Volume 5, Number 9, May 31, 2000

FREEPORT FACES INVESTIGATION DUE TO RECENT DISASTER AND PAST MISMANAGEMENT
A mountain of loosely stacked rubble, known as overburden, slid into Lake Wanagon, an alpine lake near the Grasburg gold mine in Papua's Jayawijaya district, causing a mini-tsunami of water to overflow and pour into the valley below. Four workers were killed and villages downstream were badly damaged. This occurred on May 4, 2000, the day before the annual shareholders meeting for Freeport McMoRan Copper & Gold, the US multinational who operates Grasburg, one of the world's largest gold mines.
As a result, the Indonesian government has begun to scrutinize Freeport's operations at Grasburg and, for the first time in the mine's twenty-eight year history, the government is questioning Freeport's management of the project. In particular, they have demanded that Freeport stop dumping overburden in the valley beside Lake Wanagon and that they reduce the production of the mine from 230,000 tonnes per day (tpd).
Although the company has agreed to this in principle, it is unclear what level of production will be deemed sustainable and tolerable. Given that Freeport has spent hundreds of millions of dollars ramping up to this level of production from around 100,000 tpd three years ago, they will loose money on their capital investments no matter what decision is finally made.
This accident is a major setback for the company, but it may only be the tip of the iceberg as the true flaws in Freeport's operations are exposed. … given that there are now four people dead due to the stockpile design, this is an obvious overestimation of the work.
Demands for a re-negotiation of Freeport's contract, which was a sweetheart deal signed with the former dictator Suharto before Indonesia had even occupied Papua, are garnering popular and political support.

James R. ''Jim Bob'' Moffett, Freeport's combative chairman and CEO, knew how to protect the lucrative Freeport concession during the long years when Suharto ruled Indonesia. But Suharto no longer rules Indonesia: He's a disgraced old man fighting a government investigation into allegations that he pilfered billions from the country.

The shifting climate is threatening Freeport's $4 billion investment in West Papua, formerly Irian Jaya. Freeport has 15 years left in its contract to recover gold from its mammoth Grasberg mine.

No wonder Freeport is campaigning hard to improve its image. The energetic Moffett has staked his reputation on it. Freeport's strategy is to convince local residents and Western activists that it is addressing their concerns. Moffett even vows to cut the Papuans a bigger piece of Freeport's $1.9 billion in annual revenues. Moffett, agreed only to provide written answers to questions.

But many Papuans say Freeport's attempts so far to rectify past wrongs are too little, too late. Natkime says the company should split 50-50 with ''the people of Papua'' the 3 million ounces of gold it produces annually. Freeport, however, just reported a second-quarter loss of $18.6 million on lower gold and copper shipments.
With so many years of fractiousness, Freeport has a lot of animosity to overcome. In February, 1999, it instituted a human rights policy requiring Freeport's 6,000 employees in Papua to refrain from participating in human rights abuses and to report any violations they might witness. Then in November, Moffett appointed McDonald, a seven-year member of Freeport's board of directors, to be his human rights troubleshooter in Indonesia. Moffett said he told her: ''Gaby, you have full rein. You make recommendations, and I'll take them.''

GRAY, GRAY. Another obstacle Freeport faces in mending fences is environmental degradation. Five years ago, the Grasberg mine was a 4,100-meter mountain with the top shaved off and a corkscrew-like road wrapped around it. Today, Grasberg is the opposite: a deep hole in the ground with a spiral road down the inside. The mine produces 220,000 tons of ore per day--97% of which is the gray silt, or ''tailings,'' dumped into the nearby river system. The tailings have turned a 230-square-kilometer lowland delta into a gray desert of dead trees. The company is replanting only 75 hectares--less than 1 square kilometer--per year. Freeport says it will turn the remaining treeless area into ''the most productive agricultural land'' in West Papua, producing up to $100 million worth of crops a year.

