Strikes and book launch keep Freeport-Rio Tinto in the news

Down to Earth No. 73, May 2007

The giant copper and gold mine operated in West Papua by US-based mining company Freeport McMoran with substantial investment from the British multinational Rio Tinto has been under scrutiny once again.

The Freeport-Rio Tinto mine has been the subject of protests at local and national level in recent months. At the local level, thousands of Papuan workers at the mine went on strike for four days. Facing hundreds of military and police, they successfully demonstrated against discriminatory employment practices. Besides doubling their pay, the strikers won a commitment from the company's US headquarters to reform its Indonesian management and to consider sacking Armando Mahler, President Director of Freeport Indonesia, for failing to promote Papuan employment in the company and the welfare of Papuans living in the mine area. The company has also agreed to examine the feasibility of establishing a "Papuan affairs department".

At the national level, political figures - notably Amien Rais, a vocal critic of the company and former leader of the People's Consultative Assembly - came together in parliament on the 28th of March to help launch a new book, Freeport: How the giant gold and copper mine colonized Indonesia1, and with it a new chapter in the campaign against the company's unjust practices. The public discussion under the banner "Does Indonesia have the courage to oppose colonisation by Freeport?" involved members of the Regional Representatives Council (DPD), parliamentarians from the special working group on Freeport, representatives of the Papuan student movement and NGOs including WALHI (Friends of the Earth Indonesia) and JATAM (the Indonesian Mining Advocacy Network).

The first two chapters in the Freeport book cover the history of Freeport McMoran and the joint plans by President Soeharto and the US corporation to exploit the massive copper and gold deposit. These mineral riches were part of the motivation for US and Indonesian collusion to acknowledge the sham 'Act of Free Choice' in 1969, rather than allow a post colonial transition to independent self-government for the Papuan people, as the Dutch colonialists had begun.

Chapter three covers environmental breaches and failures of law enforcement, and also takes a look at some of the economics of the Freeport mine, in terms of equity of distribution of income from the province's mineral wealth, and by attempting to quantify the environmental damage being wrought.


Poverty and riches

The book notes that in 2006 Forbes magazine listed Freeport-McMoRan Copper & Gold Inc. Chairman James Moffett as one of the world's top ten highest paid individuals. Moffett, together with Freeport CEO Richard Adkerson, received US$77.3 million in salary, plus additional benefits worth US$130 million. In the same year the average annual income of the poorest 50% of Mimika residents was one millionth of this sum, at US$132. The company itself reported income of US$4.1 billion in 2005 (Rp 38 trillion), four times the gross domestic product of Papua (Rp 9 trillion).

The development statistics quoted in the new book are fleshed out in a recent report in the Jakarta Post 'Poverty Watch' series. The article entitled 'Mimika community untouched by education, healthcare' paints a picture of persistent poverty in the district which hosts the leviathan Freeport mine. Outside the town of Timika, most people do not have access to clean water, proper housing or electricity for lighting. The article mentions local schools that have closed and public health centres that barely function due to damaged buildings and equipment. District head M. Metulessi is quoted as saying "prospects of education and health are gloomy in Mimika regency and its remote districts"2.

The Freeport book also presents calculations by environmental economists Greenomics Indonesia which estimate the environmental damage done by Freeport will require Rp 67 trillion (over US$7.5 billion) to repair, double the Rp 36 trillion (US$4.1 billion) the company claims it has contributed to the government over the fifteen years from 1992 to 2005.

The fifth chapter of the Freeport book surveys issues of corruption, payments to the military and human rights abuses in and around the mine. The book includes a seven page appendix detailing the names, dates and circumstances of the murder by security forces of 44 indigenous people from the Freeport mine area during the previous decade. It concludes with recommendations for action by the Indonesian government regarding the mine, which are reflected in a petition launched together with the book.

During the public discussion and book launch, mining analyst Kartubi identified Indonesia's mining Contract of Work system as a primary stumbling block in beneficial resource extraction, because it places the nation in a weak position compared to foreign mining companies. "This model is no longer used in the oil sector, it has been outmoded since the 1960s," said Kartubi, recommending that the system be scrapped. The analyst said the 2% royalties flowing from the Contract of Work system were insignificant for the country and especially for Papuan development.

