Monthlong strike begins at Freeport Indonesia

AP News
Posted: Sep 15, 2011 4:19 AM
Monthlong strike begins at Freeport Indonesia

Thousands of workers at Freeport-McMoran's gold and copper mine in eastern Indonesia began a monthlong strike Thursday over a wage dispute.

Juli Parorongan, a union spokesman, said 90 percent of the mine's 12,000 workers were taking part as part of efforts to push up current salaries of $2.10 to $3.50 dollars an hour to $17.50 to $43.

"We just want them to earn the equivalent of what Freeport workers in other countries earn," he said.

It's the second strike this year at one of the world's biggest gold and copper mines and coincides with a work-stoppage at the Phoenix-based company's Cerro Verde mine in Peru.

During the eight-day work stoppage at the Grasberg mine in Indonesia's easternmost province of Papua in July _ also protesting low wages and the dismissal of union leaders _ the company lost production of 4 million pounds of copper and 7.5 ounces of gold per day.

That hit the Pheonix-based company's revenue by $30 million a day, analysts said.

Citi Investment Research analyst Brian Yu noted that labor accounts for 31 percent of Freeport's average site costs, meaning a significant wage increase would have a material impact on unit costs.

He thought it unlikely Grasberg's miners would be able to negotiate a globally competitive wage based on the additional infrastructure, such as roads, required to support workers in the remote region.

Workers only returned to their jobs after the summer strike after management agreed to reinstate the labor leaders and reopen negotiations about wages and benefits.

"We finally decided to go into this strike because negotiations from July 21 to August 26 failed to reach any agreement," Parorongan said, adding that the company was only offering a 22 percent hike within two years.

Ramdani Sirait, a company spokesman, said the U.S. gold mining giant hopes to continue talks to try to find a fair and appropriate solution.

"There's no legal basis for a complete work stoppage, or strike, since the laws provide chances for sustained dialogue and mediation," Sirait told The Associated Press in an email.

He added that discussions are scheduled to take place Thursday mediated by Manpower Ministry officials to find a solution.

Sirait said the company also was offering an attractive financial package, including a 230 percent boost in bonuses for higher metal output and a 4 percent contribution to the employee retirement savings plan.

"If totaled in a yearly base, the compensation package will amount to 26 times the basic monthly wage excluding overtime," he wrote, adding that employees also get generous housing loans, bonuses and educational assistance for their children.

An interoffice memorandum from the company called on the workers to boycott the strike and to return to negotiations in good faith.

Papua police spokesman Lt. Col. Wachyono said some 300 additional police have been deployed to secure the mine.

At the request of authorities, the company sent 130 buses to transport workers out of the mine and join fellow workers gathering at the main gate of Freeport's town of Kuala Kencana.

In July, dozens of workers collapsed from dehydration and exhaustion as they left the mine to head home.