ICEL

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With Its $3.85b Mine Takeover, Indonesia Inherits a $13b Pollution Problem

Panoramic view of the Grasberg gold and copper mine in Indonesian Papua on the island of New Guinea. (Image by Richard Jones/Flickr ; Mongabay)

 

  • The Indonesian government has acquired a majority stake in the operator of the Grasberg mine, one of the world’s biggest copper and gold mines.
  • The $3.85 billion deal has been lauded as a move toward resource sovereignty, but there’s been little mention of who inherits the massive pollution legacy left from decades of mining waste being dumped in rivers and forests.
  • Activists are also calling for clarity in how the acquisition will improve the lives of the indigenous Papuan communities living around the mine, as well as end the long-running conflicts pitting them against the mine operator and security forces.

 

JAKARTA — When the Indonesian government took a controlling stake in the operator of one of the world’s richest gold mines at the end of 2018, proponents hailed the move as a historic step toward national and economic resource sovereignty.

The breathless media coverage of the transaction, which saw the government take a 51 percent stake in PT Freeport Indonesia (PTFI), previously majority-owned by Arizona-based Freeport-McMoRan, framed it as the “return” of a prized asset — the Grasberg gold and copper mine — to the Indonesian public after decades of foreign control.

But little was said about the long legacy of toxic pollution from the mine, or how exactly the new arrangement, at a cost of $3.85 billion to Indonesia, would finally bring real benefits to the indigenous people on whose land the mine sits, and who remain among the most impoverished communities in Indonesia.

 

Inheriting a pollution problem

Under the terms of the acquisition, a 41.2 percent stake in PTFI goes to state-owned smelting company PT Indonesia Asahan Aluminium, better known as Inalum. A 10 percent stake is held by the government of Papua province, where Grasberg is located. That latter stake, in turn, is managed 60:40 between an Inalum-controlled company and a province-owned firm. Freeport remains the operator of the mine.

But along with ownership in one of the most coveted mines on Earth, Inalum and the Papua government have also inherited a pollution problem stemming from the mining waste, or tailings, churned out by PTFI over decades.

“Does the completion of the divestment deal mean that the environmental problems can be resolved? No,” said Merah Johansyah Ismail, national coordinator of the Mining Advocacy Network (Jatam), an NGO. Following the takeover, he says, the national and provincial governments will also have to take the brunt of the fallout from the environmental damage caused by the mining operations.

Read moreWith Its $3.85b Mine Takeover, Indonesia Inherits a $13b Pollution Problem