MAC: Mines and Communities

Papuan Miners End Strike against Freeport-Rio Tinto

Published by MAC on 2011-12-20
Source: Statement, Al Jazeera, Reuters

Struggle "now enters the workplace".

It's been one of the largest industrial actions recently undertaken by mineworkers anywhere in the world.

For just over three months, 10,000 of them were pitted against Freeport-McMoran and its joint venture partner Rio Tinto.

See: Papua: Freeport-Rio Tinto labour battles have no end in sight

Now the trade unionists have agreed to settle with the two mega-miners.

Although they haven't won all the concessions they originally demanded (far from it) most of them should now return to work at the Grasberg copper-gold mine in Papua (West Papua).

"We are not entirely happy with the wage deal," said union bargaining committee member Juli Parorrongan.

"We made the decision to settle due to humanitarian reasons and out of concern for our workers. They have no money, very little to eat, and having no pay checks have pushed them to the brink of poverty".

"But this is not the end, only the beginning. The energy and unity of our struggle now enters the workplace." 

Editorial note: A recently-released 5 minute video sheds some further light on the nature of the workers' 94-day struggle. See:


Proud Indonesian Miners' End Strike with Freeport-McMoRan

International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) News release

14 December 2011

Indonesia - An agreement was signed in Jakarta today between PT Freeport Indonesia Workers' Union (SP KEP SPSI) and management of the world's largest gold and second largest copper mining complex - Grasberg in Papua province - that will end a 94-day strike on Saturday, 17 December. The strike pitted a low-wage but determined and enlightened workforce against a global extractive resource company, US-based Freeport-McMoRan that has Grasberg at top of its massive revenue stream.

Conflict during the strike at Freeport's Grasberg mine
Conflict during the strike at Freeport's Grasberg mine
Source: EPA/Al Jazeera

The agreement put together in Jakarta this week, with the assistance of the Indonesian government, falls short of workers' wage demands, but union-winning gains were made that will allow the 10,000 striking miners to return to their jobs with heads held high.

Firstly, striking miners will be paid their lost salaries during the three-month strike. Secondly, in a last minute company concession early today, disciplinary action against a number of strikers has been withdrawn and complete amnesty accorded. Further, a central issue in the dispute was resolved in favour of the union.

All allowances - health care, housing, education, shift premiums, service-year bonuses, and a metal bonus - will be calculated on fixed costs rather than Freeport-McMoRan's demand of variable cost schemes. Grasberg miners will receive a 24% increase on their back-dated wages to 1 October 2011. In October 2012, they will receive a 13% increase.

Some 7,000 of the striking mineworkers, PT Freeport Indonesia (PTFI) employees termed non-staff workers, had earned between US$2.13 per hour and US$2.54. The 37% falls short of the union's most recent demand to increase wages to US$4.50 per hour this year and then by US$3 per hour in 2012.

But the resolve of workers and union leaders alike to bring the world's largest recoverable gold and copper deposits to a grinding halt was a lesson of worker solidarity and unity to trade unions across the globe, and many paid special attention to the developments of this strike.

"We are not entirely happy with the wage deal," said union bargaining committee member Juli Parorrongan. "We made the decision to settle due to humanitarian reasons and out of concern for our workers. They have no money, very little to eat, and having no pay checks have pushed them to the brink of poverty.

"But this is not the end, only the beginning. The energy and unity of our struggle now enters the workplace." Much of that energy was concentrated in a fierce blockade by strikers and their families at Mile 28 on the lone road between Timika on the Arafura Sea and Grasberg open-cast and underground mines in the central highlands of Papua.

That pivotal blockade prevented PTFI from getting supplies in and more importantly, it severely hampered the company from making repairs on 114-kilometre slurry lines that carried Freeport-McMoRan's daily 230,000-tonne output to Timika and global markets. Pipelines were vandalized during the early stages of the strike by people seeking to siphon off small portions of the company's riches for sale on black markets. PTFI declared force majeure on 22 October, five weeks into the strike.

