* Freeport union demands 40 pct pay hike over two years
* Management says pay on offer beats Indonesian industry norm
* Union says deadline for pay talks extended to Oct. 4
By Yayat Supriatna
JAKARTA, Sept 20 (Reuters) - Pay talks at Freeport-McMoRan Copper & Gold Inc's Indonesian unit have stalled but a deadline for an end to negotiations has been extended, a union official said on Thursday, easing the threat of any immediate disruption.
Pay negotiations between workers and management at Freeport's remote Grasberg mine in Papua, the world's second-biggest copper mine, resumed in late June after being suspended in May when a tunnel collapse killed 28 people.
"Freeport only offered us a quarter of the pay rise that we are demanding," Juli Parorrongan, spokesman for workers' unions, told Reuters, after talks this week involving Freeport Indonesia CEO Rozik Soetjipto and Freeport CEO Richard Adkerson.
"Workers cannot accept the offer because it is considered too low," said Parorrongan, adding that workers were pushing for a 40 percent pay increase over two years or two annual 20 percent rises.
Relations between Freeport and unions have been strained in recent years following a three-month strike in late 2011, May's deadly tunnel collapse and a series of minor spats.
Freeport unions agreed a deal for a 37 percent pay rise over two years in late 2011, after initially pushing for a pay rise to as much as $200 an hour compared with a pay rate at the time of $2-$3 an hour.
Under the current wage agreement, which is due to end on Sept. 30, the majority of workers are paid 4.6 million rupiah to 7.7 million rupiah ($410-$680) a month, said Parorrongan on Thursday.
Freeport Indonesia employs about 24,000 workers, including contractors and staff. About three-quarters are union members.
Talks on a new pay deal had been expected to last up to 60 days, and Parorrongan said a new deadline of Oct. 4 had been set for talks to conclude.
"Within the context of the challenging financial condition of the company and the current global drop of commodity price market for copper and gold, we believe that the management's offering is competitive compared with the industry in Indonesia," Freeport Indonesia spokeswoman Daisy Primayanti said in an email.
The management's offer, if accepted, would mean that Freeport Indonesia workers would be earning more than their counterparts in the same industry in Indonesia, Primayanti added.
The Arizona-based miner reported a 32 percent drop in second-quarter earnings in July on weak metal prices and higher costs.
Freeport unions had yet to decide what action to take if no agreement was reached by the new deadline, Parorrongan said.