phone seeking comments.

Little Output

Grasberg is producing 5 percent of its daily 230,000 metric ton capacity because of the strike, Thamrin Sihite, director general of mineral and coal at the Energy and Mineral Resources Ministry, said Nov. 3. The mine is located in Papua about 3,120 kilometers (1,939 miles) east of capital Jakarta.

Phoenix-based Freeport said Nov. 1 it stopped milling operations at Grasberg since Oct. 22 because of damaged pipelines. Its Indonesian unit processed an average of about 120,000 tons of ore a day in October, 31 percent less than the daily rate planned for the fourth quarter, it said.

There have been no concentrate shipments from Freeport’s Indonesian unit since Oct. 22, Chief Executive Officer Richard Adkerson said on Nov. 16.

Three-month delivery copper fell 1 percent to $7,528 a ton on the London Metal Exchange at 2:40 p.m. Jakarta time.

--Editors: Indranil Ghosh, Rebecca Keenan

To contact the reporters on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net; Eko Listiyorini in Jakarta at elistiyorini@bloomberg.net

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


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