Freeport: The Price of the Raw Materials Boom (26.01.06)
The U.S. mining concern Freeport McMoRan Copper and Gold Inc. runs a large production site, the Grasberg mine, in West Papua. Up to 91 percent of the mine belongs to Freeport; the rest is owned by the Indonesian government. Freeport began exploration in Papua in 1960, while the island was still a Dutch colony. The corporation was one of the first foreign firms to profit from the pro-Western coup by Suharto in 1965. Already in June 1966, discussions took place between Freeport and Suharto in which the oft-delayed plans for the mine in West Papua were reactivated. The founder and chairman of Freeport, James R. Moffet, played golf with Suharto. Moffet cultivated his relationship to the ex-dictator and his entourage by financing vacations or college educations for the children. He also included the Suharto family in lucrative business deals.
Ore exploitation made a quantum leap in the early 1990s as the gigantic Grasberg copper and gold mine started operations. Freeport's deposits are located in a virgin forest and mountain region, inhabited by natives who had had no contact with the modern world before exploration groups arrived. A city of 100,000 residents grew out of the small village of Timika, located in the coastal lowlands. The problems of a mine worker's settlement followed: alcoholism, prostitution and AIDS. Among the blessings of civilization, a Sheraton Hotel was built in Timika for guests of the mine.
Down the River
Up to 700,000 tons of ore are mined daily from the Grasberg mine. Ninety-seven percent of that amount consists of tailings, a mixture of water and rock. This pulpy broth is pumped into the Ajkwa river, where it accumulates into a huge backed-up area of sediment in the lowlands (visible as a violet area in satellite images). More than 230 square kilometers of wetlands are already covered with tailings; that is roughly equivalent to the area of the Swiss canton Zug. In the coming years Freeport wants to excavate an additional 6 billion tons, or twice as much rock as was excavated to build the Panama Canal. Essentially all forms of life have disappeared from the water where the tailings accumulate. Freeport disputes the claim that the tailings contain toxic substances and copper. Reports from a consulting firm that works for Freeport claim the contrary: Almost half of the measurements of tailings sediment showed toxic concentrations of copper. Indonesian environmental laws set a maximum legal limit of 400 milligrams of copper per liter of water. In the Ajkwa river, concentrations reached 37,500 milligrams; concentrations were still as high as 7,500 milligrams where the river enters the sea, thus damaging important spawning grounds in coastal waters.
Since Suharto's fall, the Indonesian environment ministry has repeatedly complained that the mine breaks environmental laws; so far, there have been no consequences for Freeport. One of its long-time directors is former U.S. Secretary of State Henry Kissinger. In 2000, Kissinger also became an advisor to Indonesian president Abdurrahman Wahid, and advised the president not to touch existing contracts with Freeport, thus keeping the contracts attractive for potential new international investors (BBC World News, 1.3.2000, 13:27).
Freeport dealt aggressively with environmental activists. In cooperation with the Indonesian military and secret service, telephone conversations and e-mails were monitored. Freeport even faked an environmental group's password-protected Web site, in order to intercept the passwords of their adversaries. This destructive waste disposal procedure, which is prohibited in the U.S., continues to be used in only two large mines worldwide. Thanks to this privilege to destroy large areas of Papua's environment, granted by Suharto, Freeport can boast on its Web site that it is "the world's lowest-cost copper producer."
Militarized Zone
On 13 August 2003 the Sub-Commission on the Promotion and Protection of Human Rights passed the U.N. Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights. These norms, based on various elements of international law, define the human rights obligations of companies. A key theme of the norms is the complicity of enterprises committing human rights violations. Here too, Freeport is an outstanding example.
The catastrophic consequences to the environment were not idly accepted by the people affected. Conflicts and clashes took place time and again. Human rights activists estimate that the Indonesian military killed at least 160 people in the area of the mine between 1975 and 1997. The situation escalated in March 1996; the mine and ore processing were paralyzed for three days, machines were destroyed and offices were looted. In response, Freeport strengthened its existing cooperation with the Indonesian army. US $35 million were allocated on short notice for new military infrastructure consisting of barracks, paved roads and off-road vehicles. The company, which already had a former CIA agent on its payroll, hired a military attaché of the U.S. embassy in Jakarta and two further officers of the U.S. army. The newly-formed department "Emergency Planning Operation" controlled relations with the Indonesian army. These security forces received at least US $20 million (but more likely up to US $30 million) from Freeport between 1998 and 2004. Payments from Freeport also went to individual officers in the region, a practice that is forbidden in Indonesia and that infringes upon U.S. anti-corruption laws.
The militarization of West Papua continues. After the establishment of peace in Aceh, troops were transferred to Papua to oppose the independence ambitions of the locals and to protect the world's largest gold mine. Freeport hopes to continue operations for another 35 years.
Andreas Missbach +41 (0)79 478 91 94
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