October 27, 2014 / 9:30 AM / 4 years ago

UPDATE 1-Freeport Indonesia union plans one-month strike at copper mine

(Adds background, market context)

By Dennys Kapa

JAKARTA, Oct 27 (Reuters) - Workers at Freeport-McMoRan Inc’s giant Indonesian copper mine plan to go on strike for a month from next week, a union official said on Monday, after the company failed to make changes to local management following a fatal accident.

Earlier this month, hundreds of angry protesters blocked access for two days to the open-pit area of the Grasberg complex, where production was temporarily suspended following the death of four workers on Sept. 27.

The remote copper mine is one of the largest in the world and any prolonged disruption could support prices of the metal , which have fallen almost 10 percent this year.

Three Freeport unions have agreed to take strike action from Nov. 6 until Dec. 6 to pursue demands including the appointment of new managers, Albar Sabang, a senior official at a Freeport union, told Reuters. Sabang’s union has about 9,100 members.

“The purpose of the strike is of course to stop production so there will be pressure for the Freeport Indonesia management to answer to our demands,” Sabang told Reuters by text message.

Freeport, which employs around 24,000 workers, declined to comment on Monday. About three-quarters of the workforce belong to a union.

Relations between Freeport and the unions have been strained in recent years following a three-month strike in late 2011 as well as a series of minor disputes.

In addition to the four workers killed in the collision involving a truck last month, 28 people were killed after a tunnel collapsed in May last year.

Indonesia’s mine ministry investigated the Sept. 27 accident and asked the company to introduce changes to safety procedures and policies before allowing open-pit mining to resume.

Three weeks ago, the Freeport Indonesia union warned of fresh protests, blockades or strike action if workers’ safety concerns and other demands were ignored.

A union letter detailing the planned strike was sent on Oct. 23 to Freeport’s local CEO, Rozik Soetjipto, the chief executive and chairman of the Arizona-based firm and various government officials.

Under normal conditions, the Grasberg open pit produces around 140,000 tonnes of copper ore per day and the underground mine about 80,000 tonnes.

Although the copper market is broadly expected to be in surplus next year, one trader said, an extended strike could tighten regional concentrate supply, with the market not far from balanced at the moment. Freeport’s concentrate is low in impurities.

Freeport, one of the biggest tax payers in Southeast Asia’s largest economy, only recently resolved a tax dispute with the government that halted exports for months and frayed relations.

Should the Freeport strike go ahead as planned, it may be the first big test for Indonesia’s newly appointed energy and mineral resources minister, Sudirman Said.

Additional reporting by Michael Taylor; Editing by Alan Raybould

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