Freeport to reduce Indonesian mining activities: smelter official

[JAKARTA] Freeport-McMoRan Inc has warned it will scale back activities at its Indonesian copper mine, an official at Indonesia's main copper smelter, PT Smelting, said on Wednesday, amid a worker strike and other issues.

Freeport's Grasberg mine in Papua, Indonesia, is the world's second-largest copper mine, and recent disruptions there have helped support a jump in copper prices.

Grasberg had aimed to produce around one-third of the Freeport's total copper output this year, up from less than a quarter in 2016, as it digs into higher-grade ores. "Freeport has just issued a notice this morning that they will reduce (mining) activities in stages," Smelting director Prihadi Santoso told reporters. "We are trying to meet our commitments to our clients," he said, declining to comment on what had sparked the strike at the mine or how many people were involved.

PT Smelting is 60.5 per cent owned by Mitsubishi Materials Corporation, while Freeport Indonesia holds 25 per cent.

Lower output from Grasberg would affect Smelting, which processes around 40 per cent of the mine's copper concentrate production, Santoso said, noting he did not know how much the volumes would be cut.

A spokesman for Freeport Indonesia confirmed by text message that it had sent out a notice on output cuts at Grasberg.

Last week, Phoenix-based Freeport warned it could be forced to cut staff, spending and production in Indonesia if it did not get a new export permit by mid-February.

Freeport CEO Richard Adkerson said in late January that labour issues were hampering production as Grasberg targets to wind up its open pit mining in late 2018. "As we've approached the completion of the pit, workers have been raising complaints, grievances, and have simply not been meeting productivity standards," he said.

A spokesman for Freeport workers union did not respond to requests for comment.

Indonesia's Coal and Minerals Director General Bambang Gatot said on Wednesday that Freeport had not been issued with a new permit yet and there had been no reports of layoffs.

Freeport said on Friday last week it was still working with the Indonesian government to resolve issues after exports of its copper concentrate were halted Jan 12. The Southeast Asian country banned export shipments of semi-processed ore to boost its local smelter industry.

Copper prices on the London Metal Exchange have climbed 6 per cent on supply concerns since Indonesia stopped Freeport's concentrate shipments and as a strike looms at top copper mine Escondida.

REUTERS