London Calling on a Tale of Two Disasters
Published by MAC on 2013-05-21Source: Nostromo Research, Jakarta Globe, Bloomberg
Grasberg & Bingham Canyon - a common link
It's almost certainly the worst officially-recorded mining disaster in recent Indonesian history.
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| Workers take part in the rescue effort at Grasberg. Photo: Reuters |
On Tuesday, 21 May 2013, twenty eight mineworker were confirmed dead as the result of a tunnel collapse at Freeport's Grasberg operations in Papua during the previous week.
(For further details of this appalling event, read the articles posted below).
For the moment we'd like to turn back the page to a strikingly similar ocurrence, a few weeks ago in the United States.
In April, a huge landslide destroyed much of Rio Tinto's massive Bingham Canyon open pit workings in Utah.
Fortunately, no one was injured, since the company had cleared the site of all personnel well in advance, anticipating the rockfall through its sophisticated monitoring of underground movements. See: Rio Tinto's Utah copper mine evacuated after land slide
Ironically, a dozen or so years ago, at a Rio Tinto AGM in London, a representative of the United Steelworkers of American (USWA) urged the company not to treat its north American workers "as if they were Indonesian". (He was later upbraided by a staff member of the union for making this discriminatory judgment).
Blood on more than one hand
At the time, Rio Tinto was the biggest single investor in Freeport - a point stressed by other dissident shareholders.
Indeed, Rio Tinto continues to this day benefiting hugely from its entitlement to 40% of Grasberg's gold and copper output - courtesy of the labour of hundreds of other such workers.
The company has claimed on several occasions, since sealing its joint venture agreement with Freeport in 1996, that it's been instrumental in improving the mine's environmental and social performances.
Why then, didn't Rio Tinto long ago urge Freeport to incorporate an underground monitoring system to Grasberg, potentially saving the twenty eight lives now sacrificed?
You can draw your own conclusion...
[London Calling is published by Nostromo Research. Comments made in this column do not necessarily reflect those of any other person or party. Reproduction is welcome under a creative commons licence].
Bloomberg: Freeport Death Toll Reaches 28 as Indonesia Reviews Mines
By Madelene Pearson
Bloomberg
21 May 2013
Jakarta/Singapore. The death toll from a collapsed tunnel at Freeport-McMoRan Copper & Gold Inc.'s Grasberg complex reached 28 as Indonesia said it would review all mining operations following one of its worst mining accidents.
The rescue team recovered the remaining bodies that were buried at the accident site of the world's second-largest copper mine, Thamrin Sihite, director general of coal and minerals at the Energy and Mineral Resources Ministry, told reporters on Tuesday in Jakarta.
Operations at the mine in Mimika, Papua province, about 3,120 kilometers east of Jakarta, will remain suspended until after an investigation is concluded, the government said.
President Susilo Bambang Yudhoyono ordered related ministries to review safety at all mines in Indonesia, Sihite said earlier.
Phoenix, Arizona-based Freeport, which got 20 percent of its operating income from Indonesia last year, was still shipping material produced from the mine as of May 17, its local unit said last week.
Ten workers have been rescued from the site, Freeport said on Tuesday.
The "Freeport accident is one of the worst mining accidents inI ndonesia," Sihite told reporters in Jakarta on Tuesday. "I don' t want this to happen again."
The death toll compares with 31 from a blast at a coal mine inIn donesia's West Sumatra province in June 2009.
Freeport Indonesia had no update on shipments, Daisy Primayanti, vice president of corporate communications, said on Tuesday.
CEO Arrives
"I am deeply saddened and disturbed by this event," Adkerson said in a statement on Monday. "Our focus continues to be continuing efforts to gain access to the victims still buried at the accident, carried out as quickly as can be done safely."
Indonesia generated $1.3 billion in operating income for Freeport last year, according to data compiled by Bloomberg.
Freeport owns 91 percent of the mine, which also produces gold, and Indonesia's government holds the rest, according to the company's website.
A government team has started an investigation into the accident, studying geological data, structure and maps, Sihite said.
