$2 an hour to work on an inhospitable mountain peak

Posted: September 27, 2011 in Economic Development, Indonesia, Natural Resources
Tags: , , , , , , , ,
Continuous casting copper disc (99.95% pure), ...

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Copper is ubiquitous in modern life. Its most common use today is in electrical wiring – more than half of it is used for this purpose.

The cables that connect your mouse to your computer screen, your computer to the power socket, and your phone line to the outside world, all use copper.

In fact copper cables run under the oceans between continents. They carry the bits of information from me writing this post to various cloud computing servers around the world. There it waits for you to retrieve it – more data, more copper wires. The “cloud” metaphor (not to mention the advent of wireless connectivity) are somewhat misleading. It is still a heavily cable-dependent world.

The world’s largest single copper deposit is the Grasberg open-pit Mine in the Indonesian province of West Papua. It supplies about 4% of the world’s output and is also Indonesia’s largest taxpayer.

It is located in the most astonishingly improbable location: just 8 kilometres – literally walking distance- from the peak of Indonesia’s highest mountain. The area is characterised by glaciers. It is a very, very long way from civilisation – over 3,000 kilometres from the Indonesian capital Jakarta. The mine’s operator, the Freeport-McRohan Company, regularly flies its expat staff to the Australian resort town of Cairns for rest and relaxation.

No such perks for the Indonesians who work at this remote, inhospitable site, performing work that is both difficult and dangerous. In Australia unskilled workers at remote mining sites are lured by pay rates of $100 an hour for living so far from friends and family. The mining industry is so extraordinarily profitable that companies such as BHP and Rio Tinto can pay this without having to worry too much about it. Their biggest costs are infrastructure and extraction. Wages are trifling in comparison. Moreover copper extracted in Australia carries the same price on the commodities exchanges as copper extracted in Indonesia.

Yet believe it or not, Freeport-McRohan is currently having a dispute with the Indonesian workers of the mine who are paid roughly $2.00 an hour and want a pay rise to a globally competitive $17-$43 an hour. There is no question that the company can afford it, yet they won’t pay, so the workers are now on strike. It will be very interesting to see how far they get.

**Updated 15 December: The employees are going back to work on Sunday, after three months on strike. The company agreed to pay a 39% pay increase.

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Comments
  1. […] $2 an hour to work on an inhospitable mountain peak 27 September 2011 More on the Qantas dispute […]

  2. […] Freeport McMoran – operators of the Grasberg Mine […]

  3. […] prices of oil, wheat, corn, cocoa, copper, tin, oil, tantalum … you name it … are largely set on this exchange, along with the […]

  4. […] $2 an hour to work on an inhospitable mountain peak 27 September 2011 – re the Grasberg mine on the Western, Indonesian, side of New Guinea […]

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