Bad news for those hoping global mining giant Freeport McMoran Copper & Gold (FCX, quote) would resume output from its Grasberg mine in eastern Indonesia in the near future, but this is a positive for copper prices.
Grasberg is the world’s third-biggest copper mine. A senior Freeport official said Tuesday that the company still needs to repair pipes used to transport concentrates while a labor dispute at the mine remains unresolved.
Fixing the concentrate pipes will take a long time and as yet there is no timetable for repairs.
Freeport declared force majeure on October 22, effectively acknowledging that it will be unable to meet copper supply contracts that depend on the mine’s output.
Following a short 8-day strike in July, workers at the Grasberg mine have now been on strike since September 15 demanding a significant wage increase.
Striking workers are seeking a hike in the minimum wage of roughly $1.50 an hour to $7.50 an hour. This translates to about 78 million Indonesian rupiah a month.
But the gap between what workers are demanding and what Freeport will pay is vast.
The most recent wage talks offered workers a minimum monthly wage of 11 million Indonesian rupiah or approximately $1,200 a month, along with a raise to 19 million rupiah next year.
At the strike drags on, losses mount for Freeport. Officials estimate that the strike has led to daily losses of $18 million to $19 million for the company.
However, since supply of copper is already tight, this is supporting prices of the key industrial material and giving mining stocks — including Freeport — a lift.