During the discussion, an expert with a government background commented that the there was no hard independent data on the natural resources being exploited by Freeport. Bearing in mind the government's weak capacity for oversight, this leaves the government to rely solely on the company's own reporting for its information.

Papuan activists also spoke out against the company during the public meeting. Arkilaus Baho, spokesperson for Papua-based Unified Front for West Papuan Struggle (Front Pepera PB) spoke of his recent visits to the villages surrounding the Freeport mine. "Freeport is hiding the fact that there are many illnesses in the local community, particularly among those close to the Ajkwa River," he claimed. "They [the company] also buy members of the Provincial Legislative Council, journalists and the military in order that the voices of Papuan dissent are not heard," said Arkilaus.

Seminar speaker Amien Rais urged President Susilo Bambang Yudhoyono to have the courage to cancel the Freeport Contract of Work, which he said was within his prerogative. He reminded the President that his position was the key to ending the impoverishment of Indonesia by foreign interests.

After the discussion, a petition was launched, calling for a Presidential Decree to form an independent panel to reevaluate the future of the Freeport mine, taking into account the rights of the indigenous community and investigating and prosecuting violations of environmental law and human rights abuses (see box below). At the time of writing, the petition has secured around 600 signatures and is due to be presented to the government for action.


1 Zen et al, Freeport: How the giant gold and copper mine colonized Indonesia, WALHI and JATAM 2006. 

2 Markus Makur, 'Mimika community untouched by education, healthcare', Jakarta Post, May 16, 2007. 




The Freeport mine provides concrete evidence of the mismanagement of the mining sector in Indonesia. The nation's officials see gold only as a foreign exchange commodity which happens to be located on Papuan soil, not as a natural resource which has destructive power if exploited and which has impacts on people and the environment around it.

During its 40 years of operations, Freeport has not only damaged the mountain sites of Grasberg and Ertsberg, but altered the landscape over an area of 166 square kilometers in the Ajkwa river valley, polluted the Ajkwa river estuary, contaminated a number of species, and threatened groundwater with acid mine drainage.

Prosperity for the Papuan people is increasingly far from becoming a reality. In Freeport's area of operations, the majority of residents live below the poverty line, and are forced to scrounge a living from the remnant gold in Freeport's mine waste. The number of HIV/AIDS sufferers continue to rise at the nation's highest rate in the Freeport mining town of Timika.

Freeport still has not dealt with the problem of human rights violations relating to the pattern of behavior of Indonesian security forces, past and present, and future. Hundreds of people have suffered serious human rights violations, and have even died, without the matter being resolved. To this date there have not been any human rights violations that have been seriously followed up by the government - in fact the impression is that they have been deliberately neglected.

Meanwhile, from year to year Freeport continues to gouge profits from the biggest gold, copper and silver mine in the world. Freeport's top managers receive facilities, benefits and wages worth 1.5 million times the income of a Papuan resident of Timika. The conditions in the Timika area are like a tinderbox, there is no stability and no guarantee for the future of Papuans. There is one crisis after another, while Freeport continues to enjoy profits from its mine.

The government must immediately take real and measurable steps to solve the Freeport case. The mining activities of Freeport in Papua must be reevaluated. The President must immediately provide a mandate via a Presidential Decree to form an Independent Panel. This panel should be made up of experts in law, environment, social impacts, science, and human rights and must include local community representatives. The tasks for the panel should be as follows:

1. Undertake an assessment of all aspects of Freeport's mining operations, including environmental management, human rights abuses, and socioeconomic aspects.

2. Facilitate a full consultation with the indigenous community, especially those in the area of Freeport's operations, and with other stakeholders regarding the future of Freeport's mining operations.

3. Findings of legal breaches should be followed up with the responsible authorities. This includes violations of environmental law and human rights abuses.

4. Map out and investigate a number of scenarios for the future of Freeport, including the possibilities of early mine closure, altering rates of production, and mine waste management.

Jakarta, March 28, 2007