Freeport Grasberg Workers Set for One-Month Strike, Union Says
Workers at Freeport-McMoRan Copper & Gold Inc. (FCX)’s Grasberg mine in Indonesia will proceed with a planned one-month strike starting at midnight because of continued disagreement over pay, a union official said.
PT Freeport Indonesia and Grasberg’s labor union held two meetings in the past week but failed to agree on wage increases, said Virgo Solossa, head of organizational affairs at the labor union. Grasberg is located in Mimika, Papua province, 1,940 miles (3,120 kilometers) east of Jakarta.
“We don’t see any sincerity from the company on resolving the pay issue and coming up with a new offer,” Solossa said by telephone today from Timika, the closest town to the mine. “We’ve obtained permits from the regent and chief of police for the strike.”
About 8,000 non-staff workers at Grasberg’s production, delivery and mining divisions will put down tools at midnight, Solossa said.
Freeport and Grasberg’s labor union ended 38 days of talks over 2011-2013 contract terms on Aug. 26 after failing to agree on wages. Negotiations started after the workers walked off from their jobs for eight days in July. Employees at Freeport’s Peruvian unit also plan to proceed with a strike today after talks on pay broke down.
A strike at Grasberg and in Peru can potentially widen a global production shortfall of copper estimated at 670,000 metric tons this year by Barclays Capital and boost prices of the metal in London that have fallen more than 14 percent from a record $10,190 a ton on Feb. 15.
Grasberg Workers
Copper for three-month delivery fell 0.2 percent to $8,749.75 a ton on the London Metal Exchange at 10:09 a.m. Jakarta time.
“The management expects the workers to cancel the strike plan and return to the negotiation table because the law gives them room to continue negotiation,” Ramdani Sirait, a Jakarta- based spokesman at Freeport, said in a text-message. He declined to comment on the impact of the strike on production and sales.
The workers still expect wages to increase to between $17.50 and $43 an hour from $1.50 to $3.50, Solossa said today. The union cut their expectations from $35 to $200 an hour initially, he said Aug. 26. Freeport offered a compensation package that includes an increase in basic wages for non-staff employees of 22 percent over a two-year period, Sirait said on Sept. 5.
Grasberg, where operations started in 1990, contains the world’s largest recoverable reserves of copper and the biggest gold reserves, according to Freeport’s website. 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 the website. Gold output declined to 1.79 million ounces (50,745 kilograms) from 2.57 million ounces.
To contact the reporters on this story: Eko Listiyorini in Jakarta at elistiyorini@bloomberg.net; 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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