The 15-member bargaining team of PT Freeport Indonesian Workers' Union, part of the national Chemical, Energy, Mine Workers Union (CEMWU) of SPSI, will return to Timika from Jakarta tomorrow, 15 December. On 16 December, they will hold a mass meeting with strikers to brief them on the agreement, and then hold a ceremonial end to the blockade at Mile 28.

One outstanding issue concerning the International Federation of Chemical, Energy, Mine Workers' Unions (ICEM) is local police charges in Timika against nine union leaders. They are under investigation for disturbing the public order in blocking the Grasberg road and access to the mine and milling operations.

In months-long involvement in this dispute, the ICEM is convinced that Indonesian labour code asserts that PT Freeport Indonesian Workers' Union were within their legal rights to engage in strike activity at blockade points.

"The ICEM applauds the resourcefulness of Grasberg miners in carrying out this strategic strike," stated ICEM General Secretary Manfred Warda, "and it is now in the best interests of both the company and workers for local authorities to drop recriminations over what we know to be legitimate strike activity."

The ICEM is a Geneva-based 20-million-member global trade union federation.

For more information, contact ICEM Information Officer Dick Blin, +41 79 734 8994, or +1 615 292 6284.

Deal to end Indonesia Freeport strike

Workers agree to pay rise far short of their demands, ending three-month strike during which nine workers were killed.

Al Jazeera

14 December 2011

A wage deal has been reached to end a three-month strike at a giant gold and copper mine in Indonesia owned by US company Freeport-McMoRan, the workers' union said.

"Freeport and the workers union have agreed to a 37 per cent increase, but we are still waiting for it to made official in coming days," Juli Parorrongan, a union spokesperson, told the AFP news agency on Wednesday.

"It will be paid over two years, starting with a 24 per cent increase. If all goes as planned, we will return to work on Saturday."

The rise falls far short of the workers' initial demands from the world's most profitable gold and copper mine. They earn an average of $1.50 per hour, and were seeking a pay rise of 300 per cent.

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

Around 8,000 of Freeport's 23,000 workers in Indonesia's Papua province 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.

Strikers shot

The strike was met by violence, and a total of nine people have died since the walkout began. Several of the striking workers were shot by police during a protest.

The strike is one of a wave of industrial actions across Southeast Asia's largest economy, 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 already restive province.

The strike has slashed production by 50 per cent, 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.

Freeport has a controversial history in West Papua, which dates to the 1960s, when Indonesia annexed the territory.

Indonesia officially took over Papua in 1969, but gave Freeport the contract for Papua beforehand. For this reason, pro-independence activists see the company as complicit in the occupation of their homeland.

Striking Freeport Indonesia workers to return to work on Sat

By Olivia Rondonuwu


14 December 2011

JAKARTA - Striking workers at Freeport Indonesia will return to work on Saturday after agreeing to a pay deal to end a three-month dispute that has paralysed output at the world's second-biggest copper mine, a union official said on Wednesday.

Freeport McMoRan Copper & Gold Inc and the union are expected to sign a deal within days, which will include a pay rise of 37 percent over two years to end Indonesia's longest-running industrial dispute, the union has said.

"The firm has asked us to mobilise workers back to work on December 17 and we have agreed as part of the pay deal," union field coordinator Hengki Binur told Reuters.

The deal was meant to be signed on Tuesday but has been delayed, showing the timetable for the return of workers could also be pushed back. The level of benefits for workers and whether strikers should be penalised are seen as potential sticking points that could delay an agreement.

"We want one other condition -- we want a guarantee from Freeport and its units that the workers who have joined the strike will not get any problem when they return to work," said Binur.

Freeport's CEO Richard Adkerson has been in Jakarta in recent weeks to help negotiate a deal with the union. The company, which has said it is losing 2 million pounds of copper and 3,000 ounces of gold in daily production, declined to comment on the pay talks.

