On 26 August 2017, the Indonesian Minister of Energy and Mineral Resources, Ignazius Jonan, together with the Indonesian Finance Minister, Sri Mulyani, gave a press conference in Jakarta in which they announced that the mineral exploitation licenses of PT. Freeport Indonesia will be extended until 2041. In return, majority American shareholder Freeport McMoRan agreed to give up 41.64% of its shares in its Indonesian subsidiary, PT Freeport Indonesia. According to chairman of the parent company, Freeport McMoRan, Richard C. Adkerson, the shares are to be sold at a fair market value. The sale will enable the Indonesian government to purchase 51% of the PT Freeport Indonesia shares. Currently, the US mining giant holds 90.64%, while the Indonesian government owns 9.36% of PT Freeport Indonesia shares.
A major requirement for a 20-year extension is the construction of a smelter on Indonesian soil before 2022, a long standing demand by the Indonesian government. The smelter is expected to cost US$2 billion. The negotiations regarding PT Freeport Indonesia’s mineral exploitation licenses have been ongoing since January 2017. Freeport McMoRan signed its first contract with the Indonesian government under President Suharto in 1973. Without an extension of the licenses, the contract would have expired in 2021.
The mining area of Freeport’s Grasberg mine is located on the ancestral land of the Amungme and Kamoro, two indigenous groups, which have been excluded from negotiations since the agreement under Suharto. The indigenous landowners have demanded their right to participate in further negotiations. The failure of the Indonesian government to seek free and prior informed consent of the Indigenous land owners has caused much consternation in West Papua. John Gobai, chairman of the Papua Customary Council of Paniai Regency, stated in an interview with the Indonesian news outlet BenarNews “The Amungme and Kamoro communities have never given up their land to any other party, neither to the Indonesian government nor to PT Freeport Indonesia […] The Amungme and Kamoro want to participate in the negotiations – not because they are seeking a share in the profits, but because the Special Autonomy Law No 21/2001 and the Indonesian Constitution of 1945 acknowledge indigenous peoples as the legal owners of the land.” Gobai added that Freeport had been exploiting the Grasberg Mine for decades. However, the company has failed to include the indigenous population in decision making processes and treat them as the legal owners of the land.
Workers’ union raises serious allegations against PT Freeport Indonesia
Indigenous communities in West Papua are not the only group raising harsh criticism against PT Freeport Indonesia over the conditions of a contractual extension. The global trade union ‘IndustriALL’, consisting of senior trade union representatives in Australia (AWU and CFMEU), the Netherlands (FNV), North America (USW) and South Africa (NUM) visited Indonesia between 8 and 11 August 2017 to meet with local labor unions and the PT Freeport Indonesia executive board. The allegations against PT Freeport Indonesia go far beyond an ordinary conflict between employer and employees or a violation of the right to strike.
The ‘IndustriALL Solidarity Mission’ published a statement in which they accused the mining company of firing 4,200 employees because they had participated in a strike against the reduction of salaries and jobs. As a consequence, PT Freeport Indonesia allegedly forcibly expelled employees from company housing and denied workers and their families access to Freeport hospitals and schools. A public ‘IndustriALL’ statement mentions that several workers and their family members became sick and passed away because they were denied medical care in the hospitals owned by the company. Former employees also reported that PT Freeport Indonesia shared the names of dismissed employees with local banks in order to prevent them from gaining access to loans. The Secretary General of IndustriALL, Valter Sanches, described the situation in an interview as a human rights crisis. ‘IndustriALL’ urged PT Freeport Indonesia to revoke the mass dismissals and settle the conflict through negotiation in order to reach a suitable solution for both sides.
On 28 August 2017, Freeport McMoRan denied all allegations in a written statement, explaining that the company recognizes, respects and promotes human rights. The company stated that all measures undertaken by PT Freeport Indonesia had been carried out in accordance with Indonesian Labor Laws, and the Collective Labor Agreement (CLA)/Industrial Relations Guidelines 2015- 2017 (IRG). Freeport argues that changes in regulations under the mining law forced PT Freeport Indonesia to reduce its production, resulting in the reduction of salaries and jobs as part of the company’s strategy to adapt to a new regulatory environment. PT Freeport Indonesia also claimed that many employees left the company voluntarily after they had received compensation payments. However, the vast majority of dismissed workers denied these claims.
New animation video shows the environmental impact of the Freeport Mine
Contestation over Indigenous and workers rights is not the only problem for the company. A new animation video based on satellite imagery graphically reveals the severe environmental impact of the gold and copper exploitation on the lower regions south of the Grasberg Mine, which is located in the Mimika Regency of Papua Province. A subsidiary of the American mine giant Freeport McMoRan has dumped gold and copper tailings into the Ajikwa River since beginning operations in 1973. The ‘Suspended Particulate Matter’ (SPM), is carried by the river current to the lowlands, where it smoothers primary rain forest, sago palm groves that the Kamoro depend on, before spilling into the Arafura Sea. SPM has serious impacts on flora, fauna and marine life. The tailings even threaten Timika and a levy wall has been built to protect the city.
The animation video illustrates that a total area of approximately 138 km2 is affected by the mining tailings. Its impact on rain forests has been highlighted using the so-called NDV Index (Normalized Difference Vegetation Index) on the satellite images. The satellite images were analyzed by Michael Alonzo and Jamon van den Hoek, while the animation project itself was implemented under the direction of Olga Lucko. The seven minute video can be viewed here.