Freeport-McMoRan Copper & Gold Inc. has declared force majeure on concentrate sales agreements from its strike-hit Grasberg mine in Indonesia, the Arizona-based firm said on Wednesday.
The move offered some support to benchmark copper prices on the London Metal Exchange , which rose about 2 percent to $7,681.50 at 0635 GMT.
Production at the world's second-largest copper mine has been severely hit by month-long strike action over pay and conditions, road blockades and possible pipeline sabotage.
As previously reported, the strike action at PT Freeport Indonesia has impacted production and concentrate shipments, said Freeport Indonesia spokesman Ramdani Sirait.
Throughout the period, we have worked cooperatively with our customers on the revised concentrate production and shipping schedule.
The lower concentrate production has impacted our ability to fully perform our sales commitments and as a result, we were required to declare force majeure on the affected concentrate sales agreements, he added.
Sirait did not offer any additional details.
The Grasberg open-pit mine produces copper, gold and silver.
Before the strike began, Freeport Indonesia's copper output was forecast to be around 1 billion pounds (453,952 tonnes) in 2011, from 1.2 billion pounds last year.
Late last week, Freeport resumed pay talks with its Indonesian mine workers union in a bid to end a month-long strike.
The Freeport worker's union initially demanded $30 to $200 an hour for miners earning $1.50 to $3, after finding out their counterparts around the world earned 10 times more, but they scaled back pay demands last week to $7.50 an hour, as the company boosted production without them by using contractors and other workers.
Prior to the latest talks the company said it was considering shutting down its Grasberg mine as one of several contingency plans if security does not improve.
At that time, the firm said the Grasberg mine was operating at about two-thirds of its capacity.
The Freeport area in remote Papua province in eastern Indonesia suffers from sporadic shootings, due to a simmering separatist conflict.