Freeport Indonesia sees '08 copper output up, gold down

JAKARTA, Feb 12 (Reuters) - The Indonesian unit of Freeport-McMoran Copper & Gold Inc. said on Tuesday it expects copper output to rise 6 percent this year as it explores new areas in its Grasberg mine.

Copper output at the Gasberg mine in far-flung Papua province is likely to rise to 1.2 billion pounds (544,316 tonnes) in 2008 from 1.13 billion pounds last year, said Mindo Pangaribuan,
spokesman for PT Freeport Indonesia.

The Grasberg mine, believed to be the world's third-largest copper reserve, accounts for 40 percent of Freeport's total copper reserves of 93 billion pounds, according to the company's
Web site.

Freeport is the world's largest publicly traded copper miner.

Pangaribuan also said the company expects its gold output to fall 45 percent to 1.2 million ounces this year from nearly 2.2 million ounces in 2007 due to lower-grade ore at the Grasberg
mine.

In January, Freeport said it cut its 2008 global copper sales forecast to 4.3 billion pounds from 4.4 billion pounds and gold sales to 1.3 million ounces from 1.4 million ounces.

Freeport's Grasberg mine has been a frequent source of controversy over its environmental impact, the share of revenue going to Papuans and the legality of payments to Indonesian
security forces who helped guard the site.

PT Freeport Indonesia paid a total of $1.8 billion in royalty, tax and dividends in 2007, up from $1.6 billion in 2006.

In April 2007, native Papuan workers at the mine went on a four-day strike, demanding better welfare.

The strike helped pushed the price of copper -- used extensively in construction and electrical wiring -- on the London Metal Exchange MCU3 to $8,100 a tonne, the highest since Sept. 7 2006.

On Monday, copper hit $7,880 a tonne, the highest since Oct. 29, before settling at $7,765 a tonne on the day. The metal gained 5 percent in 2007 and so far has gained 15 percent since the start of 2008.

(Reporting by Mita Valina Liem; editing by Sugita Katyal)