Freeport Seals Pact With Indonesia on Giant Grasberg Mine

Eko Listiyorini and Viriya Singgih | Bloomberg | September 27, 2018

•  Definitive agreement to allow Inalum to raise stake to 51%
•  Accord is culmination of more than a year of negotiations

Freeport-McMoRan and Indonesia signed a binding landmark agreement for the U.S. miner to hand over majority control of the giant Grasberg copper and gold mine to a local state-owned firm, in the country’s biggest ever divestment by a foreign resources company.

Freeport Chief Executive Officer Richard Adkerson and PT Indonesia Asahan Aluminium President Director Budi Gunadi Sadikin signed a divestment deal and two other pacts in Jakarta on Thursday. The transfer of majority shares to Asahan Aluminium will happen once the company makes a payment of $3.85 billion to Rio Tinto Group and Freeport, Sadikin said.

The U.S. producer will continue to operate the mine under the agreement, which culminates more than a year of talks. The accord will allow Indonesia to issue a special mining license for Freeport to run the world’s second-largest copper mine through 2041. Freeport and Asahan Aluminium, known as Inalum, will complete the transaction before the year-end, Sadikin said.

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Indonesia government asked to recalculate Freeport mine damage

FILE PHOTO: Trucks operate in the open-pit mine of PT Freeport’s Grasberg copper and gold mine complex near Timika, in the eastern region of Papua, Indonesia on September 19, 2015 in this photo taken by Antara Foto. REUTERS/Muhammad Adimaja/Antara Foto/File Photo

Reuters | 26 July, 2018

Indonesia’s parliament has asked the government to recalculate damage to the environment from the giant Grasberg copper mine operated by the local unit of Freeport McMoRan Inc, the environment ministry said.

A 2017 report by Indonesia’s Supreme Audit Agency (BPK) calculated that Freeport’s decades-long operations at the mine in Indonesia’s remote easternmost province of Papua had caused environmental damage worth $13.25 billion.

That damage, it said, was largely a result of tailings from the mine that had extended beyond previously agreed limits and which had polluted coastal areas.

The audit also said Freeport Indonesia (PT FI) had missed royalty payments, cleared thousands of hectares of protected forest and began mining underground without environmental clearance.

The environmental issues have presented problems for Freeport and Indonesia, whose state-owned mining holding company, PT Inalum, hopes to finalize a $3.9 billion deal to acquire a majority stake in Grasberg this year.

In a meeting with Environment Minister Siti Nurbaya on Tuesday, parliament urged the minister to “ensure that PT FI fulfils governmental administrative penalties” in accordance with the law, the ministry said in a statement late on Tuesday.

“Commission VII asks the Environment Minister to calculate the value of environmental losses resulting from damage and pollution from PT FI operations, as per the findings of the BPK,” Commission VII chairman Gus Irawan Pasaribu said, according to the statement.

Jakarta-based spokesmen for PTFI and Inalum did not immediately respond to a written request for comment.

Freeport CEO Richard Adkerson said on a call with analysts on July 12 the company had been “working very closely” with the environment ministry and had “received assurance that we will find a resolution of the environmental issues that will be acceptable for all parties. So we’re very encouraged by that.”

Since then he said Freeport had “entered into very productive discussions with the ministry and are making progress with the ministry in addressing these issues and working toward a resolution that we do not expect and the ministry does not expect to adversely affect our operations.”

Parliament also urged the ministry to “conduct environmental risk analysis and environmental audits on a regular basis”, and plans to hold meetings with the ministries of mining and the environment on the matter.

A spokesman for the environment ministry declined to comment further on the parliament request or provide and estimate on how long this process could take.

Indonesia’s mining minister said earlier this month the environmental matters must be resolved before his office could issue a new mining permit for PT-FI up to 2031.

Inalum CEO Budi Gunadi Sadikin told parliament on Monday that “regarding the environment, we told Freeport ‘the past problems are your sins’. In future we will take responsibility together.”

