COPPER PRICE MAY BE PRESSURED
An estimated 6,000 workers are back on the job at the world’s largest copper-gold producer, Freeport’s Grasberg mine in Indonesia, after a brief four-day walkout.
Author: Dorothy Kosich
Posted: Monday , 23 Apr 2007
RENO, NV - The four-day walkout ended at Freeport-McMoRan's Grasberg mine in Indonesia (which supplies about 4% of the world's copper and is one of the world's largest gold producers), after workers were able to raise their concerns directly with Freeport Chairman Jim Bob Moffett via teleconference Saturday night.
Protest organizers said 6,000 workers, including 2,000 subcontractors, from Grasberg began their protests last Tuesday as the dispute centered on demands for higher wages, improved social services, and creation of a special office to increase the number of native Papuans in senior management positions.
Mangatar Marpaung, Director for Indonesia's Coal and Mineral Resources Development in the Energy Ministry told Shanghai News Saturday that Freeport lost 173,516 tons of production with an estimated loss of US$11.32 million. Normal output is 230,000 tons per day. During the walkout, however, Freeport processed ore from stockpiles. Grasberg is the Indonesian Government's largest source of tax revenues.
Penina Karma, the Secretary General of Tongi Papua, the group which represented native Papuan workers at Grasberg, said that all Grasberg employees who were on shift Sunday returned to work. Although workers had originally asked for 3.6 million rupiah (US$352) a month, Freeport agreed to increase its minimum salary from 1.6 million rupiah (US$174) to 3.1 million rupiah (US$341).
Grasberg executives have been accused of discriminating against native Papuan labor. Karma said management reorganization has been agreed to by Freeport officials. Moffett said he would even consider dismissing Armando Mahler, President Director of Freeport Indonesia, if it was determined that they had failed to meet the company's commitment of improving the welfare of its native Papuan workers.
The Papuan workers wanted more career opportunities, improved recruiting and better pensions, according to Reuters. Local and international NGOs have claimed that Freeport Indonesia is not giving enough to the people of Papua in return for the mining activities in the area. Controversy has also erupted several times regarding payments to Indonesian security forces which help guard mine operations. Grasberg had a 30-year contract with Indonesia, which began in 1992.
Mindo Pangaribuan, a spokesman for Freeport Indonesia, said the company had agreed to a feasibility study for the creation of a Papua Affairs Department and remained committed to increasing the number of Papuans in senior management positions. In last decade, the number of native Papuan workers has increased from 800 to more than 3,000 as of the beginning of this year, the Jakarta Post reported.
He told the Jakarta Post that the company intends to continue to ship copper concentrates according to the existing schedule. The parent company Freeport-McMoRan is headquartered in New Orleans.
The protests at the world's largest copper-gold mine made world copper markets nervous as copper prices soared to a seven-month high of more than $8,000 per tonne on the LME on Friday. The all-time high is $8,800 per tonne.
The London Times suggested Monday that the world price of copper could come under pressure because Freeport doubled workers' wages. Copper prices have already increased 35% during the past several weeks.