June 24, 2013 / 4:17 PM / 4 years ago

UPDATE 1-Freeport ramping up output at Indonesia mine

* Open-pit production ramping up since Saturday, says
    * Union urges all workers to return to the Grasberg complex
    * Pay talks between Freeport and union resumed

    By Michael Taylor and Yayat Supriatna
    JAKARTA, June 24 (Reuters) - Freeport McMoRan Copper and
Gold Inc was ramping up production at its Indonesian
unit on Monday, a company spokeswoman said, six weeks after a
deadly tunnel collapse at the world's No. 2 copper mine halted
    The resumption of open-pit operations at the massive
Grasberg complex came earlier than expected, taking many copper
traders by surprise - though underground work remains halted
awaiting further inspections and approvals from authorities.
    The Arizona-based company did not provide an update on its
outlook for the year, but said the 38-day closure had affected
about 52,000 tonnes of copper production, or about 10 percent of
its total forecast sales in 2013.
    Shares were down 5.6 percent at $26.57 at midday on Monday,
in line with a broader slump among miners as copper fell to a
near three-year low on a firmer dollar and worries about slowing
demand from top consumer China. 
    Freeport stopped production at Grasberg in remote West Papua
on May 15, a day after a training area in a tunnel caved in,
killing 28 people.
    On Saturday, the company said it had slowly resumed open-pit
mining after receiving approval from the Indonesian government,
although underground production remained closed. 
    "We herewith confirm that we have started to ramp up
production since Saturday," Freeport Indonesia spokeswoman Daisy
Primayanti said in an email on Monday.  
    The restart came much earlier than the market expected,
taking traders and analysts by surprise.
    "We thought Grasberg would be out for at least three months,
maybe even six months," said one U.S. copper futures trader.
    The speedy reopening of one of the world's biggest mines
removes a major support to copper prices, which have been
relatively resilient to pressure across commodities in recent
weeks due to a series of production disruptions. It comes a week
after India's No. 1 smelter reopened after a two-month shutdown.
    Prior to the accident, Freeport had expected sales of some
500,000 tonnes of copper from its Indonesia unit in 2013, along
with 1.25 million ounces of gold. 
    The company estimated it lost 52,000 tonnes of copper and
115,000 ounces of gold during the suspension and continues to
lose about 450 tonnes per day of copper from the closure of its
underground operations.    
    Trade union workers at Grasberg were returning to work on
Monday, while postponed pay talks with the company have resumed,
a union official said. Freeport Indonesia employs about 24,000
workers, of which three-quarters belong to the union. 
    Previously, union officials had demanded that all probes
into the accident be completed before production was allowed to
resume, and that they wanted to evaluate the final investigation
report and see if Freeport implemented all recommendations.
    "Production activity at Grasberg open-pit mines have resumed
and workers are back working at the mining sites," Papua-based
union official Virgo Solossa told Reuters by telephone. "The
union encourages the workers to go back to work."
    The Freeport Indonesia management had not consulted the
union when asking workers to return to their duties, Solossa
said, adding that the government would be held accountable
should there be any further accidents at the mining site.
    The union successfully demanded the suspension of five
senior Freeport employees that it suspected bore responsibility
for the accident.
    Relations between Freeport and the union have been strained
in recent years, after a three-month strike in late 2011 and a
series of minor spats.
    After the May 14 tunnel collapse, the company and the union
put on hold pay negotiations that began on May 13 and were
forecast to last for up to 60 days. 
    "Union and management representatives have restarted
negotiations again," said Solossa, without giving further

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