Indonesia’s long relationship with Freeport at crossroads
Indonesia’s long relationship with Freeport at crossroads
By Asian Correspondent Staff | 16th March 2017
AMERICAN mining giant Freeport-McRoRan Copper & Gold may soon pull out of Indonesia after more than four decades due to prolonged conflict with the government.
The company, which is the country’s oldest international investor and largest taxpayer, has been embroiled in a battle with President Joko “Jokowi” Widodo’s administration over new national mining regulation.
Legislation introduced in January 2017 requires Freeport to convert its business contract into a special mining licence, dictating the company must divest 51 percent of shares in its local subsidiary within a decade and build a new US$2 billion smelter.
With economic nationalism a key aspect of Jokowi’s agenda, the government is also demanding higher royalties, land relinquishments and more materials to be procured from local suppliers.
Freeport McMoRan’s current contract was set to expire in 2021 and CEO Richard C. Adkerson has insisted the company will not meet Jakarta’s demands to change its contract, threatening international arbitration.
It was signed in 1991 under the New Order dictatorship, long before Indonesia’s transition to democracy began in 1998.
Meanwhile, the government has been preparing state-owned aluminium company PT Indonesia Asahan Aluminium to take over management of the gold and copper mining site.
Last week, the Energy and Mineral Resources Minister Ignatius Jonan met with several of his predecessors to discuss the continuation of Freeport Indonesia’s business – even including the minister who served under Suharto between 1978 and 1988.
Protesters across Indonesia have called for the government to nationalise PT Freeport Indonesia, framing American ownership of the company as a form of colonialism.
The company, meanwhile, claim to have injected US$16 billion into Indonesian coffers between 1992 and 2015, and that divesting would impact Indonesia’s foreign investment climate.
Impact on local communities
Whilst negotiations might be taking place in office towers in Jakarta, a temporary suspension of Freeport’s operations is having significant consequences 3000km away in Indonesia’s easternmost Papua province where the mine is located.
Indonesia’s central bank reports the local economy has significantly slowed since Freeport’s decision to indefinitely shut down production. PT Freeport Indonesia has laid off more than 1500 workers in the past two months as negotiations have dragged on.
Natalius Pigai of the national human rights commission, Komnas HAM, told The Jakarta Post “it is not fair to just think about nationalism while letting many people suffer. The government should protect the rights of Papuans, including their job rights.”
Papua has a relatively high GDP compared with other Indonesian provinces despite its small population. Less than four million of Indonesia’s 250 million people live there.
Nevertheless, Papua had the highest rate of poverty of any province at 27.8 percent in 2014, compared with 11 percent nationwide.
Papuan tribal leaders visited the offices of human rights group Imparsial in Jakarta this month, pleading with the government to allow participation from local people in the decision-making process.
Meegabo Traditional Papua Council chairman John Gobai asked Jokowi’s administration to allow Freeport to “operate while the government, Freeport and the Papuan customary councils meet to negotiate the company’s contract. We do not care who will own the company’s shares later.”
Earlier in March, roughly 100 Freeport employees protested outside the Energy and Mineral Resources Ministry in Jakarta to demand a swift resolution to the dispute.
Layoffs at the company were “a result of regulations issued by the government without giving much attention to the fate of 32,000 employees and Timika residents,” PT Freeport Indonesia Employees Solidarity group member Nathalia Nauw said.
Amungme tribal council Lemasa director Odizeus Beanal said: “We simply want the government and Freeport to think about the fate of Papuans, whose land has been damaged.”
2) Freeport negotiations with government continue
Fedina S. Sundaryani The Jakarta Post
Jakarta | Thu, March 16, 2017 | 06:01 pm
Negotiations between the government and gold and copper mining company PT Freeport Indonesia continue almost one month after the firm submitted its complaints and threatened to take the case to international arbitration.
Tony Wenas, who takes part in the negotiations as Freeport Indonesia executive vice president, said no solution had been reached since negotiations started.
"The discussions are still ongoing, and we are trying to find the best resolution for the future," he said on Thursday.
Tony declined to disclose what exactly was the deadlock keeping the two parties from concluding their negotiations.
(Read also: Freeport representatives visit ministry to find solution)
Freeport has refused to accept the government’s demand to convert its contract of work (CoW) agreement into a special mining license (IUPK). The company argues that an IUPK would effectively annul its CoW signed in 1991.
Freeport says it does not want to give up the rights listed in its CoW, including protection of its long-term investments.
Under new government regulations, Freeport is required to gradually divest 51 percent of its shares to Indonesian entities.