The strike action has helped support copper prices, which have been pushed lower on worries about weak global demand, so a resumption in output could be bearish for prices. Benchmark copper in London fell 0.9 percent on Wednesday.

The strike in Papua has been running since mid-Sept, and the firm declared force majeure on its exports from Grasberg in October, freeing it from contractual obligations.

Even after workers return, it is likely to take some days to ramp up production, and longer to resume shipments since the firm needs to repair a sabotaged pipeline that takes metal concentrate from the mine to its port.

The firm's operations have been crippled by attacks on pipelines, employees and blockades by workers and spear-wielding local tribesman that have cut off its food and fuel supplies in a remote region with few roads.

Binur said that the road blockades imposed since October will also be lifted once the pay agreement is made.

The union initially pushed for a pay rise to as much as $200 an hour, versus current pay of $2-$3 an hour. It steadily dropped its demands in recent weeks to around $7.50 an hour, a level still deemed "excessive" by Adkerson.

The pay agreement is closer to the 35 percent rise offered by the company in recent weeks.

Freeport Indonesia has 23,000 workers at its Grasberg operations. Many are Christian and have been worried they would not be able to afford to celebrate Christmas due to the strike, since they are not getting paid, leading to a greater push for a deal in the past week.

The strike has been the highest profile stoppage among several worker pay protests in Indonesia -- signs of growing unrest over rising costs and a sense that the country's economic success is not being shared by all.

Analysis - As Indonesia strikes it rich, workers start to strike

By Neil Chatterjee and Olivia Rondonuwu


1 December 2011

JAKARTA - When the Jakarta governor offered a hefty pay rise last week to workers, he successfully headed off a major strike. But almost immediately, workers went on the rampage in another part of the country demanding a wage hike too.

It is another illustration of the most recent and, for investors, troubling risk they face in what has become one of the darlings of the emerging economies.

The big drivers for the strikes have been high prices for the commodities that are the backbone of the Indonesian economy, rising costs and a strong sense that the country's widely trumpeted economic successes have not been shared.

"Workers are not dumb. They are going to see prices are high. They're going to say 'we want our just rewards'," said Dick Blin, spokesman for the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM), which covers the bulk of Indonesia's main industries.

The highest profile -- and so far most costly -- strike has been going on since September at the giant Freeport McMoRan Copper & Gold Inc mine where 8,000 miners in the remote eastern province are demanding better pay.

Though union leaders in other industries deny that the Freeport strike was their trigger, the number of strikes has begun to mushroom across a broad range of industries from supermarket to telecoms, threatening to temper investor enthusiasm for one of Asia's fastest growing economies.

"These strikes are dangerous and show how weak the government is in facing industrial disputes," said Sofjan Wanandi, a leading businessman and chairman of the Employers' Association of Indonesia.

"With this situation, businesses will re-consider their expansion and investment plans, as well as plans to relocate factories from China to Indonesia," he said.

Businessmen from South Korea, a top investor, were also expressing concern, he said.

Investors in Southeast Asia's biggest economy have long factored in industrial-scale corruption, a complex and lethargic bureaucracy and even militant attacks.

But industrial disputes in the densely populated society, which has had little more than a decade of democracy, is a much newer hurdle.

Union membership is still quite low in a country where militant union leaders just a few years ago could expect to be hounded into jail, or worse.

Poor Referees

Subiyanto, the Secretary-General of Indonesia's Chemical, Energy and Mining Union Federation, estimates that only seven percent of companies have unions and the total number of workers who belong to unions is 15 percent. The number, though, appears to be growing.

Some labour-related laws are decades out of date and the number of officials supervising companies is simply too small to cope, he said.

"The fact is that government supervisors in the regions are getting lower and lower in number. For example in Tangerang regency (an industrial region), there are not more than 10 supervisors overseeing over 4,000 companies. How can you possibly monitor relations between the workers and the capital owners?"

"It's like playing football when the referee is not firm and you can see the strong oppressing the weak."

Some of those strikes have turned violent, and tension over the failure to create enough higher value jobs in the predominately youthful population could become one of the biggest mid-term risks, some analysts say.

