Freeport-McMoRan Copper & Gold Inc., the biggest publicly traded copper producer, agreed to increase the wages of its Indonesian workers, ending a three-month strike that crippled output at the Grasberg mine.
PT Freeport Indonesia employees will receive a 24 percent increase in the first year of the new wage agreement and another 13 percent in the second year, Phoenix-based Freeport said in a statement today. The company is also improving benefits and will pay a one-time bonus equivalent to three months of base wages.
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, raised concern it may widen a global metal deficit and boost prices.
Milling operations are restarting at Grasberg, the company said. Shipments of concentrate will be “limited” until full operations are restored, probably by early 2012, Freeport said.
The company cut its fourth-quarter sales forecast to about 800 million pounds of copper and 105,000 ounces of gold, from an Oct. 19 projection of 915 million pounds and 305,000 ounces respectively.
The workers will resume work on Dec. 17, said Virgo Solossa, head of organizational affairs at the labor union.
“We’ll start mobilizing workers on Saturday after we sign the agreement,” Solossa said by telephone from Timika, the town closest to Grasberg.
The current monthly wages range from 3.3 million rupiah ($360) to 5.7 million rupiah, he said.
Freeport declined 0.9 percent to $37.44 in New York. The shares have fallen 38 percent this year.
Milling, the processing of ore to prepare it for shipment to smelters, was suspended at Grasberg after concentrate pipelines were damaged during protests related to the strike, Freeport said Nov. 1. 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 at the time.
Pipeline repairs are “substantially complete,” Freeport said today.
Copper for March delivery retreated 4.9 percent to $3.2715 a pound at 4:22 p.m. on the Comex in New York.
Force majeure is a legal clause exempting a company from fulfilling contracts.