Freeport: still getting away with it

Down to Earth No. 47, November 2000

A series of official investigations into Freeport Indonesia, operators of the huge Grasberg gold and copper mine in West Papua, has done nothing as yet to curb the excessive environmental damage caused by the company.

It is business as usual at the US-British-owned mine, despite persistent questions over the company's contract, its environmental and human rights record and allegations of corrupt share allocations. It took the collapse of a dam holding overburden and the death of four contract workers to force the government to impose limited safety measures: a reduction in the amount of ore crushed from 230,000 tonnes to 200,000 tonnes per day and temporary use of an alternative overburden containment area.

According to the environmental organisation WALHI, the fatal accident at the Wanagon containment dam on May 4th was the second collapse this year. The accident caused severe flooding which swamped lands and villages below the lake. In Jakarta, Papuan students held protests outside the company's main office, calling Freeport to account.

PT Freeport Indonesia is owned by US-based parent company, Freeport McMoran - in which Britain's Rio Tinto has a 14.6% share - plus the Indonesian government and private investors. The mining operation has been demolishing whole mountains in West Papua's rocky backbone for three decades. Its activities have had a massive impact on the landscape in the mountains themselves and all the way down to the coast. The pollution and vast volumes of mud dumped into local rivers have devastated the livelihoods of indigenous peoples downstream and, for local people living near the mine, the company's close association with the Indonesian military has meant regular human rights abuses, including torture and fatal shootings.

Among government ministers, the environment minister, Sonny Keraf, has been the most outspoken in his criticism of the company. But, up against government's concerns over investor confidence and US lobby-power, he is relatively powerless to act. He wanted a temporary suspension of mining after the Wanagon disaster, until the company put better controls in place, but was evidently unable to secure the agreement of cabinet colleagues and the President. In the event production was reduced (and Freeport lost $19 million in the second quarter of 2000), but not stopped. By September a new 'overburden stockpile stabilisation plan' had been agreed with the mining ministry allowing Freeport/Rio Tinto to place a further 25 million tonnes of rock on the Wanagon containment area over a six month period.
(Freeport Press Release 12/Sep/00)

In June, Keraf made a further attempt to curb Freeport by announcing that the government was planning to revoke the permit that allows Freeport to dump tailings in the rivers, because this caused too much pollution and made life difficult for local people. He said the company should show greater respect for the environment. Freeport countered that the tailings were not toxic and the problems of downstream sedimentation were temporary as the area would be rehabilitated once the Grasberg mine shuts down in around 2015.
(Indonesian Observer 17/Jun/00)

In September the minister turned his attention back to the question of the environmental audit, carried out by international consultants Montgomery Watson, whose findings were used by Freeport to promote itself as environmentally responsible. The company published extracts of the audit earlier this year in national newspapers, including the Jakarta Post, read mainly by the expatriate community. This provoked an angry reaction from Sonny Keraf and from NGOs who expressed doubts about the validity of the audit and criticised Freeport for publishing only the positive comments (see DTE 45). In his recent comments on the audit, Keraf said at least ten points from the audit needed verifying. Freeport responded by saying it appreciated the "healthy" exchange of views and announced that it had agreed to undertake a voluntary audit every three years.

US Ambassador to Indonesia Robert Gelbard has made an unprecedented attack on Keraf's inclusion in President Wahid's recently reshuffled cabinet, accusing him of focussing his criticism on American companies and doing "virtually nothing" to deal with "the real, most important environmental problems which affect Indonesia." This and other comments have led to accusations of US interference in Indonesia's affairs.
(Jakarta Post 4/Sep/00)

Contractual obligations

According to mining advocacy network JATAM, it is Freeport/Rio Tinto's contract with the Indonesian government, signed in 1991, which allows Freeport to get away with such disasters. JATAM, along with WALHI, have been pushing hard for the company's contract to be renegotiated in order to make the company more accountable.

A government team which was given the task of examining contractual issues submitted its findings to the co-ordinating minister for economic affairs (then Kwik Gian Gie) in June. According to the Indonesian daily, Kompas, these included a re-evaluation of production levels and share divestment. A decision on the report was due in September.
(Kompas 29/Jul/00)

It its email-newsletter on mining issues, JATAM analyses the main faults with the 1991 contract (which doesn't expire until the year 2041) and its predecessor, signed in 1967. These include the lack of obligations on environmental protection and management, the lack of mine closure procedures and the failure to acknowledge the rights of local indigenous peoples.
(See Kerebok Vol 1, No. 2 June 2000)

Freeport agreement with community leaders

In August, Freeport and community leaders from the Amungme and Kamoro indigenous communities announced their agreement of a Memorandum of Understanding, through their tribal councils LEMASA and LEMASKO. According to Freeport, this will provide a framework for more detailed agreements on human rights, land rights, environmental standards and "socio-economic resources".

The agreement also serves as the "foundation for a series of subsequent contractual agreements" between the company and the communities and the first of these were announced on the same occasion. They include:

• the establishment of PT Kelabuma Permai, a limited company owned by LEMASA employing Papuans to carry out dredging and maintenance work on the tailings containment levees downstream of the mine;
• an integrated agricultural, aquaculture and livestock project in and around the tailings area, sponsored by Freeport with shareholdings by LEMASA and LEMASKO;
• the building of an office for LEMASA and a building for tribal elders.

The agreements are reported to have caused some friction within the Amungme indigenous community - so long opposed to Freeport's operations. The role of Tom Beanal is particularly problematic: concurrently Freeport commissioner (see DTE 45), LEMASA leader and vice-president of the pro-independence Papuan Presidium he would appear to have chosen a position requiring constant juggling of conflicting interests. At the first Intermational West Papua Solidarity Meeting in the Netherlands. October, representatives of the Presidium Council - including Tom Beanal - invited the international community to monitor the workings of the Freeport-LEMASA/LEMASKO MoU. The full text of the agreement can be read on Freeport's website: http://www.fcx.com/.

(Asia Wall Street Journal 20/Aug/00; MinenergyNews.Com 19/Aug/00)