A planned strike last week in Jakarta by 85,000 unionised workers was averted after the city governor agreed to hike minimum wages by about 20 percent.

Almost immediately, there was a similar protest for higher pay by 10,000 workers in Batam, an island home to manufacturers from nearby Singapore.

This time the response was slow. The military had to guard industrial estates after a mob burned traffic police posts and cars and attacked a government office.

As Freeport considers lifting pay by as much as double for more skilled contractors to end its crippling strike, any high pay award risks setting a precedent.

"If somebody asks for more, everybody will follow. That's a fact," said Alwin Lubis, president director at Indonesian miner Aneka Tambang. "That is what we're worried about."

Rising Prices

The Freeport strike has come after gold prices doubled in the past two years. Prices for many commodities of which Indonesia is a leading exporter, such as tin, copper, coffee and cocoa, have also hit record highs in recent years.

"These commodity prices are a good opportunity to negotiate for better welfare, pay and wages," said Khoirul Anam, president of the Indonesian Forestry and Allied Workers' Union.

He said conditions were often little different from the days under Dutch colonial rule, arguing, for example, that palm oil workers should be paid three times as much.

"The bargaining position of labour in Indonesia has increased. However, it is not that much. They have slowly understood their rights and are demanding more," said Andriko Otang from the Trade Unions Rights Centre.

Billionaires and Low Salaries

The strikes have coincided with growing wealth on the back of the global price commodity boom and a burst in consumerism.

On the day workers rioted in Batam, others were injured in a 5,000-strong crush to get half price Blackberry mobile phones in the capital. Also that day, Forbes released a report saying the country had created four more billionaires, with the wealth of its Indonesia "Rich List" up by 19 percent to $85 billion (54 billion pounds).

Indonesia is creating millionaires faster than any other in the Asia-Pacific, according to wealth manager Julius Baer.

Yet monthly wages average $113, less than a half that in Thailand and a third of China's, according to the Asian Development Bank's latest data. And half the population survives on less than $2 a day, according to the World Bank.

Low-wage workers, seeing pay rises cancelled out by food prices climbing 15 percent last year, are being surrounded by growing consumerism and displays of wealth. Their expectations and perceptions of inequality are rising too.

"Many of us don't see any improvements in our life," said Sari, a worker making Adidas shoes in a footwear factory, a sector where plants have relocated from China and Vietnam in the past year after wage costs rose there.

"A factor that would make a person go on strike is when one feels trapped. We are going in that direction, so the likelihood for more strikes in garment, textile and shoe factories is huge."

(Additional reporting by Janeman Latul, Rieka Rahadiana and Michael Taylor; Editing by Jonathan Thatcher)

Freeport Cerro Verde, Workers Sign Three-Year Labor Accord

By Alex Emery


22 December 2011

Freeport-McMoRan Copper & Gold Inc.'s Peruvian unit, which ended a 61-day strike last month, said it signed a three-year labor accord with workers that will enable it to move ahead with a $3.5 billion expansion.

The agreement with Freeport's Sociedad Minera Cerro Verde SAA copper mine, which lasts through August 2014, includes a 5 percent wage rise in 2012, 4 percent annual increases over the following two years and a 24,000 soles ($8,888) signing bonus, union official William Camacho said today by telephone.

"We've achieved a temporary peace, although there are still issues pending," Camacho said today from Arequipa, 750 kilometers (466 miles) southeast of Lima. "This process strengthened our union and will set a precedent for future mining negotiations in Peru."

Workers in Peru, Chile, Bolivia and Indonesia held stoppages at copper, gold and zinc mines this year to pressure for better conditions and a bigger percentage of record profits after metal prices surged. Workers at Freeport's Grasberg mine in Indonesia ended a three-month strike last week after agreeing on a wage increase.

"We now look forward to continued safe production and future expansion opportunities at Cerro Verde," Freeport spokesman Eric Kinneberg said today in an e-mail.

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