Sadikin added the environmental damage from Grasberg was a shared responsibility as the government already held a 9.36 percent stake in the mine.

Sadikin said a forestry permit for the mine still needed to be issued, and “the 185 trillion rupiah ($12.80 billion) from tailings damage still needs to be cleared up” although he was confident that all the environmental problems could be resolved.

There are 13 of 48 sanctions related to the environmental audit that have not been met yet, according to the environment ministry.

In April, Freeport shares fell to a four-month low after the environment ministry announced tough new rules intended to comply with the BPK audit, just before the company announced its first quarter earnings.

Indonesia beefing up disputed Papua border force in bid for minerals

Papua’s disputed border with Papua New Guinea … hunt on for mineral riches. Image: PNG Blogs

Albert Agua | Asia Pacific Report | June 29, 2018

Indonesia is driving towards the Papua New Guinea border because of a recent discovery of huge mineral deposits in the Star Mountain regency just at the back of Tabubil Ok Tedi mine.

“Reportedly, there is gold, copper, coal, and thorium – a safer radioactive chemical than uranium,” says president-director of PT Antam Tato Miraza, who was then Director of Development, reports Pusaka.

“Geological Survey shows its potential is good and promising.”

The core of the deposit is, however, found in the disputed area of the border between PNG and Indonesia.

The claimed Papua border “shift” – the red zone near Ok Tedi mine. Source: PNG Blogs

Recently, Indonesian troops patrolled to Korkit and surveyed the land just around 40km from Ok Tedi, less than 10km from the border marker in the Korkit village to build another military base.

The citizens from Korkit village who are PNG citizens are moving into the new Indonesian village.

This is just 20km from the mineral deposit area.

Thorium, a weakly radioactive element that can be used as fuel in a nuclear power reactor, has been discovered in the disputed area and this has been the sole driver for Indonesians to force themselves into the disputed territory.

Also the “explorers” are actually the military carrying out the exploration.

The Indonesians have been transporting mining supplies to the area and the locals are prepared to wage war if the exploration continues under heavy military security.

Wutung border improvements

Meanwhile, major improvements in infrastructure and capacity are planned for the PNG-Papua border at Wutung, reports Loop PNG.

The improvements are planned as part of the PNG government’s West Sepik Special Economic Zone (SEZ).

National Planning Minister Richard Maru and delegates of a fact-finding mission to West Sepik visited the border area last week.

Loop PNG also reports that an international bus service and terminal are planned for the Wutung border post.

Giant Waste-Spewing Mine Turns Into a Battleground in Indonesia

Grasberg mine tailings Source: Freeport-McMoRan

Danielle Bochove and David Stringer | Bloomberg | June 5, 2018

Every year, Freeport-McMoRan Inc. dumps tens of millions of tons of mining waste into the Ajkwa River system in Indonesia. The company has been doing it for decades, and is demanding the right to keep at it for decades to come.

The discharge of what are called tailings, the leftovers of mineral extraction, is perfectly legal under Freeport’s current contract with the government. But recently, after more than a year of tense negotiations over the terms of a new deal, Indonesia suddenly changed the rules: The Grasberg mine in the highlands of Papua province would have to operate by heightened standards. It shouldn’t have been a surprise, really, considering most every other miner in the world has been forced or has elected to stop discarding tailings in rivers.

Freeport, though, has said that won’t happen at Grasberg. Chief Executive Officer Richard Adkerson has been blunt about it. “You can’t put the genie back in the bottle,” he said in April. “You simply can’t say 20 years later ‘we’re going to change the whole structure’.” Grasberg’s waste management, he added, has “always been controversial.”

The tailings tussle is the latest twist in the complicated relationship between the mining giant and the Southeast Asian republic. How it plays out will have far-reaching consequences in Indonesia. Freeport is a major taxpayer and job provider and has built homes, schools and hospitals in one of the poorest provinces. But Grasberg has also long been a target for environmentalists, indigenous and separatist groups and human-rights watchdogs.

