Bloomberg News

Freeport Indonesia Agrees Wage Increase Deal to Avert Strike

October 22, 2013

Freeport-McMoRan Copper & Gold Inc. (FCX:US) agreed to increase wages for its Grasberg mine workers in Indonesia in a deal that will avoid a strike at the world’s second-largest copper mine.

PT Freeport Indonesia employees will receive 10 percent annual wage increases for the next two years, as well as higher pension and other benefits, said Juli Parorrongan, a spokesman for the workers union. Freeport Indonesia President Director Rozik B. Soetjipto and Sudiro, the head of the union who goes by only one name, signed the 2013-2015 labor agreement in Jakarta today.

The accord follows a threat last month by the union to strike if its demands were not met. Freeport Indonesia’s workers went on a three-month stoppage in 2011 that forced the company to shut operations at the mine in Papua province, driving up copper prices and hurting the company’s profits.

“We’re quite satisfied with this deal, that can be achieved without having to go through a strike or conflict,” Parorrongan said in an interview before the signing. “The management has shown goodwill in appreciating the employees.”

The labor agreement was reached after five months of negotiation, Soetjipto said. The union had sought a 20 percent annual wage increase for the next two years, Parorrongan said Sept. 19.

The talks came as unionized labor pushes for higher pay across Indonesia. Thousands of workers hit the streets of the Indonesian capital on Oct. 21, demanding the government increase minimum wages in Jakarta by 68 percent next year, according to the Jakarta Post, as rising inflation drives up living costs.

Freeport halted operations at Grasberg for more than a month after a tunnel collapse on May 14 killed 28 workers. Shipments resumed in July after the government allowed output to restart. Production may be 20 percent below this year’s target because of the stoppage, Soetjipto said in August.

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: Jason Rogers at jrogers73@bloomberg.net


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