The two-year extension of a bi-annual labour agreement is due for renewal at the end of this month and 8000 workers started a 30-day strike just over a week ago.

Mining, milling and copper concentrate shipping has been limited since.

"Approximately 50% of the workforce, primarily contractors and non-union staff employees, have reported to work and are maintaining critical operations so that full operations can resume quickly upon conclusion of the strike," Freeport said.

Revised operating plans are being developed to increase mining and milling rates with the reduced workforce while the strike continues.

Based on the expected production losses, Freeport said its current quarter estimates of 940 million pounds of copper and 415,000oz gold would be "unfavourably impacted".

Freeport said it would work in good faith with union leaders and the Indonesian government-appointed mediation team to reach a new labour agreement and restore normal operations.

The package offered includes a substantial increase in base compensation, an enhanced bonus program and attractive retirement benefits, Freeport said.

Grasberg was previously setback by an 8-day strike in July.

Before the latest round of industrial action, the mine was expected to notch up 1 billion pounds of copper sales and 1.45 million ounces of gold sales in 2011, compared to the 1.2Blb of copper and 1.8Moz of gold sold in 2010.