Freeport-McMoRan Copper & Gold reported on December 14, 2011, that PT Freeport Indonesia (PT-FI) had reached terms with union officials for a two-year labor agreement. The strike that began September 15 (E&MJ, November 2011, p. 4) was officially over, and workers were expected to begin returning to work in a matter of days. However, as of December 27, news reports indicated that unresolved issues regarding rehiring of some workers were delaying a full return to normal operations.
Pursuant to the new labor agreement, PT-FI agreed to increase base wages by 24% in the first year and 13% in the second year of the agreement, equivalent to a 40% increase over two years on a compounded basis. In addition, PT-FI agreed to provide improved benefits, including enhancements to housing allowances, educational assistance and retirement savings plans. PT-FI also agreed to pay a one-time signing bonus equivalent to three months of base wages. The parties agreed that future wage negotiations would be based on living costs and the competitiveness of wages within Indonesia.
Milling operations at PT-FI’s Grasberg mine had been suspended since October 22, 2011, pending repairs to concentrate and fuel pipelines damaged as a result of civil unrest during the course of the strike. The repairs to the damaged pipelines were substantially complete as of mid-December, and PT-FI had begun to ramp-up milling operations. Shipments of concentrate were expected to be limited until full operations were restored.