Once the evacuation process is finished, the team will check the site to determine the cause of the accident, he said.
"Grasberg mine operations including milling will be stopped until the investigation is concluded and Freeport has agreed to this," Sihite said.
The halt applies to underground and open-pit mining, he said. "Only maintenance works are allowed. We will investigate all operations."
Tunnel collapse investigations must be complete before workers return - Union
Reuters
23 May 2013
JAKARTA - All investigations into a tunnel collapse that killed 28 people at FreeportMcMoRan Copper & Gold Inc's Indonesian copper mine must be completed before workers return to the world's No.2 copper mine, a trade union leader said on Thursday.
Arizona-based Freeport suspended operations at the remote Papua mine on May 15 at a cost estimated at about $15 million a day in lost production, a day after a training tunnel away from its main operations fell in on 38 workers.
"We will get back to work after all investigations conducted by government, Freeport and labor union are completed," Papua-based union leader Virgo Solossa told Reuters. "We still don't know how long the investigation will take, perhaps in a few more days to go, I don't know."
Toll Rises to 17 in Indonesia's Worst Mine Disaster, 11 Missing; Unions Demand Shutdown Continue
Dow Jones Newswires
20 May 2013
JAKARTA, Indonesia - PT Freeport Indonesia's massive mining operations in Papua remained closed Monday, with labor unions demanding the shutdown continue until remaining bodies are recovered in Indonesia's worst mine disaster, a tunnel collapse last week that appears to have claimed 28 lives.
Markets remain unaffected by the news, with traders saying the shutdown appears temporary and the company assuring that it has stock of gold and copper to cover existing orders. In 2011, a three-month strike at the mining site substantially cut the company's production, pushing the company to declare force majeure when it couldn't deliver
on some orders.
The confirmed death toll rose to 17 on Monday, as nine more bodies in the past 24 hours were pulled from a training site hundreds of meters underground at Freeport's remote mining operations in the snow-capped mountains of Papua, eastern Indonesia.
The company's mines in the area include Grasberg, the third-largest open-pit copper mine in the world and the largest gold mine. Grasberg lies more than 4,000 meters above
sea level on the Indonesian half of New Guinea island.
The company said 38 workers had been in a small training room 500 meters below the surface last Tuesday, not far from the Grasberg mine, when the roof caved in. Ten workers were safely evacuated the following day and 17 bodies have since been removed. The government said last week that a full investigation will begin once the recovery
operation is complete.
The company said over the weekend that rescuers were no longer detecting heartbeats from the rubble, leaving local police to expect the final death toll will be 28 workers.
That toll appears to be the highest ever in Indonesia's multi-billion-dollar mining industry, one of the country's biggest recipients of foreign direct investment.
Dozens of illegal miners were killed in landslides in the last decade near the site of Pongkar, a gold mine operated by state-owned PT Aneka Tambang, and other mining
companies have seen close calls. But the regulated industry has largely avoided large-scale disasters.
"From the number of the casualties, the number is big relative to other underground mining accidents," said Syahrir AB, executive director of the Indonesian Mining Association.
Within days of the accident, which occurred near an underground mine next to the massive Grasberg mine, Freeport Indonesia announced it was shutting down operations at all its mines in the remote location, although it said no operations were directly affected by the collapse.
Freeport has been ramping up operations at its underground mines amid declining surface production.
On Monday, trade unions said they were demanding the closure stay in effect until all bodies are recovered.
"This is the demand of all workers," said Virgo Sallosa, a spokesman for a union of Freeport subcontractors.
Markets haven't reacted to the closure, taking their cue instead from lackluster economic news in China and other major economies. So far, benchmark London Metal Exchange copper futures have shrugged off the news, partly due to a substantial stock overhang in the global copper market.
"At the moment, the market is looking more on the macro side. There's plenty of inventory flowing around, so there's not any concern about supply," said Ker Chung Yang, an investment analyst at Phillip Futures in Singapore.
If this proves to be a prolonged incident of several months, however, "the market may start to get worried," Mr. Ker added.
