(Corrects name of separist representative in paragraph 12)
By Sam Wanda and Fergus Jensen
JAKARTA/TIMIKA, Indonesia, Nov 17 (Reuters) - Indonesia on Friday began evacuating villages that authorities said had been occupied by armed separatists after a string of shootings near the giant Grasberg copper mine operated by Freeport McMoRan Inc in the eastern province of Papua.
Two police have been killed and at least 12 people have been wounded by gunfire in the area since mid-August. Police have blamed an "armed criminal group", but others have said the gunmen were linked to separatist rebels.
According to police reports, the group occupied the villages of Banti and Kimbely near the mining town of Tembagapura and had prevented an estimated 1,300 residents from leaving, leading to food shortages.
Police and military leaders said they have urged the gunmen to surrender, but have also warned that tough measures could follow if their "persuasive" approach fails.
Residents were being evacuated to a sports hall in Tembagapura, according to a source at Freeport.
More than 340 residents from the two villages were evacuated and the area had been secured by the police and military, according to a police statement.
"We hope they can return safely to their respective villages," Papua Police chief said in a video of the evacuation distributed by police.
"During the rescue mission, there was an exchange of fire from morning to midday," police spokesman Ahmad Mustofa Kamal told Reuters.
Mimika Deputy Regent Yohanes Bassang asked families in Timika to take in evacuated relatives "to avoid further problems".
Bassang said many of the villagers were from the east Indonesian island of Sulawesi and had come to the area to pan for gold.
The separatist West Papua National Liberation Army (TPN-OPM), a group linked to the Free Papua Movement, has claimed responsibility for the shootings and declared war against the military, police and Freeport, but denied it was holding villagers hostage.
A representative of the group, Hendrik Wanmang, told Reuters in an earlier interview Freeport's presence had led to the "intimidation, rape and extermination of thousands of Papuan people", as well as destruction of the natural environment and wildlife.
A spokesman for Freeport Indonesia declined to comment on the matter. The company website said it is committed to ensuring its activities are "in line with the UN Universal Declaration of Human Rights, the laws and regulations of Indonesia, and the cultures of communities native to operating areas of our company".
Freeport also ensures that "environmental considerations are an integral part of all planning, engineering and operations", it says.
According to several residents interviewed by Reuters, military and police officers were preventing them from getting food from Tembagapura, where food aid was delivered in a cargo container on Saturday.
"The atmosphere has really heated up," one resident said, referring to the shootings and concerns over food supplies and safety.
Reporting by Sam Wanda in TIMIKA and Fergus Jensen in JAKARTA; Editing by John Chalmers and Nick Macfie