At stake for Freeport are reserves that Bloomberg Intelligence estimates to be worth $14 billion at the world’s biggest gold deposit and second-largest copper mine. Grasberg accounted for 47 percent of Freeport’s operating income in 2017, according to data compiled by Bloomberg.

“What happens at Grasberg has global significance,” said Payal Sampat, the mining program director at the mining watchdog-group Earthworks. “It involves some of the largest global players in the mining industry and one of the leading mining economies.”

Most countries have banned tailings deposits in waterways over concerns they can be toxic, destroying habitats, suffocating vegetation and changing the topography of rivers, causing floods. Most miners have said they’re against the practice regardless of local rules. The industry’s biggest, BHP Billiton Ltd., won’t “dispose of mined waste rock or tailings into a river or marine environment,” as the company put it in a statement.

‘Environmental Burden’

Only two other industrial-scale mines — and a third, small operation — are known to get rid of tailings as Grasberg does, and they’re in Papua New Guinea, which occupies half of the island of New Guinea; Indonesia owns the rest, which is home to the Freeport-run mine. In recognition of risks that could leave “a massive environmental burden for future generations,” the practice has been phased out everywhere else, according to the United Nations’ International Maritime Organization.

Freeport sees things differently. “As we have stated before, the tailings are benign,” said Eric E. Kinneberg, a spokesman, referring to the corporate website for a detailed explanation.

Tailings deposition area in the Ajkwa River system.Source: : Action for Ecology and People’s Emancipation

The Phoenix-based company maintains that much of the sediment in the Ajkwa River system downstream from Grasberg is caused by natural erosion, and that tailings pose no significant — or at least unexpected — threats. “There have been no human health issues or impact on the environment that wasn’t anticipated,” Adkerson said on a quarterly earnings call in April.

The company’s partner in the Grasberg complex, Rio Tinto Group, recently addressed concerns about waste removal. “Riverine tailings disposal is very, very far from best practice,” Chairman Simon Thompson told a meeting in London in April, perhaps highlighting one of the reasons Rio may be willing to sell its 40 percent interest to a state-owned company for $3.5 billion. A spokesman for the company declined to comment for this story.

Rio shares were up 1.5 percent in U.S. trade at 2:54 p.m. while Freeport gained 2.8 percent. Copper and gold prices were also higher.

‘No Realistic Alternative’

“If you think about it from Rio Tinto’s perspective, one of the biggest problems with this mine is the environmental issues. I think that’s an incentive for Rio to get out,” said Christopher LaFemina, an analyst at Jefferies LLC. “This is a critically important part of Freeport’s overall value. For Rio Tinto, it’s not.”

The problem for Freeport and Indonesia is that there’s no easy solution. “There has been no realistic alternative identified,” Thompson said. Freeport’s local unit studied 14 alternatives for tailings disposal — including dams and pipelines — and concluded all were too risky in a mountainous terrain prone to earthquakes and heavy rainfall.

As it is, the heavy ooze wends its way through glacier-capped valleys, descending almost 4 kilometers (2.5 miles) to tropical lowlands and a 230 square kilometer deposition zone, where roughly half the tailings are parked. The rest flows on to a river estuary and the Arafura Sea.

“The company has sacrificed not just the river, but also the coastal area,” said Pius Ginting, coordinator of Action for Ecology and People’s Emancipation, an Indonesian environmental group.

50 Million Tons

According to Earthworks, Freeport sends more than 76 million metric tons of tailings and waste rock into Indonesian rivers every year. The company puts the 2017 figure at 50 million tons. Without spelling out precisely how the requirement should be met, Indonesia told Freeport that it would boost to 95 percent from half the amount of tailings that must be recovered from the river system, according to Adkerson.

That was a shock that sent Freeport’s stock tumbling after Adkerson revealed it on April 24. Shares have largely recovered as investors bet the government will fail to follow through.

