UPDATE 1-Freeport ramping up output at Indonesia mine
* Open-pit production ramping up since Saturday, says Freeport * Union urges all workers to return to the Grasberg complex * Pay talks between Freeport and union resumed By Michael Taylor and Yayat Supriatna JAKARTA, June 24 (Reuters) - Freeport McMoRan Copper and Gold Inc was ramping up production at its Indonesian unit on Monday, a company spokeswoman said, six weeks after a deadly tunnel collapse at the world's No. 2 copper mine halted operations. The resumption of open-pit operations at the massive Grasberg complex came earlier than expected, taking many copper traders by surprise - though underground work remains halted awaiting further inspections and approvals from authorities. The Arizona-based company did not provide an update on its outlook for the year, but said the 38-day closure had affected about 52,000 tonnes of copper production, or about 10 percent of its total forecast sales in 2013. Shares were down 5.6 percent at $26.57 at midday on Monday, in line with a broader slump among miners as copper fell to a near three-year low on a firmer dollar and worries about slowing demand from top consumer China. Freeport stopped production at Grasberg in remote West Papua on May 15, a day after a training area in a tunnel caved in, killing 28 people. On Saturday, the company said it had slowly resumed open-pit mining after receiving approval from the Indonesian government, although underground production remained closed. "We herewith confirm that we have started to ramp up production since Saturday," Freeport Indonesia spokeswoman Daisy Primayanti said in an email on Monday. The restart came much earlier than the market expected, taking traders and analysts by surprise. "We thought Grasberg would be out for at least three months, maybe even six months," said one U.S. copper futures trader. The speedy reopening of one of the world's biggest mines removes a major support to copper prices, which have been relatively resilient to pressure across commodities in recent weeks due to a series of production disruptions. It comes a week after India's No. 1 smelter reopened after a two-month shutdown. Prior to the accident, Freeport had expected sales of some 500,000 tonnes of copper from its Indonesia unit in 2013, along with 1.25 million ounces of gold. The company estimated it lost 52,000 tonnes of copper and 115,000 ounces of gold during the suspension and continues to lose about 450 tonnes per day of copper from the closure of its underground operations. Trade union workers at Grasberg were returning to work on Monday, while postponed pay talks with the company have resumed, a union official said. Freeport Indonesia employs about 24,000 workers, of which three-quarters belong to the union. Previously, union officials had demanded that all probes into the accident be completed before production was allowed to resume, and that they wanted to evaluate the final investigation report and see if Freeport implemented all recommendations. "Production activity at Grasberg open-pit mines have resumed and workers are back working at the mining sites," Papua-based union official Virgo Solossa told Reuters by telephone. "The union encourages the workers to go back to work." The Freeport Indonesia management had not consulted the union when asking workers to return to their duties, Solossa said, adding that the government would be held accountable should there be any further accidents at the mining site. The union successfully demanded the suspension of five senior Freeport employees that it suspected bore responsibility for the accident. Relations between Freeport and the union have been strained in recent years, after a three-month strike in late 2011 and a series of minor spats. After the May 14 tunnel collapse, the company and the union put on hold pay negotiations that began on May 13 and were forecast to last for up to 60 days. "Union and management representatives have restarted negotiations again," said Solossa, without giving further details.
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