Tony met with Coordinating Political, Legal and Security Affairs Minister Wiranto on Thursday, a day after visiting the Energy and Mineral Resources Ministry to discuss the issue with officials there. (bbn)
3) HEALTHS AND TRANSMIGRATIONS ISSUES OF WEST PAPUA DELIVERED IN UNHRC
AdminMar 16, 2017
Jayapura, Jubi – Some organisation delivered a joint statement to draw Human Right Council’s attention to the human rights situation in West Papua in particular regarding the rights of the indigenous people, including their right to health.
Vivat International, Franciscans International, the World Council of Churches and Geneva for Human Rights with support of the International Coalition for Papua (ICP) , Tapol and Westpapua-Netzwerk, on Wednesday (15/3/2017) at the 34th regular session of the United Nations Human Right Council in Geneva said they acknowledge and appreciate the invitation from the government of Indonesia for the visit of the UN Special Rapporteur on the Right to Health to Indonesia, including West Papua, in March 2017.
“We see this visit as a sign of hope and a step towards having more confidence for the future of the indigenous West Papuans,” said Andrzej Owca, who delivered the joint statement.
However, those organisation are deeply concerned by the continuing decline of the population of indigenous Melanesians in West Papua. Since the annexation of West Papua by Indonesia in 1969, the number of West Papuans has decreased from 96% in 1971 to 48% in 2010, with current estimates being less than 42%.
“At this rate, the population of indigenous Melanesians in West Papua could disappear within the next 40 years. Violence against indigenous West Papuans has been the result of an unresolved, long-standing conflict over the political status of West Papua,”
Mr Owca said the situation for the indigenous West Papuans has been further exacerbated by a low standard of physical and mental health that the State has failed to address, in comparison with other ethnic groups in Indonesia. Governement health intitutions are not providing and delivering effective health and medical services for indigenous West Papuans, especially in remote regions.
Therefore, those organisation recommend that the government of Indonesia to establish a strong policy and take appropriate measures toward stopping and reversing the depopulation of indigenous Melanesians in West Papua, by controlling the transmigration flow into West Papua and by respecting the rights to development for indigenous Melansians in West Papua, including rights to customary lands.
“We also urges Indonesia government to monitor and ensure effective implementation of health and medical services in remote areas, and stop the engagement of military personnel in the implementation health care programs in West Papua,” said Mr Owca in the end of joint statement. (*)
4) Indonesia To Summon British Ambassador Over Papua Coral Reef Destruction
Details Published on Thursday, 16 March 2017 13:39
JAKARTA — Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan will summon the ambassador of the UK, Thursday, in connection with the destruction of coral reefs in Raja Ampat, Papua, by British cruise ship MV Caledonian Sky, Indonesia’s Antara news agency reported.
"Tomorrow (Thursday), I will summon him," he stated at his office here on Wednesday.
The former chief minister for political, security, and legal affairs said a regulation in place in the Great Britain stipulates that strong administrative sanctions can be imposed on a seaman or ship’s captain found conducting violations that caused destruction in the sea.
Panjaitan remarked that he will also send a team to investigate the destruction caused by the Bahamas-flagged ship.
The Indonesian government has formed a joint team with officials from his office, the environment minister’s office, the transportation ministry, the tourism ministry, the ministry of justice and human rights, the Attorney General’s Office, the police, and local governments in connection with the incident.
"We will send the team there tomorrow (Thursday). Officials from other ministries have also been sent there," he pointed out.
Panjaitan stated that his office will investigate how a 90-meter-long cruise ship of 4,200 gross tonnage was allowed to sail in the area.
The ship has caused destruction in "the heart" of Raja Ampat and damaged the exotic coral reefs.
"It was said that the ship carrying tourists had entered the area several times. It should have been prohibited. Investigation must be conducted to unearth how the ship was allowed to sail in that area during low tide," he noted.
Panjaitan remarked that his office will review the existing regulations that might have lead to the incident.
"This should serve as a lesson. We will conduct a thorough investigation to prevent recurrence of a similar incident in future," he emphasised.
Arif Havas Oegroseno, the first deputy for maritime sovereignty, has expressed willingness to cooperate with the foreign ministry to deal with the destruction.
Although MV Caledonian Sky is a cruise ship belonging to a British company, but based on the international law, the country, whose flag was flown on the ship in question, must be held responsible.
"The ship carried the flag of the Bahamas. According to the international law, the country, whose flag the ship is bearing, is held responsible. The company that operates it may be from another country," he explained.
Oegroseno said he has communicated with the foreign ministry on efforts to be taken to settle the case, including seeking help from the Great Britain.
Oegroseno said Indonesia has no diplomatic relations with the Bahamas, which is a British Commonwealth member country in the Caribbean.
"In the morning, just now, I met with friends from the foreign ministry, as we have no representative in the Bahamas. We also do not have an embassy there," he revealed.
As the problem is linked to navigation safety, the Indonesian government will also cooperate with the International Maritime Organisation in dealing with the incident.