T

he government claims a compromise has nearly been reached between a striking workers union and the management of a local unit of US gold and copper mining giant Freeport McMoran.

Newly appointed Energy and Mineral Resources Minister Jero Wacik said on Wednesday that the union’s salary demand had come down to US$4 per hour from the initial demand of $35 per hour.

Meanwhile, Freeport Indonesia’s management had agreed to a 28 percent salary increase to $3.09 per hour, according to Jero, a senior politician of President Susilo Bambang Yudhoyono’s Democratic Party.

“It has come so close [to a compromise]. If reached, Freeport could operate again. Otherwise, all parties will suffer losses — the state from taxation losses, the people from income losses and the company from output,” Jero told a press briefing on the sidelines of the ASEAN Summit.

However, the workers union refuted Jero’s claims, saying nothing had been finalized and that negotiations to demand a higher salary than the current $2.4 per hour were still “ongoing”, according to the union’s official Virgo Solossa.

The union has been on strike for more than three months, possibly the longest stoppage in the country’s mining history. The standoff has also turned deadly as two protesting workers were shot dead by the police during a violent rally mid last month in Timika, Papua, the closest town to Freeport’s mining site Grasberg, which holds the world’s largest single reserves of copper and gold.

A sabotage also hit Freeport’s main pipeline carrying concentrate from the mine to the port.

Numerous vested interests have jumped on the band wagon to take advantage of the lingering dispute to create security instability in resource-rich Papua, resulting in the killing of more than a dozen people by unidentified gunmen in the last two months, mostly in areas near Freeport’s operation site.

The increasing chaos followed repeated calls from politicians and officials for the government to renegotiate its contract with Freeport. The government said the contract, renewed in 1991 and due to expire in 2021, had positioned Indonesia on the losing side.

The labor strike and the violence have prompted Freeport to declare force majeure in its Papua operation.

The company’s current production is 5 percent of its normal output. Under normal conditions, Freeport recorded $8 million in revenue per day.

The executive vice president and chief administrative officer of Freeport Indonesia, Sinta Sirait, said the company was offering a net monthly salary of between Rp 12.7 million ($1,400) and Rp 17 million, excluding incentives and bonuses.

“We, on the management side, really want the negotiation process to proceed despite other efforts. We want to reach a compromise. The process has been long, but we believe that the government’s mediation would help both parties to accelerate the process,” she said.

Freeport Indonesia currently employs 8,467 people and almost 40 percent of them, or more than 3,200 workers, are Papuans.

Manpower and Transmigration Minister Muhaimin Iskandar dismissed concerns that the continuous strikes, including in other mining companies, were a trend that could hinder business expansion in Southeast Asia’s largest economy.

“The trend [of strikes] is not increasing. It’s a common phenomenon, especially approaching the season of joint contract agreement [renewal],” he said.