The world's largest gold mine has been on strike for the 4th consecutive month.

It has reached the fourth consecutive month of the ongoing dispute between Freeport McMoRan and the Miner Labor Union in Indonesia. The dispute originates from the implementation of Labor Mining Laws that were passed in 2009. To make things worse, Freeport has laid off thousands of workers over the period of the strike. On top of all that Freeport’s is unable to come to terms with the Indonesian government on the conditions of the divestment of them mine causing the situation tensions to escalate even further between the people of Indonesia and Freeport McMoRan. So what’s this all entail for us?

…Well, first, to get a little background, Grasberg is the world’s largest gold mine and the world’s 3rd largest copper mine. It’s located in the Sudirman Mountain range in the province of Papua, Indonesia where gold was first discovered in 1936. Considering the lack of infrastructure, the mountain range made logistics extremely difficult, and the investment for development, which was financed by non-other than Texaco Chairman, Augustus Long, and Godfrey Rockefeller, through a corporation called Freeport Sulphur, did not commence until the 1960’s. Excavation did not officially start until 1973. Since then, the mine has become the most successful excavation operating today.

Now, according to experts, the continued strike will increase prices of copper for, at least, the first quarter of 2018. These predictions are increasingly convincing, considering the brewing of the current feud. China has increased its demand for copper in the last few months, yet sources claim that customs data reports show that no more than 40,000 tons of raw ore from Grasberg were imported to from January to March of 2018. I thought that was an interesting detail considering Grasberg has 3 flotation facilities to produce concentrate for export. This data, for some reason, was not in the article. In past weeks SMM (Shanghai Metals Market) reported that the benchmark for TC on copper concentrate has gone up to 79-85 USD per ton and shall continue on that trend going into the new year. For that we will have to wait and see, It seems like an optimistic forecast, considering the increased market demand in recent months.

Recent sources confirm that the Indonesian government is making preparations to acquire Rio Tinto’s 40% stake in the Grasberg mine. If such negotiations are taking place then it would only be logical that the government continue to support the strike to induce Rio Tinto to relinquish their share “amicably”. I think if the deal with Rio Tinto is realized it will serve to put the wheels in motion to put the issue to rest between the people and government of Indonesia and Freeport McMoran.

If you have any questions or comments on the topic get in touch with us, or leave a comment below. Thanks for reading and stay tuned for more news on the issue.

Shareholders (Stake) PT Freeport Indonesia:

Freeport-McMoran

Indocopper Investama

Gov. of Indonesia

Operations 2016 - 2017 PT Freeport Indonesia

Gold Production (in thousand ounce) +72.65%
Gold Sales (in thousand ounce) +74.6%
Copper Production (in million pounds) -5.1%
Copper Sales (in million pounds) +0.5%