* Govt probe into tunnel collapse should not take long
* Three-month production loss could cut Freeport's 2013 EPS
By Michael Taylor and Yayat Supriatna
JAKARTA, June 7 A government-led investigation
into the tunnel collapse that killed 28 people at Freeport
McMoRan Copper and Gold Inc's copper mine in Indonesia
should not take three months to complete, the head of the probe
said on Friday.
This signals production could resume sooner than expected at
the Grasberg complex in west Papua, the world's No.2 copper mine
where operations were shut on May 15, a day after a training
tunnel away from the mining operations caved in on 38 workers.
"The three-month period stated by the Minister of Energy and
Mineral Resources Jero Wacik was not just for the accident
investigation, but for the whole investigation and inspections
of all underground mining in Indonesia," Ridho Wattimena said.
"I think (the accident) investigation will be not too long,"
Wattimena, who is also head of the mining engineering graduate
programme at the Bandung Institute of Technology, told Reuters.
"We do not need months to investigate it."
The government investigation will focus on the cause of the
collapsed tunnel to prevent a similar accident in the future,
and once completed, a report and recommendations will be sent to
Wacik, Wattimena added.
Arizona-based Freeport briefly resumed open-pit mining
production on May 28, but after a worker was killed in a
separate accident, the government asked the company to suspend
operations until a government investigation was completed. The
probe was forecast to take up to three months.
A three-month production loss could slash Freeport's 2013
earnings per share by 24 percent, if costs are expensed, to an
estimated $2.54 per share, according to a BMO Capital Markets
research note this week.
BMO estimates Grasberg will contribute 32 percent of
Freeport's earnings before interest and tax this year.
Freeport Indonesia could not be contacted on Friday, but
earlier this week it said that results of internal inspections
confirmed that overall underground mine facilities were safe.
Indonesia's chief economics minister has called for the
speedy completion of the government probe into the accident, so
that open-pit mining can resume quickly.
Freeport Indonesia estimates it contributed around $1
billion to the Indonesian economy last year in taxes, royalties
and dividends to the government.
A trade union representing the mine workers, wants both
government and company-led investigations into the accident to
be completed before production is resumed.
The Grasberg complex, which also has the world's largest
gold reserves, normally produces around 220,000 tonnes of
concentrated ore a day, with about 140,000 tonnes coming from
open-pit mining and 80,000 tonnes from underground operations.
A stoppage of three months would cut around 125,000 tonnes
of copper or about half a percent from global supply, according
to Reuters estimates, which combined with other disruptions
could wipe out an expected small market surplus and boost global
Although Freeport has not said what level of stocks it has
left, large miners typically have three to four weeks of ore
stockpiled at port, and around three days on site.
Benchmark three-month copper on the London Metal Exchange
traded at $7,365 a tonne on Friday, slightly lower than
the day before the accident.