Freeport secures approval to commence underground mining at Grasberg complex

10 July 2013 (Last Updated July 10th, 2013 18:30)

Freeport McMoRan Copper and Gold has secured approval from the Indonesian government to commence underground operations at Grasberg mine, the world’s second largest copper mine.

Grasberg mine

Freeport McMoRan Copper and Gold has secured approval from the Indonesian Government to commence underground operations at Grasberg mine, the world's second largest copper mine.

Operations were ceased at the mining complex in Papua on 15 May following the collapse of an underground training facility near its Big Gossan mine that killed 28 people.

With government approval and the completion of investigations, the company resumed full scale open-pit mining and concentrating activities at the Grasberg complex on 4 July.

Freeport Indonesia president director Rozik Soetjipto was quoted by Reuters as saying that that underground mining will take one month to return to full capacity.

The Grasberg complex is located some 60 miles north of Timika, at Tembagapura in Irian Jaya.

Before the closure, the daily copper ore output from open-pit mine touched approximately 140,000t, while the output from its underground operations was about 80,000t.

Deputy Energy and Mineral Resources Minister Susilo Siswoutomo said in a news conference that after considering the events, issues, the investigation and views of local government and communities, the government has decided that the mine is safe.

Siswoutomo also pointed out that in order to avoid any further accidents at the mine, the company needs to install detectors to monitor rock conditions and tunnel supports, and enhance safety conditions at training areas.

About 35% of production from the Grasberg mine is shipped for further processing in the domestic market. while the rest is shipped to countries such as Spain, South Korea, China and Japan.

After an accident on 15 May, Freeport resumed production on 28 May but a few days later one worker was killed in a separate accident, which prompted both the government and the workers' union to call for a temporary shutdown of the Grasberg mine complex.

Following these accidents, Freeport had to declare force majeure on copper shipments.

Soetjipto said the company would initially prioritise meeting its supply commitments for its Gresik smelter in Indonesia and then decide on lifting force majeure.

Meanwhile, Freeport is holding talks with the government for a new mining contract in order to replace its current 30-year contract, which will expire in 2021.

The government intends to conclude these talks this year but some industry experts doubt this will happen given that the initial deadline has already been missed by three years.

A member of the government team in discussions with Freeport over the mining contract said that the accident would not delay the talks any further.

Image: The Grasberg open pit, originally a 4,100m-high mountain, has been mined down to 3,000m. Photo: Alfindra Primaldhi.

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