May 31, 2013 / 7:16 AM / 7 years ago

Freeport Indonesia union says new mine collapse, urges members to stop work

JAKARTA (Reuters) - A worker was fighting for his life after a new tunnel collapse on Friday at Freeport McMoRan Copper and Gold Inc’s Indonesian mine, a union official said, calling on members to stop work at the huge copper mine after the second major accident in just over two weeks.

Company and government officials could not be immediately reached for comment, but the latest accident at the world’s second-biggest copper mine raises questions over how much longer Freeport will be able to supply its customers.

“The victim is still in a critical condition. Hopefully, we can save his life,” Papua-based union official Virgo Solossa told Reuters by telephone. He had earlier said the worker had been killed.

“We hope this is the last incident ... that’s why we ask the company to stop all activities at the mining area to review safety systems for the sake of the workers.”

Another worker at the mine, who asked not to be identified, said that two other workers were rescued and taken to hospital after the tunnel collapse at the Deep Ore Zone (DOZ) underground mine in the Grasberg complex.

Freeport suspended operations at the complex in eastern Indonesia on May 15, a day after a training area in another tunnel, away from the site of its main operations, caved in on 38 workers.

Twenty-eight people died in what was one of the worst mining disasters in Indonesia’s history.

The accidents raise concerns over whether Freeport will have to default on shipments to customers.

They also cast doubts over Freeport’s ambitious plans to turn Grasberg into the world’s biggest underground mining complex after 2016 when its open pit operations are due to end. Open pit mining currently accounts for two-thirds of production.

“You have to ask questions of Freeport,” said one Singapore-based industry source. “Is it the result of a seismic event, or has the underground mine become unsafe after the recent collapse?”


Industry sources say large mining operations typically have three to four weeks of ore stockpiled at port, and around three days on site.

Freeport declared a force majeure on some concentrate sales about one month into a 2011 strike, freeing itself from some of its contractual supply obligations.

Freeport said on Wednesday it had resumed some operations at the mine, which also holds the world’s largest gold reserves. The union had reiterated that work would not resume until all investigations into the May 14 accident were complete.

“This latest accident shows how Freeport management is arrogant after they have forced themselves and the workers to go back to work and re-start production activity,” the union’s Solossa said.

“That’s why the union calls on all workers to stop working at all Freeport mining areas,” said Solossa. The union represents about 18,000 of the mine’s 24,000 workers.

After the May 14 tunnel collapse, the company and the union put on hold pay talks that began on May 13. Relations have remained strained between the two sides since a three-month strike in late 2011.

Freeport Indonesia’s sales are expected to reach 1.1 billion pounds of copper and 1.2 million ounces of gold in 2013, up 54 percent and 31 percent over 2012, respectively.

Open-pit mining at Grasberg normally produces around 140,000 tons of copper ore a day, while underground operations yield 80,000 tons.

The problems at the mine have helped underpin copper prices, although a prolonged shutdown would be necessary to hit world supplies, which are still seen in a small surplus this year.

Freeport has been drawing on stocks to keep up overseas shipments during the production shutdown.

There was no immediate impact on copper prices on Friday with benchmark three-month copper on the London Metal Exchange trading at $7,268.75 a ton, slightly higher than where it was trading after the mine closure.

Additional reporting by Sam Wanda in Timika, Fergus Jensen and Michael Taylor in Jakarta, and Melanie Burton in Singapore; Writing by Michael Taylor; Editing by Jonathan Thatcher and Ed Davies

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