Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Workers at Freeport’s Grasberg – one of the world’s largest gold and copper mines – in the remote Indonesian province of West Papua vowed Friday to paralyse production, as their strike over pay enters its second month.
About 12,000 of Freeport’s 23,000 Indonesian workers have joined the strike that started on Sept. 15 and on Friday Freeport said some workers have returned, putting it in a position to increase mining and milling output. The gulf between the the two parties are so wide that chances of a settlement appear remote – Freeport has offered a 25% increase on wages while the union wants the current minimum rate of $1.50 an hour raised more than 8-fold.
AFP quotes Virgo Solossa, spokesman for the workers’ union: “If we don’t get the pay increase we want, our goal is to stop production by November 15.” The current lowest wage is $1.50 an hour, which workers want raised to $12.50 while the maximum hourly rate of $3.50 it wants pegged at $37.
Reuters reports late last month, the company said about 4,200 workers at the mine, mainly contractors and non-union staff, have returned to work, allowing some mining to resume.
Freeport-McMoRan Copper & Gold Inc (NYSE:FCX) is the largest taxpayer in Indonesia and in the first week of the strike last month when production was slashed by 230,000 tonnes a day, it represented daily losses of $6.7 million in government revenue.
Chief Executive Richard Adkerson told Reuters on the sidelines of the African Copper conference in London: “There has been some softening in copper demand, but not to the extent seen in the copper price. There is a disconnect right now and that’s because investors are concerned about the future.”
Three-month copper on the London Metal Exchange traded at $7,280 a tonne in the afternoon from Thursday’s close of $7,225 a tonne, marking its third session of gains, after hitting a 14-month low on Monday.
Al-Jazeera has in-depth coverage on Grasberg where it found a history of violence: Freeport began to disclose security-related payments in filings with the US Securities and Exchange Commission in 2001. It confirmed annual payments reaching an average $5m each year for government-provided security of the Grasberg complex and its staff – and fluctuating annual costs reaching $12m for unarmed, in-house security costs. A spokesman for the company later told the Jakarta Post that these payments had been taking place since the 1970s.
4 Comments
John
How does the company expect employees to live deccent lives on $1.50 per hour?
TheEngineer
So here is more proof that the economic system you have requires people who do the work to live with a standard of living so low they should be happy rice and cigarettes and a place to pray. I guess since they are not europeans who left europe for a better life they are not entitled to one? Nobody I know epects these people to live like overfed americans, afterall, they just got pulled out of the stone age less than 100 years ago, but $1.50 with an offer of $1.85 is “lame”. What about $1.50 increased to $3.00, 100% increase instead of 25%?
OracleOne
If you pay them too much, then Indonesia might get developed as much as other developed countries are, then the rainforests would be removed and replaced with farmlands, etc. So, extract the resource you want and then un-develop the place so that the rainforest and other depopulated wilderness areas remain instead of the workforce. We need jungles and rainforests and wilderness areas more than we need 7 billion people in fully developed countries. I’m just saying.
Playersdad
welcome to the real world here in canada I have to work and complete with third world countries in the resource industry.well the cheap labour is about to end and then we will see how competative they will be .the largest miners don’t care about there workers its all about payoffs to the governments and profits .years back I can remember J SRedpath employees working at Grasberg and making between 100,000 to 160,000 U.S. a year and the natives making 1000.00 a year.