T

he world’s largest publicly traded copper mining firm, Freeport-McMoran Copper & Gold Inc., may have to wait a little longer to get its Indonesian operations back on track, pending a court ruling to settle a salary dispute with its workers.

Manpower and Transmigration Minister Muhaimin Iskandar warned the company that it could not recruit new workers to replace those participating in a month-long strike. Such a move, he said, would be in violation of the Labor Law.

“PT Freeport’s management is not allowed to recruit new workers or conduct massive layoffs to replace those who are on strike until the industrial dispute is settled,” Muhaimin said on Wednesday in response to an announcement by Indonesian subsidiary, PT Freeport Indonesia, on the new recruits.

Muhaimin said the company must wait for a verdict from the Industrial Court.

The workers have gone on strike again in protest of the management’s decision to lay off workers who went on strike at the Grasberg mine in Timika. The strike turned deadly when two workers were shot dead by police officers who were trying to tame the approximately 8,000 protesters.

Human rights organizations condemned the violence. An investigation into the incident is ongoing.

Freeport management and workers, represented by the Confederation of All-Indonesian Workers Labor Union (SPSI), have agreed to bring their case to court after failing to close a deal with the help of ministry mediation.

Freeport CEO Armando Mahler told reporters in conference call on Wednesday that his company had tried to create a win-win solution with the labor union SPSI.

“We have agreed to increase pay by 25 percent, as was proposed by the Manpower and Transmigration Ministry,” he said. “However, the SPSI did not accept the proposal and held to its demands.”

Mahler said the workers demanded a salary increase to US$17.50 per hour. “The company’s burden to pay workers will be too high. I don’t believe any mining company can bear such a demand,” he said.

Freeport Indonesia spokesperson Ramdani Sirait said the annual take-home pay of low level workers ranged from Rp 170 million ($19,040) to Rp 235 million a year. Under the new proposal, Freeport would increase pay to between
Rp 210 million and Rp 285 million.

PT Freeport Indonesia chief administrative officer Sinta Sirait said the company was operating at 80 percent capacity.

“For now, our productivity is 185,000 tons per day,” she said. “With only 80 percent productivity, we lose $20 million every day.”

SPSI spokesperson Juli Parorongan said the company had provided the media with false information of how much the workers were demanding and how much they were being paid.

Juli said the workers were in fact demanding $7.80 per hour, not $17.50 per hour. He also said that more than 50 percent of Freeport workers were only being paid as much as Rp 7 million per month in take-home pay.

“The company exaggerated how much they were paying the workers,” he said.

A member of the Indonesian Science Institute who is an expert on Papua, Ikrar Nusa Bakti, said the workers’ grievances could be easily used by separatists to fuel negative sentiment against the central government and foreign investors.

Ikrar said the government should seize the opportunity to play the role as an honest broker between the conflicting parties.

“This is also a good opportunity for the government to demand that Freeport be more transparent in its operations. We know for sure that Freeport is not just mining copper,” he said. (lfr)