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RPT-UPDATE 2-Freeport Indonesia workers extend strike to 3rd month
November 16, 2011 / 2:42 AM / in 6 years

RPT-UPDATE 2-Freeport Indonesia workers extend strike to 3rd month

* Union extends strike to mid-Dec, maintains pay demands

* Industry talks over treatment, refining charges delayed-trader

* Copper prices shrug off supply loss on weak global demand

By Rieka Rahadiana

JAKARTA, Nov 15 (Reuters) - Union workers at Freeport Indonesia are extending their strike into a third month, keeping production and exports halted from the world’s second biggest copper mine.

The strike at Freeport McMoRan Copper & Gold Inc’s Grasberg, the longest stoppage in Indonesia’s mining history, led the firm to declare force majeure on exports last month and has helped support global copper prices.

The union said on Tuesday it was extending the strike, due to end on Tuesday, to mid-December because of a lack of a pay deal with the firm.

“Tomorrow we are still on strike, no resolution yet,” said union official Virgo Solossa.

A union spokesman said on Monday it was sticking to a pay demand for a fivefold increase for workers to $7.50 an hour, an apparent hardening of their stance given the union said last week they might cut their pay demand to $4 an hour.

“The management hopes dialogue can continue to be done to expedite a fair and reasonable agreement,” said Ramdani Sirait, Freeport Indonesia’s spokesman.

Copper prices were little changed on Tuesday, with three-month London futures down 0.7 percent at $7,705 a tonne by 0942 GMT, though analysts said the strike had tightened the market and was holding up industry talks over annual contracts.

A Japanese trader said talks over treatment and refining charges (TC/RC) between producers and smelters were being delayed because of uncertainty over how long the Freeport force majeure would last.

“It’s not the right time to exchange the number. It’s better to wait,” the trader said. “The market is tight. Traders are trying to cover short positions.”

He said most people had been able to cover for lost shipments since the force majeure, but if the stoppage continued for another two or three months then market players would have a problem.

“Smelters may reduce output,” the trader said.

Even if a pay deal is worked out in coming days, Freeport still has to repair its main pipeline taking concentrate from the mine to its port in the remote Papua region. Freeport said at the start of November that it could take a month to fix the sabotage-hit pipe.

Any pay deal would enable the firm to get more secure access to the pipe’s route, after a series of deadly attacks on employees in recent months worsened the security situation in a region facing a simmering independence movement.

Citigroup head of metals research David Thurtell said the Freeport supply loss was limiting price weakness for copper, despite expectations of weaker global demand.

“Worries about a global slowdown have understandably led to a lot of the froth being taken out of the London Metals Exchange complex over the past two months,” Thurtell said.

Barclays Capital has forecast copper mine supply to fall 2 percent this year -- the first production drop since 2002 -- on a litany of disruptions, including the Freeport strikes at Grasberg and Peru’s No. 3 copper mine Cerro Verde.

The strikes have raised doubts that Freeport McMoRan can meet fourth-quarter output and sales targets.

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