PT Freeport Indonesia is negotiating a two-year extension of its bi-annual Collective Labor Agreement that is scheduled for renewal on September 30, 2011. On September 15, 2011, the union workforce at the Grasberg mine in Papua, Indonesia, which includes approximately 8,000 hourly employees, commenced a 30-day strike. There is no legal basis for the strike under Indonesian law, according to the company.
In a statement, the Freeport McMORan Copper & Gold said Freeport Indonesia is committed to work in good faith with union leaders and representatives of the mediation team appointed by the Government of Indonesia to reach agreement on the new labor agreement and to restore normal operations. The compensation package being proposed is highly competitive and includes a substantial increase in base compensation, an enhanced bonus program, attractive retirement benefits and other benefits for the employees and their families.
The strike has limited mining, milling and concentrate shipping activities at the Grasberg mine. Approximately 50% of the workforce, primarily contractors and non-union staff employees, have reported to work and are maintaining critical operations so that full operations can resume quickly upon conclusion of the strike. Freeport Indonesia is developing revised operating plans, which will be implemented during the strike, to begin increasing mining and milling rates with a reduced workforce.
“The PT-FI management team continues to work diligently and constructively to reach agreement on a new labor agreement that is reasonable and fair to all parties. In 2010, the contribution from Grasberg to the Government of Indonesia and the local community, including taxes and domestic wages and procurement totaled more than $3.8 billion. We are committed to maintaining an attractive work environment for our employees and look forward to concluding the negotiations on a mutually agreed basis as soon as possible,” said James R. Moffett, chairman of the board, and Richard C. Adkerson, president and CEO.
The estimated impact of the work stoppage to aggregate daily production, including joint venture interests, is approximately 3 million lb of copper and 5,000 oz of gold for each day of the work stoppage. PT-FI is seeking to minimize the production and cost impacts associated with the strike.