Grasberg

The giant Grasberg copper and gold mine in Indonesia's West Papuan Province, re-started mining operations in July 2013 following a stoppage of two months after a tunnel collapse resulted in the deaths of 28 mine workers.

Grasberg is the Worlds Largest Gold Mine
The stoppage of operations at the Grasberg mine, which is the world's largest gold mine and the world's third largest copper mine, with a history of mining going back to the 1930's, reduced its 2013 production to 80 percent of what it had originally targeted for the year, namely 1.25 million ounces of gold and 500,000 tonnes of copper. The mine is also a silver producer. Although the mine is now back in full production, the incident has raised questions regarding underground expansion plans along with ongoing negotiations concerning the contract between the mine owner and operator, Freeport Indonesia (PTFI) and the Indonesian Government, to take operations beyond 2021.

Despite Problems the Grasberg Mine Remains the Jewel in the Crown for its Owner Freeport Indonesia (PTFI)
Despite worker strikes, occasional outbreaks of violence and political intervention the troubled mine remains the jewel in the crown for Freeport ñ Indonesia (PTFI), a 91 percent owned subsidiary of American based mining company, Freeport-McMoRan Copper and Gold Inc. (FCX). The Government of Indonesia holds a nine percent interest in the mine. The joint venture arrangement also has international miner, Rio Tinto, holding a 40 percent share of mine production when production goes above specific levels until 2021. After that date Rio Tinto will receive 40 percent of all production, as well as receiving representation on technical and operating committees.

The Grasberg mine is a world leader in both gold and copper production as well as in reserves of both minerals. The joint venture arrangements with the Government of Indonesia allows the company to explore, mine and produce minerals in an area comprising 10,000 hectares known as Block A. Further exploration is conducted in Block B that covers an area of 200,000 hectares. PTFI and Rio Tinto have exploration rights covering a total of 690,000 hectares in Papua in addition to Blocks A and B adjacent to the Grasberg operation. In 2007 the Grasberg mine employed 10,776 personnel with 25 percent of them local Papuans.

Grasberg Mine in the Process of Transitioning from Open pit to Underground Mining
The current mine plan incorporates the transitioning from being an open pit mine to an underground block cave mining operation by mid 2015. PTFI, as mine managers, is continuously analysing long range plans to better assess the best design of the open pit operation with the development of the underground block cave ore body.

New Mining Law Compliance Makes Processing Difficult for Grasberg
A mining law passed by the Government of Indonesia in 2009 effectively prohibits the export of unprocessed minerals from Indonesia after January 12, 2014. The law was legislated with the intention of increasing the value of commodity exports and to build a local mineral processing industry. However, to assist large producers, like Freeport, the government has used its discretiorary powers that exempts complience if the copper content in the ore is greater than 15 percent. Freeport already processes up to 40 percent of the ore mined at the Grasberg mine at a smelter in East Java. It is currently working with Indonesian partners to construct new smelters in the country. Freeport also argued that it ships much of its minerals under long term contracts to overseas smelters and it would find it difficult to pull out of such agreements by the cut off date of January 2014.