The negotiations to secure the right to keep mining Grasberg until 2041 had already been complicated by an edict that foreign miners sell majority stakes in their assets to local interests. Rio’s apparent interest in divesting would ease that problem for Freeport, reducing how much it would need to unload.

Stunning Asset

Even if its share dropped below 50 percent, Freeport as an operator could still win big — Grasberg is a stunning asset, expected to produce more than 520,000 tons of copper in 2018 and more gold than any other mine. Of course, Indonesia’s tailings mandate may be a negotiating tactic, as some Freeport investors said they suspect. Ilyas Asaad, inspector general at Indonesia’s Environment & Forestry Ministry, didn’t respond to a request for comment.

The company is holding its position: The discharge of tailings into the river system is an inescapable consequence of keeping the mine in operation. If the government backs down, it will be “a political decision,” said David Chambers, a geophysicist who runs the U.S. nonprofit Center for Science in Public Participation. “There aren’t many governments that are willing to sacrifice those kinds of environmental resources for the financial resources.”

Few investors have publicly seized on the tailings mess as a reason to shun Freeport. One was Norway’s $1 trillion sovereign wealth fund, which in 2006 excluded Freeport from its investment universe and in 2008 sold its holding of about $850 million of Rio shares, citing Grasberg’s use of the river system to dispose of tailings.

“The spotlight has shone on these issues a lot more brightly in the last couple of years,” said Andrew Preston, head of corporate governance in Australia for Aberdeen Standard Investments, which owns shares in Rio and BHP. The “wake-up call,” Preston said, was the 2015 failure of a tailings dam at BHP’s Samarco iron-ore joint venture with Vale SA in Brazil. Billions of gallons of sludge escaped to travel hundreds of kilometers down the Doce river, killing at least 19 people and leaving hundreds homeless.

Jefferies’ LaFemina said investors are betting on the status quo in Indonesia. “In negotiations, different sides are trying to get leverage.” In the end, “I am not expecting there to be a significant change to how this asset operates”.

Rio Tinto about to offload stake in Grasberg mine for $3.5 billion

Grasberg mine on the island of New Guinea, one of the world’s biggest sources of copper and gold. (Image: Google Earth)

Commentary from SkyTruth: “News that Rio Tinto is negotiating to sell out its stake in the massive Grasberg Mine in West Papua (Irian Jaya). We’ve written about this mine before: uncontrolled dumping of tailings into rivers flowing past the mine has caused the deposition of tailings across a broad swath of former rainforest downstream, creating a moonscape 30 miles long and up to 2-1/2 miles wide. By selling out, Rio Tinto might be able to dodge any liability for that damage — although their partner Freeport McMoRan may still be on the hook, and apparently the “tailings issue” is holding up the sale”

Cecilia Jamasmie | Mining.com | 23 May 2018

World’s No.2 miner Rio Tinto confirmed Wednesday is ready to sell its stake in the giant Grasberg mine, the world’s second largest copper operation, to Indonesia’s state mining holding company Inalum for $3.5 billion.

The move could mark the end to a long-drawn-out, three-way dispute over the mine, which has been centered on bringing local ownership of Grasberg up to 51%, a main requisite set by the Indonesian government to allow Freeport-McMoRan to keep operating in the country.

Discussions with  PT Indonesia Asahan Aluminium, known as Inalum, and Freeport — the other two companies engaged in talks — were ongoing, Rio said, “including as to price,” noting that no agreement had been reached.

Rio’s deal with Freeport was struck in 1995 and entitles it to a 40% share of production when certain output levels are hit. But as a result of strikes and other disruptions and as the open pit at Grasberg nears the end of its life, the Melbourne-based miner hasn’t seen any benefit since 2014.

Chief executive Jean-Sebastien Jacques publicly questioned Grasberg’s place in Rio’s future back in February 2017. He followed in June with a remark about the mine being a world-class copper deposit, which might not be a world-class mining investment.

“There is a fundamental difference between a world-class resource and a world-class business,” he said again last week at the Bank of America Merrill Lynch Global Mining, Metals & Steel Conference.

