Freeport-McMoRan Copper & Gold Inc. (FCX - Free Report) has reportedly reached a tentative deal with the workers of the Grasberg mine in Papua, Indonesia, over wages for the period 2013-2015. The terms of the deal will be included in a Collective Labor Agreement (CLA).
Freeport and the union have agreed on some terms to be included in the CLA including base pay hike for the workers and enhancements in the pension plan The negotiating team is in talks to settle the remaining details before the end of this month. The new deal will be retroactive to Oct 1.
Freeport temporarily suspended operations at the mine in May after an accident occurred at 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, the company 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.
Freeport, which is among the prominent players in the mining industry along with Newmont Mining Corp. (NEM - Free Report) , Barrick Gold Corp. (ABX - Free Report) and Goldcorp Inc. (GG - Free 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, a follow-on from the accident at Grasberg.
Freeport currently retains a short-term Zacks Rank #3 (Hold).