Freeport McMoran Copper & Gold Inc is scaling up mining and milling output and concentrate sales at its giant Indonesian mine as more employees report for work, it said on Friday, even as the union extended a pay strike by a month.

About 12,000 of Freeport's 23,000 Indonesian workers have joined the strike that started on Sept. 15, reducing mining, processing and concentrate shipments from Grasberg, the world's third-largest copper mine.

Unionised workers decided on Thursday to remain on strike until Nov. 15, making this the longest stoppage in Indonesia's mining industry.

The union said Freeport representatives had been unable to attend a meeting with members of the local government and parliament in Jayapura, capital of remote Papua province where the mine is located.

We are disappointed that the Union intends to continue the strike, which has no basis under Indonesian law, despite PTFI's(Freeport's) efforts to conclude the...negotiations on a fair and reasonable basis, a company spokesman said via email.

PTFI is conducting operations on a reduced scale. We are continuing to see an increase in employees reporting for work, allowing the company to scale up mine production, milling production and concentrate sales.

He did not elaborate on who the returning workers were and how many wer

Late last month, the company said about 4,200 workers at the mine, mainly contractors and non-union staff, have returned to work, allowing some mining to resume.

Union officials had planned to continue talks with the company after mediation ended in a deadlock two weeks ago.

PTFI has accepted the recommendations of the mediation team appointed by the Government of Indonesia and continues to seek to reach resolution, the Freeport spokesman added.

The spokesman did not give details on the level of production or shipments.

A metals trader in London said that in the strike's initial stages Freeport had stockpiles of 140,000 tonnes of copper concentrates with 40,000 tonnes of copper contained, at the port used by the mine.

Obviously, some workers went back and are likely to have started putting these onto boats, but I would figure they have about 25,000 tonnes of copper contained left, he added.

The strike will enter its fourth week next week and the last time it had an eight-day strike in July, it suffered production loss of 35 million lb (15,876 tonnes) of copper and 60,000 ounces of gold.

The company said last month it was unlikely to meet third-quarter sales estimates due to the then one-month strike, as the projected impact on production is about 3 million lb of copper and 5,000 ounces of gold for each day of the work stoppage.

The strike extension came a day after Chief Executive Richard Adkerson said the firm was unable to make up a production shortfall from its stoppages in Indonesia and Peru, as it was already operating at full capacity.

Freeport and other producers are undergoing annual negotiations with smelters for treatment and refining charges (TC/RCs) during the London Metal Exchange industry gathering this week.

Three-month copper on the London Metal Exchange traded at $7,280 a tonne by 1140 GMT from Thursday's close of $7,225 a tonne, marking its third session of gains, as efforts in Europe to contain the sovereign debt crisis lured back buyers.

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