The Freeport outage has come during China's peak demand season for copper, and suppliers there say buying from automotive and white goods manufacturers has been picking up in recent weeks.
Freeport Indonesia, a unit of Arizona-based Freeport-McMoRan Copper & Gold Inc. (FCX), is Indonesia's largest taxpayer, sending more than $2 billion a year to state coffers.
--Deden Sudrajat in Jakarta and Clementine Wallop in Singapore contributed to this article.
Hopes fade for those still trapped in Freeport Indonesia mine
Reuters
18 May 2013
JAKARTA - Freeport McMoRan Copper & Gold Inc said on Saturday that rockfalls were hampering rescue efforts after a tunnel collapse four days ago at its giant Indonesian copper mine, with hopes fading of finding alive any of the 23 still missing.
Freeport closed the world's second largest copper mine on Wednesday, a day after a tunnel fell in on 38 workers undergoing training. Five are known to have died. Several of the 10 rescued are still in hospital.
The Grasberg mine in West Papua is in one of the most remote regions of the Indonesian archipelago.
"We continue to carry out these (rescue) efforts non-stop, 24 hours a day as quickly as can be done safely to do everything possible to save lives, but as more time passes the possibility of there being any survivors becomes less likely," Freeport Indonesia's Mine General Manager, Nurhadi Sabirin, who heads the emergency response team, said in a statement.
Rockfalls were slowing rescue efforts, he said.
The company is using a device to detect vibrations to help find out if any of those trapped are still alive.
"This device has detected vibrations that could be consistent with a human heartbeat, but this is not conclusive and could be caused by a number of other vibrations," he said.
"We have not detected any other potential signs of life in the past 72 hours."
The training tunnel is outside the mining area and around 500 meters (yards) from the entrance of the Big Gossan mine.
A trade union leader on Friday demanded that Arizona-based Freeport keep the mine closed while it investigated the accident, which he blamed on the company.
"All operational activities, including production activities, have to be stopped during the investigation process," union leader Virgo Solossa told Reuters.
"We think that the accident has been caused by the company's carelessness. This has to be investigated."
Freeport Indonesia's President Director, Rozik Soetjipto, said in the statement that once the rescue efforts are finished, the company would launch an investigation with help from international experts and Indonesian energy and mines ministry officials.
The statement made no reference to how long operations might be suspended at the mine, which also holds the world's largest gold reserves.
The initial impact on supplies is likely to be minimal, as the company keeps large stockpiles at the mine site. That would change if the closure drags on.
The accident could also fray already fragile relations with the union, which went on a three-month strike in 2011. On Thursday, the company and union put on hold pay talks that began on May 13.
The Grasberg mine has been a frequent source of friction over how its rich resources are shared between locals, the company and Jakarta.
Around 50 percent of the mine's copper is shipped to smelters that Freeport either owns or part-owns in Indonesia and the United States, analysts say.
Freeport declared a force majeure on some concentrate sales about one month into the 2011 strike, freeing itself from some of its contractual supply obligations.
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.
(Reporting by Jonathan Thatcher, Michael Taylor and Yayat Supriatna, Writing by Jonathan Thatcher; Editing by Ron Popeski)
Freeport Halts Indonesia Mining After Tunnel Collapse Kills 4
By Liezel Hil & Eko Listiyorini
Jakarta Globe
15 May 2013
Freeport-McMoRan Copper & Gold Inc. suspended operations at the world's second-largest copper mine, where four people were killed and 25 remain trapped after a tunnel collapse at the Grasberg complex in Indonesia.
Mining was halted in sympathy for the victims of the accident, which had no direct impact on operations, Freeport Indonesia President Director Rozik Soetjipto said in Jakarta on Wednesday. The company has enough stockpiled material to supply shipments for as many as two days, he said.
Grasberg in Papua includes underground and open-pit operations and is the world's second biggest by output, Freeport said in a presentation on Tuesday. The complex generated $3.92 billion of revenue for Freeport last year, or 16 percent of the Phoenix-based company's sales. Freeport owns 91 percent of the mine, which also produces gold, and Indonesia's government holds the rest, according to the company's website.
