UPDATE 2-Indonesia union urges completion of probes into Freeport tunnel collapse

Thu May 23, 2013 6:43am EDT

* Investigations must be wrapped up before workers return -union

* Rescuers retrieve all 28 missing bodies by Wednesday

* Union official says he does not know how long probe will take

* Freeport says still has stocks for "number of days"

By Yayat Supriatna and Michael Taylor

JAKARTA, May 23 (Reuters) - All investigations into a tunnel collapse that killed 28 people at the world's No.2 copper mine, run by Freeport McMoRan Copper & Gold Inc in Indonesia, must be completed before workers return, a trade union official said on Thursday.

Arizona-based Freeport suspended operations at the remote Papua mine on May 15, a day after a training tunnel away from its main operations fell in on 38 workers. The closure is estimated to cost $15 million a day in lost production.

The impact of the Grasberg closure on global copper supply has so far been limited as the mine complex keeps stockpiles in reserve in case of disruptions, although that would change if the closure drags on.

"Shipments are being made that can last for a number of days but there is a finite amount there. It will depend on when we start. We believe we will be prepared to start relatively quickly," Chief Executive Richard Adkerson told reporters.

"We've taken the first steps today of getting workers back and having training briefings ... The priority is going to be on safety and not production, but there is no barrier to physically starting production very quickly."

Investors fear the accident, one of the country's worst mining disasters, could further strain relations between Freeport and trade unions after a three-month strike in late 2011 and smaller disputes since.

"We will get back to work after all investigations conducted by the government, Freeport and the labour union are completed," Papua-based union leader Virgo Solossa told Reuters.

"We still don't know how long the investigation will take, perhaps a few more days to go, I don't know."

Ten workers were saved at the Grasberg mine complex, which also holds the world's largest gold reserves, and company officials said rescuers had retrieved the bodies of all 28 missing workers by Wednesday.

Indonesia's energy and mineral resources ministry is holding an investigation into the accident and has ordered safety checks on all underground mining facilities in the country.

Freeport has said that once rescue efforts are complete it will launch an investigation with the aid of international experts and Indonesian government officials.

With no official estimate of how long the investigations might run, analysts worry the mine could face a prolonged closure. Freeport has said it would only reopen with government permission.

Adkerson declined to predict how long the investigation would take.

One reason for the collapse could be that the tunnel was old and had not been properly maintained, or there could be a problem with the stability of the rock that needs further investigation, said Matt Fusarelli, an analyst at mining and metals consultancy AME Group in Sydney.

"It indicates that there could be more risks associated with the geology and they're going to have to test," Fusarelli added.

"This is not a local Indonesian company, this is a big publicly-listed, Western mining company which brings first world safety standards to these mining operations."

The Grasberg mine normally produces around 220,000 tonnes of concentrated ore a day. Around 140,000 tonnes comes from open pit mining and 80,000 tonnes from underground operations.

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.

The rise in sales is due to higher ore grades and a targeted ramp-up in output from underground operations, with open-pit operations likely to be phased out by 2017.

"It does call into question the viability of some of the expansion," Fusarelli added, referring to the tunnel collapse.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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