JAKARTA/TORONTO – An estimated 5 000 workers at the giant Grasberg copper mine operated by Freeport-McMoRan's Indonesian unit will extend their strike for a fourth month, a union official said on Friday, in an ongoing dispute over layoffs and employment terms.

The escalating labour issue comes as Freeport, the world's largest publicly traded copper miner, is snarled in a lengthy and costly dispute with Indonesia's government over rights to the Grasberg copper and gold mine.

Freeport resumed copper concentrate exports from Grasberg, the world's second-largest copper mine, in April after a 15-week outage related to that row, but a permanent solution is yet to be found.

Copper prices hit a 4-1/2 month peak on Friday, fuelled by strong growth in top consumer China, a weak dollar and worries about supply disruptions.

Freeport is pushing back against revised government rules that require miners to pay new taxes and royalties, divest a 51% stake and relinquish arbitration rights. The Arizona-based miner wants an 'investment stability agreement' that replicates the legal and fiscal rights under its existing agreement.

Freeport Indonesia union industrial relations officer Tri Puspital told Reuters on Friday that the strike was extended because there is still no solution for worker concerns.

The strike began in May after Freeport laid off some 10% of its workforce to cut costs.

In May, Freeport said that mining and milling rates at Grasberg were affected by the strike, and investors will look for more information when the company reports second-quarter financial results July 25.

Indonesia said last week it would invite Freeport chief executive Richard Adkerson to Jakarta this month to try to settle a dispute, but a company spokesman would not confirm whether he would attend.

Freeport shares were down about 1% on New York at $12.93 Friday morning.