Indonesia's Freeport mine will shut for 2 weeks

Indonesia's Freeport mine will shut for 2 weeks

October 10 2003

By Muklis Ali, Reuters

Jakarta - Indonesia's Mines and Energy Minister said on Friday that PT Freeport Indonesia will stop production from its open-pit gold and copper mine in Papua for two weeks, after a landslide killed two workers on Thursday.

However, U.S.-based Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX - News), whose unit PT Freeport Indonesia operates the mine, later clarified that only the parts affected by the incident would be closed.

Freeport-McMoRan spokesman William Collier said mining operations continue in "most" of the Grasberg open-pit mine, the world's largest gold mine. The company said another five workers were injured and six are missing after Thursday's landslide.

The company also said operations continue at its Deep Ore Zone underground mine, milling facilities and concentrate delivery systems at the site.

"We have sent a team to Freeport mine to investigate there," Mines and Energy Minister Purnomo Yusgiantoro told a news conference on Friday.

"Let's wait until the investigation team returns and then we will decide what we are going to do on policy."

Freeport Indonesia president director Adrianto Machribie said the company would still be able to meet export commitments using stockpiles and underground mines at Freeport's Papua complex.

He said Freeport has produced 80 percent of the copper and 85 percent of gold planned for 2003.

"We have stockpiles for seven days and we have underground mining," Machribie told the news conference. "We will fulfill our commitments until now."

Asked how long Freeport could meet its commitments, Machribie said: "It depends on how long (production is stopped)... If the minister says around two weeks, we feel no problem."

"We hope to repair the impact of this landslide as soon as possible. We are optimistic," he said.

The Grasberg deposit, discovered by Freeport in 1988, has the world's largest gold reserves and third-largest copper reserves.

Different from 2000

Freeport-McMoRan said in the United States on Thursday the accident would dent fourth-quarter output but not hurt long-term financial results. Its shares fell $1.41, or 3.77 percent, to end at $35.99 on Thursday.

Simon Sembiring, acting director general of geology and mineral resources from the Mines and Energy Ministry, said the incident differed from one in 2000 that led to a request to cut production.

"This is nothing to do with the company production," he said. In 2000, Indonesia had pressed Freeport to cut production following an accident at the company's Lake Wanagon waste dump that killed four workers and raised concerns about possible environmental damage.

Sembiring said senior officials from PT Freeport Indonesia had reported the incident to the mines and energy ministry on Friday morning.

Freeport McMoRan, based in New Orleans, Louisiana, mines and processes ore containing copper, gold and silver in Indonesia and smelts and refines copper concentrates in Spain and Indonesia.

The incident could increase tensions for the company in the region, human rights groups said, but a police official in the nearby town of Timika told Reuters by telephone on Friday that there were no signs of unusual activity.

Freeport has been subject to sporadic criticism on human rights and environmental issues, while Papuan pro-independence groups say not enough of the revenue the Indonesian government gets from Freeport and other multinational operations goes to the remote province, about 3,000 km (1,860 miles) east of Jakarta. (Additional reporting by Michael Erman in New York)