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Indonesia: Papua Leaders Want Say in Copper Mine Negotiations

Victor Mambor
Jayapura, Indonesia
2017-08-29
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Security personnel keep watch at Freeport McMoran's Grasberg mining complex in Papua province, Indonesia, Aug. 16, 2013.
AFP

The Indonesian government’s decision to allow one of the world’s largest copper and gold mines to operate in Papua province through 2041 prompted local leaders to remind officials that their people never gave up land ownership and want a role in negotiations.

On Tuesday the U.S.-based firm Freeport McMoran announced it was giving up a majority of its ownership in Papua’s Grasber mining complex in exchange for being allowed to operate there for up to 24 more years.

“We indigenous Papuans, especially from the Amungme and Kamoro tribe communities, have never released our ancestral lands to any party, neither to the government of Indonesia nor Freeport,” John Gobay, a chairman of the Customary Council in Paniai, a district in Papua, told BenarNews on Tuesday. Two weeks ago, he met with Indonesian President Joko “Jokowi” Widodo in Jakarta, where Gobay expressed concerns about issues involving Freeport’s operations at the Grasber complex.

He said neither the Amungme nor Komoro were seeking a share of the mine, but they should be valued as the owners of the mountain where Freeport has been operating for decades.

“We own the mountain and the land and the state has recognized it under the state 1945 Constitution and Law No. 21 of 2001 on Papua Special Autonomy,” Gobay said.

Freeport-McMoran agreed to divest 41.64 percent of its Indonesian subsidiary, PT Freeport Indonesia (PTFI), at a fair market price to allow 51 percent ownership by Indonesian interests. Freeport’s share of the company is 90.64 percent while the Indonesian government holds the other 9.36 percent.

“Reaching this understanding on the structure of the mutual agreement is significant and positive for all stakeholders. Important work remains on documenting this agreement and we are committed to completing the documentation as soon as possible during 2017,” Freeport Chief Executive Richard C. Adkerson said Tuesday in a news release.

As part of the agreement, Freeport agreed to construct a smelter in Indonesia by 2022, thereby lifting a government threat to ban the company from exporting unrefined copper. The smelter is estimated to cost $2 billion and is a major concession for his company, Adkerson told the Wall Street Journal.

The government is not likely to have the financing to buy all of Freeport’s share being put on the market, so the divestment could be spread across many potential buyers, analysts told the Journal.

Finance Minister Sri Mulyani Indrawati Energy and Mineral Resources Minister Ignatius Jonan represented the Indonesian government and Adkerson represented Freeport at a Tuesday news conference in Jakarta where both sides announced the agreement.

Ignatius said Indonesia had agreed to extend Freeport’s license, which ends in 2021, by 10 years to 2031, and another 10 years to 2041 if the company met the contract’s requirements, including the smelter.

“The negotiation between the government and Freeport began in early 2017. But in the last three to four (days), the talks got intense and the two sides found an agreement,” Ignatius said.

Adkerson said Freeport would honor the agreement.

“We appreciate the leadership of President Joko Widodo and we have been listening carefully to what the government wants and its objectives,” he told the news conference.

Papuans demand role

But because Papuans own the land in and around the mining complex, they should have a role in the upcoming negotiations involving the purchase of company holdings, said Ruben Magay, a member of the Papuan Regional Legislative Council (DPRP).

“This is the time for the government to involve land owners in determining Freeport’s investments,” he told BenarNews on Tuesday. “There are three parties, the central government/local government, investors and indigenous people.”

He said discussions regarding Freeport should be clear on what percentage is for investors, what percentage is for the government and how much is for the indigenous people.

“During Freeport’s first work contract in 1967, until the second work contract in 1991, and this most recent one, the position of indigenous people has been unclear. The discussion has been between the central government and the investor, in this case, America,” Magay said.

Gobay expressed hope that Jokowi would hold a special negotiation session attended by the government, Freeport and the representatives of Amungme and Komoro tribes.

“If not, we will report it to the United Nations through the indigenous representatives and we will contest Freeport and the central government for not complying with its own regulation,” Gobay said.

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