Multinational corporations lining up to profit from West Papua's resources

Down to Earth No. 76-77 May 2008

Another year, another set of record profits from West Papua's mineral resources.

The Westminster conference centre just alongside the UK's Houses of Parliament and Westminster Abbey seem a long way away from the frontier town of Timika or, for that matter, the prawn fisherfolk of Bintuni Bay in West Papua. However, each year this is the scene of the Annual General Meeting of Rio Tinto PLC, a 40% joint venture stakeholder in the expanded Grasberg mine in the highlands of West Papua. It is here that the board of directors of Rio Tinto announced record profits from its mining operations around the world. Benefiting from record commodities prices, due mainly to the rapid economic expansions of countries like China and India, this company and others like it are revelling in economic conditions unparalleled in recent years. In 2007 the company earned US$7.4 billion profit - another record year.

Similarly, record energy prices have meant that oil multinational BP, despite growing concerns over the safety of its operations, continues to make huge profits. In 2007, the company recorded profits of US$17.29 billion. The Tangguh liquid natural gas (LNG) plant, in Bintuni Bay, West Papua, is due to become operational by the end of this year, and will soon be contributing to these gains.

What lies behind such record profits? As has been documented previously in DTE newsletters, there are many questions about human rights and social and environmental impacts to be asked.

Increased militarisation around BP's Tangguh operation

At the recent meeting of the Tangguh Independent Advisory Panel (TIAP) on 22nd April 2008 in London, some of these concerns were raised. At one point, a picture was brought in by a meeting participant of a Papuan man who had been beaten by the Indonesian security services. The political environment within which BP is operating continues to threaten the picture of calm, peaceful economic and social progress painted by the company. The TIAP panel spoke of an increase of 100 soldiers from Indonesia's armed forces (TNI) to Bintuni and 30 TNI soldiers to Babo, two local towns on the shores of Bintuni bay. Added to this, is the news that the towns and villages around the Tangguh project are experiencing a growth in numbers of people being drawn to the anticipated economic benefits from BP's presence in the area. These developments are of concern as they point to a similar pattern to the militarisation and population influx that happened around the Freeport/ Rio Tinto Grasberg mine in Timika. BP is making strenuous attempts to distance itself from such comparisons, given that Freeport / Rio Tinto has been condemned so vigorously for its relationships to the military and police in the area around its mine (see DTE 57).

Such observations by TIAP cast doubt over the effectiveness of BP's 'concentric rings of security', provided by its 'Integrated Community Based Security' (ICBS) system, which was intended to prevent such a process of militarisation.

BP, Tangguh and climate change

Another significant concern that has been raised with BP is the question of Tangguh's environmental impact. With the Tangguh operation due to begin production of LNG by the end of this year, extensive shipping traffic will increase the risk of pollution to the local area and consequently further threaten the fishing capacity of local communities.

Another area of concern is carbon emissions. BP has stated its intention to minimise its CO2 output across the board in its worldwide operations. Undermining these green claims is the fact that its 'world-class model for development' operation at Tangguh still has no plans to implement a system of Carbon Capture and Storage (CCS). The TIAP panel has called for a feasibility study from the Indonesian government. However, BP Indonesia staff have told DTE that lack of progress on this is due mainly to cost and have indicated that it should be the Indonesian government, not BP, that bears this cost. Indeed, since the arrival of Tony Hayward as BP's new Chief Executive Officer (CEO), the company appears to be taking backward steps in terms of its attitude towards the environment. A clear example of this is BP's controversial purchase of 50% of the highly-polluting Sunrise tar sands field in Canada. Given BP's vast profit margin, it seems scandalous that BP should continue to resist implementing every possible technique to significantly reduce the already large estimated emissions of CO₂ from Tangguh's imminent operations. (See also DTE 73).

BP and sustainable development - a realistic proposition? 

BP's approach to its Tangguh operation is showing signs of moving further away from the 'good intentions' the company uses to sell this project to the public, both in the UK and in Indonesia. The subject of the fisherfolk of Tanah Merah village was raised as a result of a recent article in the local publication Suara Perempuan Papua ('Papua Women's Voice'). Tanah Merah was the village on the southern side of Bintuni Bay which was moved to make way for the company's main site. The article was critical of the new situation that these villagers find themselves in and also of the measures taken by BP to provide alternative livelihoods for them and their new situation. DTE has since heard that many of the new houses in Tanah Merah Baru are now empty and was told by TIAP and BP Indonesia staff members that much of the equipment provided by BP has now been sold (for example the outboard motors given to the fishermen). This situation illustrates well how, despite apparent good intentions, BP's efforts to contribute to local villagers development and well-being is not producing the desired results. Perhaps this is an indication that the gap between the realities of this big multi-national corporation and local Papuan villagers is too big to be bridged in this way, and that Tangguh's presence remains an imposition on the local landscape and society. In the end, the net result of BP's efforts may be an influx of money (from sales of outboard motors and suchlike) rather than real long-term, sustainable and manageable development for Papua.

