UPDATE 2-Indonesia says Freeport accident probe may last 3 months – by Kanupriya Kapoor and Michael Taylor (Reuter India – June 3, 2013)


JAKARTA, June 3 (Reuters) – Freeport McMoRan Copper and Gold Inc’s Indonesian copper mine will not be able to resume output until a probe into a deadly tunnel collapse is completed in about three months time, a government official said, adding to worries over metal supplies.

That length of stoppage would almost certainly hit Freeport’s ability to meet its contractual obligations, though the company has not said what level of stocks it has left.

Freeport suspended operations at the world’s No. 2 copper mine on May 15 a day after a training area in a tunnel, away from its main operations, caved in on 38 workers, in one of Indonesia’s worst mining disasters.

The Grasberg mine normally produces around 220,000 tonnes of concentrated ore a day, with around 140,000 tonnes coming from open-pit mining and 80,000 tonnes from underground operations. A three month stoppage at Grasberg would take an estimated 125,000 tonnes of copper out of the global supply chain.

The price impact so far has been relatively limited, although copper mine shutdowns elsewhere, coupled with supply log jams, could change this.

“It’s definitely a big deal. These disruptions are adding up,” analyst Dan Smith of Standard Chartered in London said.

A rockslide at Rio Tinto’s Bingham Canyon copper mine in April, the recent shutdown of India’s top smelter on pollution concerns and a shortage of feed stock scrap that has forced plants in China, the world’s top producer of refined metal, to cut capacity have all eaten into supply.

Arizona-based Freeport restarted open-pit mining production last Tuesday, but after another worker was killed on Friday after a safety breach, the mining ministry told Freeport to stop until after its investigation was completed.

“There is now an independent investigation team which will work on the minister’s orders for three months,” Director of Minerals at the Energy and Minerals Resources ministry Dede Suhendra said in a text message sent to Reuters on Monday.

“While the investigation is ongoing, there cannot be any production activity, except maintenance.”

For the rest of this article, click here: http://in.reuters.com/article/2013/06/03/indonesia-freeport-probe-idINL3N0EF1PQ20130603


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