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Factbox - Vital information on Freeport Indonesia

Source
Reuters - December 13, 2011

A three-month labour strike at Freeport McMoRan Copper & Gold Inc's Grasberg mine in Indonesia looks to be nearing the endgame, after sources said the US-based miner and a workers union were expected to sign a pay deal on Tuesday.

The worst ever labour disruption in Indonesia's mining industry, which began in September, has crippled production at the world's second-biggest copper mine in the remote province of Papua.

Below are some facts and figures on Freeport Indonesia and the strike:– The two sides have agreed to a pay rise of 40 percent over two years to end Indonesia's longest-running industrial dispute, and will sign the agreement in Jakarta, say sources. The current pay is $2-$3 an hour. The union had demanded an hourly rate of $7.50.

  • In early December, the Freeport Indonesia union, which represents about 8,000 miners, said it planned to extend the three-month strike until Jan. 15.
  • The Indonesian government was losing $8 million worth of taxes, royalties and dividends every day the strike was on.
  • Freeport Chief Executive Officer Richard Adkerson has been in the Indonesian capital for weeks, trying to broker a deal.– Adkerson is ranked 29 on the Forbes' CEO compensation list, with total compensation of $25.29 million and five-year compensation at $179.1 million. He owns stock worth about $172.8 million.
  • Freeport Indonesia began mining operations at the Grasberg site in 1972 and in 1988 discovered the Grasberg mine. In 1991, a new contract was signed to tap the huge riches of Grasberg mountain. Two mines are currently in operation – the Grasberg open pit and the Deep Ore Zone underground block cave.
  • The Grasberg open-pit mine produces base metal copper, and precious metals gold and silver. It employs about 23,000 workers when at full-strength and is about 3,400 km (2,100 miles) east of Indonesia's capital, Jakarta.
  • The firm began open-pit mining at Grasberg in 1990. Open-pit operations are forecast to continue until mid-2015, at which time the Grasberg underground mining operations are due to start.
  • The multi-billion dollar Grasberg project holds more gold and copper reserves than any other mine in the world.
  • Before the strike, Freeport Indonesia's copper output was forecast to be 1 billion pounds in 2011, from 1.2 billion last year. Gold sales are expected to hit 1.3 million ounces this year, versus 1.8 million ounces in 2010 and 2.5 million ounces in 2009. The primary driver for the dip in output are differences in ore grades as Freeport Indonesia work through different sections of the mine.
  • Indonesia's government owns 9.36 percent in Freeport Indonesia, which accounts for 1.6 percent of GDP in Southeast Asia's top economy. Freeport, the world's biggest publicly traded copper miner, has previously said it is in talks with Papua province, about selling a stake in its Grasberg mine.
  • Last year Freeport spent $155 million on various sustainable development programmes in Papua, including nearly $70 million on community development in one of the country's poorest regions.
  • Freeport's aggregate capital spending on its development projects in the Grasberg mineral district, was estimated at $288 million in 2010. Over the next five years, aggregate capital spending on these projects is expected to average $600 million per year.
  • Rebels in the eastern province of Papua have waged a low-level insurgency against the government for four decades, and previously threatened to blockade the mine after police killed a separatist in an attack in late 2009.

[Sources: Reuters, Freeport website.Reporting by Michael Taylor.]

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