UPDATE 4-Freeport Indonesia mine halts copper output
* Says supply lines to mine blockaded* Stock drops over 4 percentBy Olivia RondonuwuJAKARTA, Oct 17 (Reuters) - Freeport-McMoRan Copper & Gold halted production at its Grasberg mine in Indonesia on Monday because of security fears and worker blockades, in the worst supply disruption since a strike began a month ago.Freeport said the main pipe carrying copper concentrate to its port from Grasberg, the world's second-biggest copper mine, was cut earlier on Monday, helping copper prices to rise.It said it does not know who cut the pipeline and is still evaluating the impact on copper shipments from the remote mountain mine.Freeport's production has also been hit by a strike at a second mine, Cerro Verde in Peru, where the union pulled out of talks and members have threatened to go on a hunger strike to push demands for a raise.The news sent shares of the U.S. mining giant down 4.7 percent to $35.04 in morning trading on the New York Stock Exchange. The company is slated to report third-quarter earnings on Wednesday and analysts expect its profit to be lower ."The prolonged strike continues to burden the company, and with the recent events no immediate resolution to the situation is evident," said analyst Tony Rizzuto of Dahlman Rose & Co."Shares could be pressured in the near term while uncertainty surrounds its Grasberg operations," he said.At a news conference, Freeport Indonesia spokesman Ramdani Sirait said: "Production is completely cut because the main pipe has been cut and because of security concerns."A company source said the concentrate processing plant will be shut for 30 days, but the firm could not say how long it will take to fix the pipe or how long production or processing will be halted.The stoppage is a setback for the Freeport after it said last week it had ramped up copper concentrate output at Grasberg to average more than 4,000 tonnes per day by relying largely on non-unionized and contract workers, a move criticized by the government.The company said it had still managed to ship 103,189 tonnes of concentrate in the past week, though with blockades to the port and rising worker tension, it was unclear if further shipments can be made.Copper prices have mostly shrugged off the supply disruption during the strike that started on Sept. 15 because of worries about a weakening global economy.Copper pulled back from an earlier three-week high on Monday as supply-side concerns took a backseat to Europe's ongoing debt struggles.By 10:37 a.m. EDT (1437 GMT), the benchmark December COMEX contract in New York fell 2.20 cents at $3.3865 per pound -- down from an earlier-session peak at $3.46356, which marked its priciest level since Sept. 27.Road blockades, part of the prolonged strike by around 12,000 of the mine's 23,000 workers, have stopped containers carrying food and medicine from reaching the mine and jet fuel from reaching the nearest airport, the company said."Logistics needed for production and activities in the highlands have been held at the port," said Sirait. "There are hundreds and hundreds of containers now piling up at the port."The union said the blockades and damage to facilities such as a bus terminal occurred because workers were angered by the death of a colleague following a clash with police last week, as well as because of the company's "apathy" to worker demands."This is a result of unstoppable emotion of the people who were angered by the death of a worker. The union can't do anything about this," said union spokesman Juli Parorrongan.Parorrongan said the union had no information on who cut the pipeline, which the company called "sabotage", and will check who was behind it.INDEPENDENCE MOVEMENTRebels in the eastern province of Papua have waged a low-level insurgency against the government for four decades, and previously threatened to blockade the mine after police killed a separatist in an attack in late 2009.Three men were killed in a shooting last week near the mine in Papua, though it was not clear if this was linked to the pay dispute or to the independence movement.A clash earlier last week between striking workers and police near the mine led to the death of two protesters -- one of whom was a member of an indigenous tribe -- and injured others, as disgruntled and striking Grasberg workers protested after being barred from collecting belongings from barracks.A Reuters witness said indigenous people carrying arrows and spears were joining workers near the blockades on Monday.