Tempo Interactive

Walhi Wins Lawsuit Against Freeport Indonesia
28 Aug 2001 18:49:24 WIB
TEMPO Interactive, Jakarta:This afternoon (28/8) the South Jakarta District Court justices, headed by justice Rusman Dani Ahmad, awarded in favor of Indonesian Forum for the Environment (Walhi) who had filed a lawsuit against the mining giant PT Freeport Indonesia. The court found PT Freeport guilty of having polluted the environment in the case of the Wanagon Lake collapse.

The justices have ordered PT Freeport to recompensate the damages that stemmed from the collapse of the dam. This includes making efforts to minimize pollution generated by the company’s mining activities and cleaning the water supply of Wanagon Lake from any toxic and dangerous substances. The justices also decided that the supervising of the recovery efforts would be carried out by governmental and non-governmental institutions.

After hearing the decision, PT Freeport Indonesia, represented by Miang Warman Associated, said that they would file an appeal. “Because this remains the personal opinion of the judges, we plan to file an appeal immediately,” Warman said.

The trial of this case has so far been conducted 11 times. According to Walhi, PT Freeport Indonesia has polluted Wanagon lake and has thereby endangered the lives of local people. This pollution also caused the collapse of Wanagon lake on May 4, 2001 at 09.30 pm Eastern Indonesian Time (WIT).

Freeport Indonesia Urged to Conduct Tailing Cost-Benefit Study

JAKARTA, June 14, 2002 Asia Pulse/Antara - Private gold and copper company PT Freeport Indonesia has been asked by the Indonesian Environment Ministry to conduct a cost-benefit analysis on its own tailings, State Minister of Enviroment Nabiel Makarim said here Thursday.
The analysis could also be used as a parameter to find out the advantages and disadvantages to PT Freeport's environment of the use of nearby river as a tailings dumpsite, Makarim said in a hearing with the House of Representatives' commission on mining and energy matters.
The minister said PT Freeport Indonesia was committed to carry out the ecological risk assessment (ERA) study next October. The company, he said, would make recommendations from its ERA study and use the recommendations to draw up a new environmental management and monitoring plan.

The Jakarta Post - August 1, 2002

Govt warns Freeport over river pollution

The government has asked U.S.-based copper and gold mining company PT Freeport Indonesia to immediately deal with the pollution emanating from its mines near the Papuan towns of Tembagapura and Timika.
It said that thousands of locals living along two main rivers where the company dumped its waste water were under threat from numerous diseases because of the river pollution.
Muh. Ali Kastella, chief of the provincial office of the Waste Management Board (Bapedalda), confirmed in Jayapura on Wednesday that Governor Jaap P. Solossa has delivered an official letter to Freeport, asking the company's management to deal with the pollution immediately and to also be transparent about its waste management procedures.
He said the governor's letter was sent following an instruction from Minister of the Environment Nabiel Makarim that Freeport be warned about the pollution.
The governor also asked Freeport to explain how its waste was treated before being discharged into the rivers. The company was asked to redesign its work program to resolve problems with its tailing dump and to reduce discharges into the rivers as part of the effort to maintain the ecological stability of nearby mangrove forests.
Numerous informal leaders have expressed their deep concern over the river pollution, saying the government should fine the company as its waste was polluting rivers which served as water sources for the indigenous people in the area.
Markus A. Pogolamum, one of the informal leaders, regretted that Freeport had been mining the province's copper and gold deposits for years but still did not hesitate to make the locals the victims of its mining operations.Local people could do nothing if the government failed to control the giant mining company, he said.
Last August, the South Jakarta District Court declared Freeport guilty of violating the environmental law as a result of the Grasberg incident in 2000. The court ruled that the company had disseminated misleading information about its waste management activities and had failed to prevent the collapse of its waste heap at Lake Wanagon near its copper and gold mines in Grasberg, Mimika Regency. The incident claimed four lives.
The lawsuit was filed by the Indonesian Forum for the Environment (Walhi). The environmental organization has also sued Freeport over the river pollution but the case has yet to go to trial.