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Issue #1529      30 November 2011

In Indonesia, anger against mining giant grows

A foreign mining company, protected by hundreds of soldiers, extracts precious resources from a remote tropical forest. The mining enrages indigenous tribes, who resist.

It may sound like a movie script, but it is in fact the story of the world’s largest gold mine, located high in the mountains of Indonesia’s Papua province and owned by Freeport-McMoRan, an American mining conglomerate.

The Grasberg mine’s open pit yawns near equatorial glaciers in the shadow of Mount Puncak Jaya in Papua. In recent weeks, thousands of miners there have gone on strike for higher pay; several have been killed. On October 10, miners tried to block replacement workers from boarding buses to the mine. Some strikers threw rocks at police, who answered with gunfire, killing miner Petrus Ayamiseba and wounding six others.

Then on October 15 and again on October 21, unidentified gunmen struck, killing four Freeport-McMoRan workers and two locals. Meanwhile, unidentified saboteurs cut the pipeline that carries minerals from the mine down the mountain and to a local port.

The violence is the latest chapter in problems that have dogged Freeport-McMoRan since it signed its first contract with the Indonesian government in 1967. It was not until two years later that Indonesia’s government annexed the region.

The Freeport-McMoRan issue complicates Jakarta’s governance of the country’s newest, poorest and remotest province, wracked by a low-level insurgency waged by Papuans seeking independence.

Strike over pay

On September 15, thousands of unionised workers walked off the job. Union lawyer Tri Puspital says the workers are seeking wages of $7.50 to $33 an hour.

“We’re making $1-$3 an hour,” he explains. “We’re not asking for the same pay as Freeport workers in other countries. We are just asking for what’s rightfully ours, considering how much the minerals mined at Grasberg contribute to Freeport.”

The miners point out that last year, the Grasberg mine contributed $6.3 billion of the nearly $19 billion in revenues reported by Freeport-McMoRan Copper & Gold. The company, based in Phoenix, Arizona, is the world’s largest producer of copper and gold, and ranks 136th on the Fortune 500 list, just behind Nike and ahead of Time Warner Cable.

“What has happened to the Papuans, if people could see and if people understood, would break your heart,” says Australian academic Denise Leith, who wrote The Politics of Power, a book about Freeport-McMoRan. “Freeport are indeed part of that, because of their support of the Indonesian military.”

Payments to police, soldiers

Foreign media are barred from Papua without government approval.

Freeport-McMoRan spokesman Eric Kinneberg declined to be interviewed for this story. But in an email to National Public Radio (NPR), he wrote that under the terms of an Indonesian presidential decree, Freeport-McMoRan gave the police and military $14 million last year for support services and community programs.

Andreas Harsono, a Jakarta-based researcher with the group Human Rights Watch, notes that the legality of the payments has never been challenged in court.

“There are laws in the US and also in Indonesia that US companies, and Indonesian companies, any company, cannot pay the Indonesian military,” Harsono explains. “But it can be waived if the company is considered to be on the list of vital national interests.”

Freeport-McMoRan denies paying individual policemen or soldiers. But The Jakarta Globe newspaper recently quoted National Police Chief Timur Pradopo, who defended the direct payments as legitimate. He called them “lunch money.” In a letter dated November 1, 2011, the United Steelworkers union wrote to the US Department of Justice, asking it to investigate whether Freeport-McMoRan’s payments amounted to bribing a foreign government, in violation of the US Foreign Corrupt Practices Act.

Avoiding accountability?

Abigail Abrash Walton, a human rights expert at Antioch University New England, says Freeport has lobbied its way out of some tight spots with the help of powerful board members, including former US secretary of state Henry Kissinger.

“Because of politics and the power of money in politics, this company has been able to avoid accountability under the rule of law,” Walton says.

Walton notes that in 2000, Indonesia’s then President Abdurrahman Wahid suggested that the government should renegotiate its contract with Freeport-McMoRan, which has a 91 percent stake in the venture, to give the country a bigger share of the profits.

When Wahid “made that noise,” Walton says, Kissinger flew to Jakarta immediately, met with the president and offered himself as an adviser to the new government.

“And as soon as he did that, the issue about renegotiating the contract with Freeport went away immediately,” Walton says.  

Next article – Bankers have seized Europe

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