Indonesia and Freeport have been negotiating the terms for the company to give the government a majority ownership in Grasberg for over a year. But until today, it wasn’t clear what would happen to Rio’s interest in the mine.

Grasberg, the world’s second-largest copper mine and fourth largest gold operation, has transitioned to a fully underground operation, set to reach full capacity by 2022, when it will produce 160,000 tonnes per day of ore.

The additional Deep Mill Level Zone block cave mine, currently under construction, is projected to contribute an additional 80,000 tonnes per day of ore once at full capacity, expected in 2021.

Three dead since Sunday in renewed fighting in Papua

Members of the Indonesian Army in Papua. Photo: AFP

Radio New Zealand | 6 April 2018

Gunfire exchanges between Indonesian military forces and West Papuan guerillas in Mimika regency have left three people dead since Sunday.

The death of a soldier with the Indonesian army, or TNI, prompted renewed fighting in the mountainous area around the Freeport mine in Papua province.

TNI and police forces had gone into a remote part of the area to reclaim villages controlled by the West Papua Liberation Army, or TPN.

TPN guerilla forces have declared war on the Indonesian state and the operations of the Freeport mine.

An NGO worker in Mimika’s capital Timika, Demi Picoalu, said the TNI killed two Papuans in an intense sweep operation sparked by the killing of one of their troops on Sunday.

“After that, massive sweeping opertaion in (local) villages, and they (joint TNI and police troops) shoot everyone, because the TPN is hiding in the community village, so TNI used rockets.”

Earier, according to the Jakarta Post, the TPN said that over 1,000 civilian lives were at risk due to the TNI’s operation.

TPN spokesperson Hendrik Wanmang said they had gathered civilians in Kampung Opitawak and TPN fighters had retreated and left the kampung to avoid civilians being mistaken for armed fighters.

However, Demi Picoalu said that according to reports he had recieved from Banti village, the TNI’s sweep operation had stopped.

Local villagers had been evacuated to the relative calm of a village named Banti 2 where they were consideed safe lest fightnig break out again.

Indonesia police kill Papua woman, clash claim disputed

Police claim arrested youth was stealing ore concentrate from the Grasberg mine cargo dock

Niniek Karmini | Associated Press | 5 February 2018

Indonesian paramilitary police fatally shot a woman in what they said was a clash with stone-throwing villagers in the troubled Papua region, but a relative of the victim disputed their account of events.

Police said in a statement Monday that the 61-year-old woman was among villagers who intervened to help an 18-year-old man who jumped out of a boat to escape custody after being detained on suspicion of theft.

The statement said police fired warning shots during the clash with villagers on Saturday. The woman died from a gunshot to the head, police said. A cousin of the dead woman said that there was no clash and that she was shot as an innocent bystander when police fired on the escaping suspect.

In a separate statement, Papua police spokesman Ahmad Kamal said seven officers were being questioned by the police internal affairs unit in connection with the incident.

Conflicts between indigenous Papuans and Indonesian security forces are common in the impoverished region, which Indonesia annexed more than half a century ago.

Police said the 18-year-old was one of three people suspected of stealing ore concentrate in Mimika district from the cargo dock of U.S. mining company Freeport-McMoRan, which operates the giant Grasberg gold and copper mine in Papua, and was captured after a hunt by police, security guards and navy officers.

The handcuffed man jumped out of the speedboat he was being transported in on Saturday evening and villagers from a nearby island came to his aid and prevented him from being apprehended again, according to police.

Cornelia Emakefaro, the cousin of the victim, said the woman and her husband were in a small boat on an errand to fetch fresh water when the woman was hit by police gunfire after the theft suspect jumped into the water.

“Based on information from my cousin’s husband as the only witness and the village head, there was no attack from villagers to the officers,” Emakefaro said. “We understand they are carrying out the task of catching suspects who may have been involved in the theft, but they are not entitled to shoot people like chasing game animals.”

