Reuters reported that Dionisius Mameyau, head of the Indonesian government's local manpower office, said production had completely halted.

"Freeport management admitted this in a meeting with the Freeport Indonesia union, which still hasn't resulted in any deal," he reportedly said.

Grasberg employs about 8000 workers and is the world's largest copper and gold mine in terms of reserves.

Thousands of workers are believed to be involved in the strike which is seeking better pay and conditions.

Many workers receive just $US1.50 an hour according to the union behind the industrial action.

The union is also pushing for Freeport chairman James Moffet to come to the mine to negotiate according to Radio New Zealand.

Last week the radio station spoke to an undisclosed Papuan employee of the mine who said only about 1000 workers were striking and many union members were continuing to work.

Last year PT Freeport Indonesia forecast 1 billion pounds of copper and 1.3 million ounces of gold sales for the 2011 calendar year.