Tangguh and the future of independent monitoring of the project

Senator Mitchell, Chair of TIAP, strenuously defended BP's record when challenged about these problems, maintaining that in no way did this reflect the situation on the ground at Tangguh. Whatever the reality, it is of concern that some members of TIAP look increasingly like ex-officio members of the BP board of directors, rather than a truly independent body with real critical oversight to the project. The last recommendation in the most recent TIAP report on 'Public Information' illustrates this blurring of boundaries between BP and TIAP, making various recommendations on how BP can "publicize the benefits delivered as well as correct possible misconceptions about the Project".

DTE has recently been a co-signatory of a letter to BP's management arguing that external scrutiny of Tangguh is essential throughout the duration of the project. However, it remains to be seen as to whether BP is committed to facilitating a truly independent oversight to its operations in West Papua.

Environmental destruction in West Papua

By contrast, Freeport-Rio Tinto can have no possible claims to the stated high aspirations of BP's project. By providing the extra investment for the Grasberg mine expansion, Rio Tinto bought into a company and a mine that has an abysmal record of environmental and social damage. This investment has ensured that Freeport's legacy of expansion and destruction will continue for at least another 30 years. This record was denounced at Rio Tinto shareholders meetings this April in both London and Brisbane. Rather than looking at improvement, the management, as in the case of BP, seems to have taken steps backward.

When questioned about the effects of riverine tailings disposal at the Grasberg mine, the Rio Tinto board maintained this was the best possible solution, in contrast to previous admissions that this disposal method was 'not ideal'.* Many organisations including World Vision, Oxfam and trade unions have called for these practices to be banned. Indeed, even BHP Billiton, another mining company not normally associated with good practices, claims to be moving towards policies that do not use riverine or sub-marine disposal systems (see also Mining news in brief).

Given the record level of profits that Rio Tinto is reporting, how is it possible for Rio Tinto to allow such destructive practices to continue? Is it really the case that Freeport-Rio Tinto can imagine that because there are lax environmental controls or few civil society organisations with loud enough voices in West Papua that no-one will notice? With the Norwegian Government's Pension fund divesting from Freeport due to this 'severe environmental damage', perhaps the pressure for change will finally grow too strong for the company to ignore.

The human impact of the Grasberg mine

However, it is not just in relation to the environment that Freeport-Rio Tinto's record at the Grasberg mine is so destructive. As mentioned earlier, the companies' record of collusion with the Indonesian security forces is already well documented. Recent violent incidents in the vicinity of the mine further illustrate the social upheaval that this mine provokes in the area. Survival International reported that on December 5th, 2007, two women were shot dead and another was injured as they protested near the mine. More recently, 19 illegal miners were killed when a landslide hit them as they were panning for gold on the tailings from the Grasberg mine. Although a Freeport-Rio Tinto spokesman distanced the company from responsibility for the incident, saying that these miners were operating outside the companies' concession area, it appears that tragic incidents such as these are becoming more and more commonplace in connection with this mine's operations.

The future of exploitation of West Papua's resources

Although the history of these two mega-projects are different, representing two different eras in the exploitation of West Papua's resources, their futures appear to be increasingly interlinked. Both projects are set to make vast profits for their shareholders in the UK, US and Australia and are in the process of expanding further. At the same time, these companies are operating in an environment that, at best, is ill-suited to their all-consuming technologies and, at worst, is being undertaken at the expense and against the will of local Papuan communities. However, with increased awareness of the effect on the climate and of the inequalities and injustices of such projects, the wider global community is waking up to impact of the activities of companies such as BP and Freeport-Rio Tinto in West Papua.

*For a detailed assessment of the Grasberg mines' tailings disposal system see the 2006 report on the Freeport-Rio Tinto mine by WALHI (Friends of the Earth Indonesia at http://www.eng.walhi.or.id/kampanye/tambang/frpt-report-may-06/).

(Sources: TIAP 6th Report on the Tangguh LNG Project, available at http://www.bp.com/sectiongenericarticle.do?categoryId=9004751&contentId=7008791; 'Hidup dalam Sangkar Emas' Suara Perempuan Papua, Edition 19, Year 4(2008), Walhi report on Freeport-Rio Tinto, at http://www.eng.walhi.or.id/kampanye/tambang/frpt-report-may-06/; Mineral Policy Institute, Australia, report on 2008 Rio Tinto AGM in Brisbane, Australia; 'Suharto and the rape of West Papua', TAPOL Bulletin No.188/189, March 2008; Survival, News Archive, 'Police arrest, torture and kill Papuan tribal people' 14 December 2007; ANC News Online 7 May 2008, 'Papua landslide death toll rises to 19')