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Freeport Indonesia Says 1 Month to Fix Cut Pipeline
Olivia Rondonuwu | November 01, 2011

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Freeport Indonesia will take a month to fix its main sabotage-hit pipeline to take concentrate from the world’s second-biggest copper mine to its port, where there are no stockpiles left for shipping.

No further concentrate was heading from the massive Grasberg mine to its port in the remote Papua region either, the firm said, implying the force majeure that it declared last week on some concentrate sales could be expanded or extended in length.

Freeport said on Tuesday it was evaluating the force majeure, and declined to say which customers had been affected.

Freeport McMoRan Copper & Gold Inc briefly halted production at Grasberg in mid-October because of sabotage to the pipeline and said on Tuesday it is still only operating and producing ore at “reduced levels.”

The US miner has been hit by attacks on equipment and staff and blockades to its food and fuel supply routes during a six-week strike by mine workers seeking better pay and conditions, setting back its efforts to maintain some output using contract workers.

“Freeport has initiated repairs to the damaged pipelines but has not been able to gain full access to the affected areas of the pipelines because of the road blockades by striking workers,” said Freeport spokesman Ramdani Sirait.

Grasberg holds more gold and copper reserves than any other mine and also produces silver. The supply disruption has been supportive for copper prices , which have been under strong pressure due to concerns over the global economy.

Blockades

The firm showed reporters at a news conference pictures of unidentified people cutting pipelines, for both concentrate and fuel. Sources told Reuters that several pipelines have been cut in recent weeks, though it was not clear how significant these pipes are.

The firm is ordering in replacement pipe to fix the main 120-kilometer-long pipeline that takes concentrate from the mountain mine to the port, after it was cut on Oct 17.

It was not clear whether the sabotage to pipelines was done by disgruntled workers or by members of a Papua independence movement, which has been simmering for decades in the province to seek a greater share of its resource wealth.

Milling operations have been suspended because of the pipeline damage, Sirait said.

Indonesian police have said they aimed to lift the roadblocks on Tuesday, although miners warned that would lead to violence and it was not clear if the police went ahead.

The firm is facing a serious fuel shortage, though striking workers have agreed to allow jet fuel through blockades to supply the nearest airport in Timika, a worker said on Tuesday. The firm uses the airport to fly in supplies and people.

Sirait said the strike is costing Freeport Indonesia, part owned by the Indonesian government, around $18-$19 million daily.

The central and local governments have tried to mediate pay talks between firm and the union, representing 8,000 workers, in recent days to try to end the strike, but no deal has been reached so far. The union has rejected a 30 percent pay rise offer as it holds out for a fivefold increase.

Arizona-based Freeport, the world’s largest publicly traded copper producer, has cut its full-year copper sales outlook to 3.8 billion pounds from 3.9 billion pounds earlier because of the strike, though still beat Wall Street estimates in the third quarter because of soaring gold prices .

Reuters