UPDATE 1-Freeport Indonesia union threatens walkout from Friday

Thu Jun 13, 2013 3:36am EDT

* Union demands suspension of five employees after May 14 accident

* Freeport urges union leaders to reconsider strike threat

* Two Japanese copper smelters keep production forecasts unchanged

By Yayat Supriatna and Michael Taylor

JAKARTA, June 13 (Reuters) - Trade union workers at the Freeport McMoRan Copper and Gold Inc mine in Indonesia will stop work indefinitely from Friday if the company does not suspend those suspected of being at fault for a deadly tunnel collapse last month, a union official said.

Freeport halted operations at the world's No.2 copper mine in remote West Papua on May 15, a day after a training area in a tunnel caved in, killing 28 people.

The firm declared force majeure on Wednesday to free itself from obligations to deliver copper concentrate from its Grasberg mine in Indonesia's eastern most province. Workers at the mine have been carrying out maintenance since the collapse.

In a letter sent to Freeport management on Monday, the union cited five company officials suspected of being responsible for the accident, Papua-based union official Virgo Solossa said by telephone on Thursday.

"They have to be sent home while the investigation on the cause of the accident is still under way," said Solossa.

"We have set a deadline of June 14 for the management ... we will then ask all workers to stop work and withdraw from the operations site."

Freeport Indonesia spokeswoman Daisy Primayanti said the company was in talks with the union.

"We are urging the union leaders to reconsider their instruction to their members and to work cooperatively with the company so that everyone can return to a productive and safe working environment," Primayanti said in an email.

Freeport employs about 24,000 workers, of which three-quarters belong to the union.

Any walkout could delay the eventual resumption of production at the mine and further strain ties between the two sides after a three-month strike in late 2011. Planned pay talks were also put on hold last month.

ASIAN SMELTERS ASSESS IMPACT

Before Freeport declared force majeure, Indonesia's only copper smelter, PT Smelting, which usually gets most of its copper concentrate from Freeport, said it was in talks with other suppliers to avoid an enforced closure.

Japanese smelter Pan Pacific Copper, which also buys copper concentrate from Freeport Indonesia, said on Thursday it had asked other contracted suppliers to bring forward deliveries.

"We may consider buying copper on the spot market if needed," said a Pan Pacific spokesman, who wouldn't say where the other suppliers are based. He added that the company had not altered its production forecast of 261,400 tonnes for the April-September period.

Sumitomo Metal Mining, Japan's No.2 copper producer, said it was too early to determine the impact of the force majeure on its purchases of concentrate, and that the firm had no plans to change its annual production targets.

Arizona-based Freeport briefly resumed open-pit mining on May 28, but after a worker died in a separate accident the Indonesian government asked the company to suspend operations until a government investigation was completed.

The head of the Energy and Minerals Resources Ministry investigation into the accident said on Thursday a final report would be handed to the government by early next week at the latest.

Government officials say production cannot resume until the investigation is completed, and will analyze the findings with experts.

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