Freeport Workers End Strike

JAKARTA

Workers at a giant mine in Papua owned by US company Freeport-McMoRan ended their three-month strike over wages after reaching a deal with the company on Wednesday, a union spokesman said.

Under the agreement workers will receive a 37-percent pay hike over the next two years.

“The deal has been signed this evening by (union) chairman Sudiro, who represented the workers and PT Freeport Indonesia’s president director and CEO, Armando Mahler,” Juli Parorrongan said, adding that workers would resume work on Saturday.

Around 8,000 of Freeport’s 23,000 workers in Papua have been on strike since September 15, crippling production at the Grasberg mine, which holds the world’s largest gold and second-largest copper reserves.

The employees are to initially receive a 24-percent increase in pay in the first year and an additional 13 percent in the second, Parorrongan said.

“This is just the beginning of our fight,” he said.

“Although this is not as much as our first demand, we feel that we have reached the peak of our struggle… In the future, we want to be treated as a partner by the company,” he added.

PTFI, Freeport’s Indonesian subsidiary, said it had also agreed to provide “improved benefits” to workers such as housing allowances, educational assistance and retirement savings plans.

It would also pay a one-off bonus equivalent to three months’ salary, it added.

“PTFI management is pleased to have reached mutually acceptable terms with its union workers and appreciates the support and assistance of the various government agencies in reaching a resolution for the benefit of all stakeholders,” the statement said.

The strike has slashed production by 50 percent, prompting the company in October to declare force majeure – a legal declaration of extraordinary circumstances enabling it to avoid liability on existing orders – as it was unable to deliver shipments to some customers.

On Wednesday PTFI said full operations were expected to be restored by early 2012.

Workers originally demanded a 20-fold increase, from a minimum of US$1.50 an hour to $30, but their demands steadily declined.

The Energy and Mineral Resources Ministry’s director for minerals and coal, Thamrin Sihite, said the government welcomed the deal.

“We completely support the agreement and this will be a valuable lesson for all parties,” he said, adding that the dispute had “significant impact” on workers, the company as well as the economy.

The strike is one of a wave of industrial actions across Indonesia, where the cost of living is rising and a burgeoning middle class is demanding a greater share of the nation’s economic success.

The action at Grasberg triggered a spate of violence, with at least eight people killed in ambush attacks and a clash with police in the restive province.

Last month President Susilo Bambang Yudhoyono called for an “immediate solution” to the dispute as the government lost billions in taxes and royalties from the company due to the strike.

The workers claimed to be Freeport’s lowest-paid employees in the world, including those at mines in Africa and South America.

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