Freeport-McMoRan Copper & Gold Inc. reported that PT Freeport Indonesia (PT-FI) has reached terms with union officials to be incorporated in a two-year extension of its Collective Labor Agreement. The labor strike, which commenced September 15, 2011, has ended and workers will begin reporting to their positions soon.
Under the terms of the agreement, PT-FI agreed to increase base wages by 24% in the first year and by 13% in the second year (equivalent to a 40% increase over two-years on a compounded basis). In addition, the company will provide improved benefits, including enhancements to housing allowances, educational assistance and retirement savings plans. For humanitarian purposes, PT-FI also agreed to pay a one-time signing bonus equivalent to three months of base wages (the duration of the strike). The parties also agreed that future wage negotiations would be based on living costs and the competitiveness of wages within Indonesia.
As previously reported, milling operations have been suspended since October 22, 2011, pending repairs to concentrate and fuel pipelines damaged as a result of civil unrest which occurred during the course of the strike. The repairs to the damaged pipelines are substantially complete and PT-FI has begun to ramp-up milling operations. Shipments of concentrate are expected to be limited until full operations are restored, which is expected by early 2012.
FCX estimates consolidated sales for the fourth quarter of 2011 to decline by approximately 115 million lb to 800 million lb of copper. Gold production for the quarter will decline by approximately 200,000 oz to 105,000 oz.
