UPDATE 1-Freeport Indonesia says open-pit mine running at 60 pct

Tue Jun 25, 2013 8:03am EDT

* Loading of copper concentrates begins, no shipments yet

* Underground production remains closed

By Michael Taylor

JAKARTA, June 25 (Reuters) - Open-pit production at Freeport McMoRan Copper and Gold's Indonesian unit, the world's second-largest copper mine, has recovered to about 60 percent of capacity, a spokeswoman said, following an accident and prolonged closure.

Loading of copper concentrate for shipment has also begun, but underground production remained closed.

Freeport stopped production at the Grasberg mine in remote West Papua on May 15, a day after a training area in a tunnel caved in, killing 28 people.

"We are mining at 60 percent level at our open-pit mine," Freeport Indonesia spokeswoman Daisy Primayanti said on Tuesday.

"We hope to ramp up production to full capacity in not too long," she added, but was unable to give a timeframe.

On Saturday, the company said it had slowly resumed open-pit mining after receiving approval from the Indonesian government.

The open-pit mine normally produces around 140,000 tonnes of copper ore per day, while output from the underground operations is 80,000 tonnes. Freeport was forced to declare force majeure on shipments after the accident.

"We have started loading concentrates today at a low loading rate level. However, we are not yet able to make shipments," Primayanti said, adding that the company continued to work closely with the government investigation team and mine inspectors with a view to eventually resuming underground operations.

Before Freeport declared force majeure, PT Smelting, Indonesia's only copper smelter 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 it had asked other contracted suppliers to bring forward deliveries.

Before the accident, Freeport had expected sales of about 500,000 tonnes of copper from its Indonesia unit in 2013, along with 1.25 million ounces of gold.

The company estimated it lost production of 52,000 tonnes of copper and 115,000 ounces of gold from closing the mine and that it continues to lose about 450 tonnes per day of copper from the closure of its underground operations.

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.

Benchmark three-month copper on the London Metal Exchange traded at $6,752 a tonne on Tuesday, or $663 lower than the day before the accident.

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