In September, Indonesian police demoted two officers who fired at a crowd of protesting Papuan villagers, killing one man, in a decision that rights groups said was too lenient and showed a chronic lack of accountability for abuses in Papua.

Papua shooting shuts down Freeport route

West Papuans have long expressed frustration about the environmental destruction caused by the Freeport mine operations in Mimika regency. Photo: MIneral Policy Institute

Reuters | Radio New Zealand | 13 November 2017

The Indonesian unit of Freeport-McMoRan has temporarily shut the main supply route to its Papua mine after a shooting incident, a spokesman says, amid escalating tensions between security forces and an armed Papuan group in the area.

No one had been reported hurt after shots were fired at a vehicle, but the main supply route to the world’s second-biggest copper mine had been temporarily closed while the security situation was assessed, Freeport Indonesia spokesman Riza Pratama said in text message.

Authorities in Indonesia’s eastern province of Papua are delivering food and aid to villages near the mine where security forces say the rebel group has blocked residents’ movement, as security personnel surround the area, a police official said.

Police said a group linked to the Free Papua Movement (OPM) was preventing about 1000 people from leaving five villages near the Grasberg mine operated by the US company.

“We continue to try a persuasive approach and dialogue,” said Viktor Mackbon, police chief of the Mimika area, where the villages are located. Talks with the group would be conducted through public and religious figures in the region, he added.

Officials on Saturday said about 200 police and military personnel had been deployed in preparation to secure the area by force, if necessary.

Police said they will distribute, on Monday, a notice in the area for the “armed criminal group” to give themselves up and surrender weapons.

Reuters could not immediately reach members of the rebel group, the West Papua National Liberation Army (TPN-OPM), to seek comment.

On Friday, the group denied occupying villages near the mine, but said it was “at war” with the police, military, and Freeport.

A resident from one of the villages, Banti, said security forces had blocked access to the village.

Residents he had spoken were not being held hostage by separatists but “are only worried about what might happen if the police and military come into their area”, he said.

A state of emergency has been declared in the area and security stepped up after a string of shootings since August 17 that killed one police officer and wounded six.

Papua has had a long-running, and sometimes violent, separatist movement since it was incorporated into Indonesia after a widely criticised UN-backed referendum in 1969.

Separatist violence threatens to disrupt Freeport’s Indonesia mine

Fergus Jensen, Agustinus Beo Da Costa, Sam Wanda | Reuters | 9 November 2017

Armed separatists have occupied five villages in Indonesia’s Papua province, threatening to disrupt Freeport-McMoRan Inc’s giant Grasberg copper mine, which has already been hit this year by labour unrest and a dispute over operating rights.

A state of emergency has been declared and around 300 additional security forces have been deployed to the mining area of the eastern province after a string of shootings since Aug. 17 that killed one police officer and wounded six.

“They want to disrupt Freeport’s operations,” said Suryadi Diaz, a spokesman for the Papua police.

“(Freeport) is rich but they are poor, so they just want justice,” Diaz said, adding that the militants were a splinter group of the separatist Free Papua Movement (OPM).

Freeport Indonesia spokesman Riza Pratama said the company was “deeply concerned” about security and was using armoured cars and helicopters to ferry workers to and from the Grasberg mine in the province’s Mimika regency.

He said attacks had been launched along the road near the town of Tembagapura, about 10 km (6 miles) from the mine, where families of employees – including expatriates – live.

He added that so far there had been no impact on production and shipments from Grasberg, the world’s second-biggest copper mine.

Last year Freeport Indonesia contributed about a quarter of the parent company’s global sales of 4.23 billion pounds (1.92 million tonnes) of copper.

Arizona-based Freeport, the world’s largest publicly listed copper producer, has already been grappling with labour problems at Grasberg and a lengthy dispute with the Indonesian government over rights to the mine.

The mine has also be dogged by major concerns over security due to a low-level conflict waged by pro-independence rebels in Papua for decades. Between 2009 and 2015, shootings within the mine project area killed 20 people and wounded 59.

