Freeport-McMoRan Copper & Gold Inc. (FCX - Analyst Report) is expected to sign a new contract with workers of the Grasberg mine in Papua, Indonesia, within a couple of weeks after it reached a tentative agreement with them over wages, according to Reuters.
As per the news agency, the deadline for an agreement between the workers’ union and Freeport was last Friday. Freeport reportedly stated that it has plans to extend the talks by two more weeks and may sign a deal by mid-October.
Freeport is negotiating with the workers for their wages, benefits, rights, obligations and pensions. However the negotiations were temporarily suspended in May after an accident occurred at the Grasberg due to the collapse of a tunnel at the mine that took 28 lives.
While the accident occurred outside the area of mining operations, Freeport temporarily suspended mining and processing activities at the Grasberg complex as a part of the rescue and recovery operation. The closure of mining operations affected production as the Indonesian operation lost about 125 million pounds of copper and 125 thousand ounces of gold in the second quarter of 2013. The mine is currently operating at 85% of its capacity.
Freeport, which is among the prominent players in the mining industry along with Newmont Mining Corp. (NEM - Analyst Report), Barrick Gold Corp. (ABX - Analyst Report) and Goldcorp Inc. (GG - Analyst Report), released its second-quarter 2013 results in July. The company reported earnings of 49 cents per share, a roughly 34% decline from the year ago earnings of 74 cents. But it beat the Zacks Consensus Estimate of 41 cents. Profits slid 32% year over year to $482 million, hurt by lower prices.
Revenues fell roughly 4.2% year over year to $4.29 billion in the second quarter, missing the Zacks Consensus Estimate of $4.45 billion. Copper sales from Indonesian mining operations fell around 14% year over year to 158 million pounds while production declined roughly 20% to 139 million pounds in the quarter, resulting from the accident at PT Freeport.
Freeport currently retains a short-term Zacks Rank #3 (Hold).