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Govt to help Freeport resume operations

A senior official says the government will take all needed steps for PT Freeport Indonesia (PT FI) to resume normal operations at its Grasberg gold and copper mine in Timika, Papua

Rangga D. Fadillah (The Jakarta Post)
Jakarta
Mon, October 31, 2011

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Govt to help Freeport resume operations

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senior official says the government will take all needed steps for PT Freeport Indonesia (PT FI) to resume normal operations at its Grasberg gold and copper mine in Timika, Papua.

Deputy Energy and Mineral Resources Minister Widjajono Partowidagdo said on Friday that the ministry would coordinate with relevant institutions to provide security assurances to Freeport.

“I will go to Papua [this week]. I just met with representatives of Freeport employees and locals living near the mine. They complained about the security condition there,” he told reporters at his office.

Widjajono said the government would focus on security first, worker welfare second and then on renegotiating the government’s contract with Freeport.

“In negotiations, it’s important to prioritize transparency and trust so that we can produce win-win solutions. Don’t demand exaggerated things or we’ll never have an agreement,” Widjajono said.

Under normal conditions, PT FI produces about to 230,000 tons of ore a day, which is delivered to a processing plant in Mimika where it is transformed into about 6,000 to 7,000 of concentrate.

According to the third quarter report of Freeport McMoRan, PT FI’s parent company, local production and sales of copper and gold were adversely affected by strikes in Indonesia.

The company said PT FI missed its copper production target by 70 million pounds and its gold target by 100,000 ounces of gold due to the eight-day strike in July and the ongoing strike that started on Sept. 15.

“Freeport Indonesia has developed revised operating plans to produce and ship concentrate at modified levels with a reduced workforce and sold concentrate from inventory during the third quarter of 2011, which partly mitigated the lower production levels,” read the report.

PT FI spokesman Ramdani Sirait said earlier that the company had cooperated with customers on its revised concentrate production and shipping schedules throughout the strikes.

“Lower concentrate production has impacted our ability to fully fulfill our sales commitments. As a result, we were required to declare force majeure on the affected concentrate sales agreements,” he said.

Bloomberg reported on Sunday that striking workers have called for suspending talks with the management for a week after earlier rejecting an offer of a 30 percent increase in wages.

“The workers have asked for a break starting on [Monday] to explore other options for a comprehensive solution,” Virgo Solossa, head of organizational affairs at PT FI’s labor union, said by telephone from Timika.

PT FI’s non-staff workers (field operators) have demanded status as hourly wage workers with salaries from between US$17.50 and $43 per hour.

Management rejected the demand, offering a 30 percent increase in base salaries, higher than its previous offer of 22 to 25 percent as recommended by a mediator.

However, the workers insisted on their demands for hourly payment.

PT FI claimed that its lowest level field operators received Rp 170 million (US$19,285) in annual take-home pay, including benefits, while the highest-ranked employees received Rp 235 million.

This claim was rejected by Freeport’s worker union, which said low-level operators were paid 90 million a year, while the highest level received Rp 142 million.

The ongoing strike claimed five lives when police officers opened fire on strikers blocking PT FI facilities.

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