Papua and neighbouring West Papua provinces make up the western half of an island north of Australia, with independent Papua New Guinea to the east. The provinces have been plagued by separatist violence since they were incorporated into Indonesia after a widely criticised U.N.-backed referendum in 1969.

President Joko Widodo has sought to ease tension in the two provinces by stepping up investment, freeing political prisoners and addressing human rights concerns.

Police spokesman Diaz said around 1,000 local residents and migrant workers who pan for gold in Mimika were being prevented by the separatists from leaving the five villages.

Security forces had entered the occupied area on Thursday, police and military sources told Reuters, but it was not clear if they had been able to evacuate any of the residents.

“Perhaps they feel envious with the company’s presence,” Papua Police chief Boy Rafli Amar told Reuters. “We are trying to maximise protection for the community … because people have been raped and some have had goods stolen.”

In one attack in late October, shots were fired through the windscreen of an ambulance that was ferrying a villager who had just given birth, police said.

The water supply of Tembagapura town had also been contaminated with kerosene, Boy said, but police had not been able to ascertain if it was an act of sabotage carried out by the same group behind the shootings.

“JUST WILD THIEVES”

In a video purported to come from the National Liberation Army (TPN-OPM), part of the OPM group, dated Sept. 29, a guerrilla action coordinator named as Joni Beanal reads out an open letter warning of attacks on Freeport in order “to destroy it”.

“The main reason for the integration of Papua into Indonesia was a conspiracy by America and Indonesia in the interests of mining exploitation by Freeport MacMoran in Papuan soil,” the coordinator said on the video, which was seen by Reuters.

Reuters was not able to verify the authenticity of the video. Papua police spokesman Diaz dismissed the recording as “old”.

Papua Military Commander Major General George Elnadus Supit said the TPN-OPM posed no significant threat and were “just wild thieves who are perhaps being used by a separatist group”.

Concord Consulting group warned that a harsh crackdown on the militant group could “backfire” if security forces were unable to prevent civilian casualties.

“Militants in Mimika will be able to hide among the local population – many of whom share their rejection of Indonesian rule,” the security consultancy said in a note on Wednesday.

Freeport contributed $20 million towards Indonesian government-provided security protecting workers and infrastructure in 2016, about one-third of its local security budget.

The company paid $668 million to the Indonesian government last year in income taxes, royalties and export duties, making it one of the country’s single largest taxpayers.

The Panguna copper and gold mine in neighbouring Papua New Guinea was abandoned in 1989 after a campaign of sabotage by the rebel Bougainville Revolutionary Army.

Echoing the situation in Papua, there was deep resentment among the indigenous Bougainville people about the wealth going to the Papua New Guinea central government and the mine’s then operator, Conzinc Riotinto of Australia Ltd, a forerunner of Rio Tinto .

(Reporting by Fergus Jensen and Agustinus Beo Da Costa in JAKARTA; Additional reporting by Sam Wanda in TIMIKA; Editing by John Chalmers and Alex Richardson)

Gold mine protester tried for spreading communism as red scare sweeps Indonesia

Indonesian Muslims shout slogans during a rally against communism outside the Parliament in Jakarta on September 29. Photo: AP

Jewel Topsfield & Amilia Rosa | Sydney Morning Herald | October 12, 2017

An anti-gold mine protester has become the latest person to be tried under draconian anti-communist laws in Indonesia.

The case comes as the spectre of a resurgent red peril has once again inflamed the country more than 50 years after the leftist movement was brutally crushed.

In circumstances that local media have described as reminiscent of Suharto’s authoritarian New Order regime, Heri Budiawan could face up to 12 years in jail for spreading communism.

Prosecutor Budhi Cahyono said banners made by protesters against a gold mine in Banyuwangi in East Java on April 4 contained a hammer and sickle drawing in red spray paint like that used by the defunct Indonesian Communist Party, the PKI.

