Skip to content

Dow Jones: Toll Rises to 17 in Indonesia’s Worst Mine Disaster, 11 Missing; Unions Demand Shutdown Continue

May 21, 2013

May 20, 2013

Dow Jones Newswires

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

"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.

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: