Strike impacts Freeport's Grasberg mine, workers 'resigned'

TORONTO (Reuters) - Freeport McMoRan Inc said Thursday that mining and milling rates at its Grasberg mine in Papua, Indonesia have been affected by an extended strike, and a “large number” of approximately 4,000 absentee workers were deemed to have resigned.

Trucks are parked at the open-pit mine of PT Freeport's Grasberg copper and gold mine complex near Timika, in the eastern region of Papua, Indonesia on September 19, 2015 in this file photo taken by Antara Foto. REUTERS/Muhammad Adimaja/Antara Foto

Escalating labor tension is a further disruption for Freeport, entangled in a lengthy dispute with Indonesia over rights to the giant mine, which has cost both sides hundreds of millions of dollars.

Arizona-based Freeport is now trying to mitigate the impact of workforce issues on mining and milling rates, which it would not quantify, by re-allocating resources, training additional workers and supplementing its mill throughput with available stockpiles, spokesman Eric Kinneberg said.

Benchmark copper prices hit three-week highs Thursday as worries about prolonged disruptions at Grasberg triggered short-covering, ahead of a long holiday weekend in Europe and top consumer China.

Freeport Indonesia union industrial relations officer, Tri Puspital, told Reuters on Saturday that the strike had halved Grasberg’s output.

A union representing an estimated 9,000 workers, excluding contractors, recently extended its strike at Grasberg for a second month, in a dispute over employment terms and layoffs. [L4N1IM05M]

Freeport, the world’s largest publicly traded copper miner, said some 4,000 workers, including a limited number of contractors, have not reported to work despite multiple summons.

“As a result, a large number of these workers were deemed to have resigned, consistent with agreed industrial relations guidelines and prevailing law,” Kinneberg said.

Union officials were not immediately available for comment.

The majority of Freeport’s 30,000-strong Indonesian workforce is “productively and safely” working, Kinneberg added.

In a May 15 memo seen by Reuters, Freeport said the strike is illegal and “voluntary resignation is the consequence” for workers ignoring demands to return to work who were absent for five consecutive days.

Freeport resumed copper concentrate exports from Grasberg, the world’s second-largest copper mine, last month after a 15-week outage related to its government dispute and had planned to ramp up production, which was cut by around two-thirds during the outage.

Workers now deemed “resigned” are in addition to an estimated 2,000-3,000 workers Freeport placed on furlough as of mid-April, when approximately 10 percent of its 32,000 member workforce was “demobilized” under a cost-cutting effort.

The union, which began a 30-day strike May 1 to try and get workers’ jobs back, is demanding Freeport end its furlough policy.

Reporting by Susan Taylor; Editing by Dan Grebler and Cynthia Osterman