Thirty-nine workers may have been in a classroom at an underground training facility when a tunnel collapsed on Tuesday, Freeport said in an e-mail on Wednesday. Ten survivors have been evacuated and are reported to be in a stable condition.
Freeport is inspecting the structure of the underground mines at Grasberg, Soetjipto said. He declined to comment on the suspension's potential impact on production.
Before the latest stoppage, output at Grasberg was disrupted in both 2011 and 2012 after labor unrest and violence. The company said in a February filing that 15 people died and 57 were injured in 37 shooting incidents in and around the complex between July 2009 and February 15.
Freeport declined 1.2 percent to $31.21 at 9:30 a.m. in New York.
Freeport Indonesia mine should stay shut to probe tunnel collapse -union
By Yayat Supriatna and Michael Taylor
Reuters
17 May 2013
- Suspension of copper mining enters third day
- Tension between union, Freeport could spook investors
- Indonesia president calls for investigation
JAKARTA - Freeport McMoRan Copper & Gold Inc's Indonesian copper mine should remain closed for an investigation into a tunnel collapse that has left five dead and 23 missing, a trade union leader said on Friday.
Thirty-nine workers were attending an underground training class away from the main operations at the world's No.2 copper mine when a tunnel fell in on them on Tuesday.
Freeport Indonesia, which on Wednesday halted work at the Grasberg mine in the remote West Papua province as a mark of respect to those killed or trapped, could not immediately be reached for comment on Friday.
"All operational activities including production activities have to be stopped during the investigation process," union leader Virgo Solossa told Reuters.
"We think that the accident has been caused by the company's carelessness. This has to be investigated."
Freeport had said on Wednesday that it was still too early to identify the causes of the incident and that it would continue to look into the collapse.
Operations at the mine, which also holds the world's largest gold reserves, remained suspended on Friday, according to Solossa and a source with knowledge of the matter.
Any impact on supply would initially be minimal as the mine keeps stockpiles in reserve in case of disruptions, but that would change if the closure drags on.
Investors will also be wary that the incident could further sour relations between the union and the Arizona-based firm, with memories still fresh of a three-month strike in late 2011.
On Thursday, the company and union put on hold pay talks that began on May 13.
Indonesian President Susilo Bambang Yudhoyono called for an investigation and for rescue efforts to be intensified in a Twitter message late on Thursday, urging all companies in the country to improve safety for workers.
The Grasberg mine has been a frequent source of friction over how its rich resources are shared between locals, the company and Jakarta.
Around 50 percent of the mine's copper is shipped to smelters that Freeport either owns or part-owns in Indonesia and the United States, analysts say.
Training Tunnel
Solossa said the government should take "firm action" and questioned why the company built the training centre in an underground area, as well as the building's structure and safety procedures.
"Freeport also has to show full responsibility for the victim's treatment and compensation," he said, adding that the firm should replace workers injured or killed with their relatives.
The training tunnel was located outside the mining area and around 500 metres from the entrance of the Big Gossan mine.
Freeport Indonesia President Director Rozik Soetjipto, who was at the mine site on Thursday, ordered field teams to make a new round of inspections in all underground structures to ensure that they are safe.
Despite the suspension of operations, which was being reviewed on an hourly basis, Freeport Indonesia has said that production was not expected to be significantly affected.
Freeport declared a force majeure on some concentrate sales about one month into a three-month strike in late 2011, freeing itself from some of its contractual supply obligations.
"In locales like this, that are more prone to geological and employer unrest and also from a weather aspect too, they have to be well prepared for periods where there may not be much in the way of mine production," said Gavin Wendt an analyst for MineLife in Australia.
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.
"You will be looking at about four weeks of supply in stockpiles to ensure that the operation can keep chugging along," he added. "If it continues on, you'll start to see an impact on copper prices ... After a week and if there is a prospect that it will linger on."
Benchmark copper on the London Metal Exchange was little-changed at $7,300.75 a tonne by 0846 GMT.