Freeport Indonesia mine shut for second day, five dead

JAKARTA Thu May 16, 2013 3:34am EDT

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JAKARTA May 16 (Reuters) - Operations at Freeport-McMoRan Copper & Gold Inc's Indonesian mine remained halted for a second day, as rescuers raced to find 23 workers still trapped underground after a training tunnel collapse at the world's No.2 copper mine.

Thirty-nine workers were attending an underground training class at the Grasberg complex in remote West Papua province, when the tunnel collapsed on them early on Tuesday morning. Five people have died, Freeport said in a statement on Thursday.

The company temporarily suspended mining activities on Wednesday, as a mark of respect for those killed and trapped, while the statement added that pay talks with unions that began on May 13 had also been put on hold.

Union leader Virgo Solossa told Reuters there was no problem with the suspension of pay talks, adding that he planned to attend a union meeting on Thursday to decide on any response to the tunnel accident at the Grasberg complex - which also holds the world's largest gold reserves.

The cause of the accident was still unclear. The training tunnel was located outside the mining area and around 500 meters from the entrance of the Big Gossan mine.

Eleven people have now either been rescued or managed to escape the tunnel collapse, according to the Freeport statement.

"The rescuers have been working around the clock for two days now and they continue to strive to reach the rest of our trapped colleagues in the shortest time possible," President Director of Freeport Indonesia Rozik Soetjipto, who is now at the mine site, said in the statement.

The tunnel collapse is one of a number of worker-related incidents at the Papua mine in recent years, including a strike in late 2011 that lasted for three months.

Freeport declared a force majeure on some concentrate sales about one month after workers began to strike in 2011, freeing itself from some of its contractual supply obligations. Traders, however, do not expect the current shutdown to impact supply.

The mine would typically have several days of ore stockpiled on site, while up to a month of material may be stored at port, suggesting there was little risk the miner would default on supplies to customers, a Singapore based trader said.

Freeport Indonesia's sales are expected to reach 1.1 billion pounds of copper and 1.2 million ounces of gold in 2013, up 54 percent and 31 percent over 2012, respectively.

Benchmark copper on the London Metal Exchange was down around 0.4 percent at $7,168 a tonne by 0729 GMT.

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