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Shaun Connell is the owner of Stand Strong Enterprises, a network of websites on commodities, stocks, and long-term investing.
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  • Production At Freeport Indonesian Copper Mine Resumes 0 comments
    Mar 13, 2012 2:19 PM | about stocks: FCX

    More than two weeks ago, violence stopped production at the Freeport-McMoRan copper and gold mine located in eastern Indonesia.

    According to Ramdani Sirait, a spokesman for the company, the worker union and management reached an agreement regarding resolution last week. The parties worked together to get workers to the mine site.

    An 8,000-worker strike was held at the Grasberg mine from September to mid-December, but not all workers and supervisors participated. The strike ended on December 14 after workers received improved benefits and a 37 percent increase in wages. However, some of the workers who did not participate were later subjected to intimidation and violence by those who did. This resulted in the February 23 suspension of mine operations and the arrest of three workers.

    As copper prices fell on markets around the globe on Monday, production resumed at the mine. Located in the highlands of Papua, Grasberg is the largest gold mine and second-largest copper mine on the planet.

    Previous attempts to return operations to normal were hindered by security concerns and drawn-out disputes between unionized workers and management.

    The union leader informed Reuters that though work at the mine has resumed, "solid teamwork" must be developed. This should be a partnership between workers and the company, representing a victory for all.

    With production getting back to normal, the additional supply of the base metal should cause copper prices to decline even further.

    What caused prices to decline in London on Monday had everything to do with China. Weak demand and over-supply lead to concerns. Last week, stockpiles reached 224,781 tons, their highest since July 2002. Data released over the weekend indicated a slowdown in exports from the giant commodity consumer during February.

    On the London Metal Exchange, three-month copper prices fell 1.05 percent, landing at $8,401 per ton.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: FCX
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