UPDATE 1-Freeport Indonesia union says mine shut but maintenance under way

Sat May 25, 2013 4:47am EDT

JAKARTA May 25 (Reuters) - Between 35 and 40 percent of workers at Freeport McMoRan Copper & Gold Inc's Indonesian unit returned to work on Saturday to carry out maintenance work after a tunnel collapse that killed 28 people, a union official said.

The resumption of work was a possible sign the firm was gearing up towards restarting operations at the world's No. 2 copper mine.

Arizona-based Freeport suspended operations at the remote Papua mine on May 15, at a cost estimated at about $15 million a day in lost production.

Operations were suspended a day after the tunnel, away from its main operations, fell in on 38 workers.

"Starting today, around 35 to 40 percent of workers have been back to work in Freeport mining facility in Papua, but only for mining facilities and equipment maintenance, especially in Grasberg open-pit mining," Papua-based union leader Virgo Solossa told Reuters.

"Production activities are still shut. We hope investigation teams complete their works as soon as possible."

Several investigations are being conducted, including one by the Energy and Mineral Resources Ministry and one by Freeport Indonesia using international experts.

Solossa reiterated that all investigations into the cause of the collapse must be completed before mining resumes at the Grasberg complex, which also holds the world's largest gold reserves.

"The company, with the unions, have agreed to actually return to work, starting yesterday," Freeport spokeswoman Daisy Primayanti said on Saturday, although she was unable to give an exact figure or percentage of returning workers.

On Thursday, Freeport Chief Executive Richard Adkerson said the company was prepared to re-start production relatively quickly and had taken the first steps of getting workers back and having training briefings.

Primayanti said a possible restart of operations at Grasberg depended on the outcome of underground safety inspections being carried out by the energy and mineral resources ministry.

"Obviously, the company is keen on getting back to normal operations, pending further direction from the mine inspector," she said.

With no official estimate of how long the investigations might run, analysts worry the mine could face a prolonged closure and further strain relations between Freeport and trade unions after a three-month strike in late 2011.

The company and union put on hold pay talks, which began on May 13, after the tunnel collapse.

"It is not ethical to link the accident to the pay talks," Solossa said. "However, as far as safety is concerned, we will push the management to improve the safety systems for the sake of workers."

The Grasberg mine, which normally produces around 220,000 tonnes of concentrated ore a day, employs about 24,000 workers.

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