Accused of spreading communism: Heri Budiawan. Photo: Amilia Rosa

“The defendant led the activities of the people protesting and did not stop or prevent the placement of the banner with the hammer and sickle symbol identical to the PKI symbol, knowing that communism is forbidden in Indonesia,” Mr Budhi said in the indictment in the Banyuwangi District Court.

“The defendant’s act was against the law … in regards to crimes against the security of the nation.”

But environmental groups claim the gold mine, PT Bumi Suksesindo, is using the communism allegations as a tactic to shut down protests against alleged environmental damage caused by the mine.

The man who filed the complaint to police about the alleged hammer and sickle image in April was the then senior manager of external affairs at the gold mine.

Supporters of Heri Budiawan outside the Banyuwangi District Court. Photo: Supplied

Mr Heri strenuously denied the allegations. “None of the banners we did had hammer and sickle drawings on them,” he told Fairfax Media.

Mr Heri claimed there was no way he would invoke the former communist party in his fight against the gold mine.

Thousands of Muslims staged a rally in the Indonesian capital, protesting the government decree to ban radical organisations and against the alleged revival of communism.  Photo: AP

“I am against the PKI, I don’t want it in Indonesia either. If there was an anti-PKI rally I would join it.”

A surge in anti-communist sentiment and paranoia about the resurgence of the PKI swept Indonesia in the lead up to the 52nd anniversary of the murder of six army generals on September 30.

The PKI was blamed for the aborted coup, which triggered the purge of between 500,000 and one million people with suspected leftist leanings in a dark chapter of Indonesian history that remains deeply sensitive.

Last month police were forced to fire tear gas and water cannons to disperse anti-communist protesters who falsely claimed an event at the Jakarta Legal Aid Institute Foundation was a meeting of communist supporters.

Military chief General Gatot Nurmantyo ordered screenings of the 1984 propaganda film Pengkhianatan G30S/PKI (Betrayal of the Communists), a blood thirsty depiction of the death of the generals at the hands of the communists.

Even Indonesian President Joko Widodo – who was targeted by a smear campaign falsely claiming he was the son of communists during the last election campaign – tweeted on October 1: “Don’t let the cruelty of the PKI reoccur.”

“Although the PKI was violently obliterated in the mid-60s and communism is a dead letter globally which has no popular support in Indonesia, it is alive and well as Indonesia’s number one bogeyman,” Dr Tim Lindsey, the Director of the Centre for Indonesian Law, Islam and Society at Melbourne University wrote recently.

“Communism remains the label of choice to smear progressive opponents.”

Mr Heri is convinced the case against him has been made up because of his fight against the gold mine, BT Bumi Suksesindo, which he claimed had destroyed the local forest and and was responsible for mud floods.

“It’s all made up. I know I am not guilty,” he told Fairfax Media. “I am not an activist, just a villager. The mine is destroying our livelihood.”

The mine could not be reached for comment.

The trial is continuing in the Banyuwangi District Court.

Fandi, from the Indonesian Forum for the Environment (WALHI) in East Java, said this was not the first time locals had been criminalised to stop the fight against the mine.

He said the PKI symbol might be ancient history but it was an effective weapon. “It is to divert attention from the issues with the mine,” Fandi told Fairfax Media. “The area was downgraded from protected forest to an industrial zone to allow the mine to operate on it.”

Australian National University Associate Professor Marcus Mietzner said that rather than an indication of hardening anti-communist stances in Banyuwangi, this appeared to be a convenient pretext for interests associated with a large corporation to support cases against those rejecting its projects.

“Some of the other events – especially the attack on the Jakarta Legal Aid Institute Foundation – are more closely related to the ideological and political dynamics ahead of 2019,” Dr Mietzner said.

“Obviously, the goal is to somehow associate Jokowi with communism – a move he has countered by portraying himself as being as staunchly anti-communist as his critics. As a result, pro-democracy and leftist NGOs are cornered from two fronts: the alliance of Islamist and pro-military forces on the one side, and the Jokowi government’s attempts to appear anti-communist on the other.”