Sept. 26 (Bloomberg) -- Workers at Freeport-McMoRan Copper & Gold Inc. (FCX) in Indonesia withdrew from government-brokered talks that failed to bring agreement on wages at the company’s Grasberg mine, where a strike continues, a union official said.
About 8,000 employees, or 70 percent of Freeport’s workforce at Grasberg excluding contractors, walked out on Sept. 15 to demand wage rises. Labor negotiators returned to Papua on Sept. 23 after three days of mediation in Jakarta led by the manpower ministry, said Virgo Solossa, head of organizational affairs at the union.
“Freeport management is disappointed that the union declined to proceed with the mediation,” Ramdani Sirait, a Jakarta-based spokesman at PT Freeport Indonesia, said in a text message today. Freeport is committed to continuing talks to reach agreement on a 2011-2013 contract, he said.
Workers in Peru, Chile, Bolivia and Indonesia have gone on strike at copper, gold and zinc mines this year, seeking improved conditions and a bigger slice of record profits after metal prices more than doubled since the end of 2008. The Freeport strike has raised concern it may widen a global copper deficit and boost prices. The mine has the world’s largest recoverable reserves of the metal used in electrical wire, according to Phoenix-based Freeport’s website.
“Mediation has failed and at the moment we don’t see any point to return to the negotiation table if the management doesn’t change their offer,” Solossa said by telephone from Timika, the town closest to Grasberg. “We will continue with the strike as planned and there’s a possibility to extend it further if there’s no agreement by Oct. 15.”
About 1,000 workers will rally tomorrow in Timika and the rest will stay at Kuala Kencana square outside the town, Solossa said.
Freeport and the union at Grasberg 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 their jobs for eight days in July. The mine is located in Papua province, 1,940 miles (3,120 kilometers) east of Jakarta.
Freeport will lose 3 million pounds (1,361 metric tons) of copper and 5,000 ounces of gold a day because of the strike, the Phoenix-based company said Sept. 21. Indonesia’s government estimated a potential loss of 230,000 tons of ore a day.
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 Freeport’s website. Gold output declined to 1.79 million ounces from 2.57 million ounces.