http://www.aljazeera.com/indepth/opinion/2011/08/201182814172453998.html
West Papua: A history of exploitation
West Papua was taken over by Indonesia in 1969, and a legacy of oppression and
environmental devastation has followed.
NAJ Taylor Last Modified: 21 Sep 2011 20:29
The Grasberg mine has damaged surrounding river systems, such as the
Ajikwa river above [West Papua Media]
Investing in conflict-affected and high-risk areas is a growing concern for
responsible businesses and investors. Companies based in developed countries
often operate in lesser-developed foreign markets, where governance standards
are lax, corruption is high and business practices are poor.
These pieces focus on one specific Anglo-Australian company and their American
partner that jointly operate a mine in West Papua, one of the poorest provinces
of Indonesia. The risks for the company include the potential to contribute to
environmental and social damage in a foreign market. The risks for investors
include financing a company that does not get its risk management right.
This is the second chapter of a four-part essay that examines how the Norwegian
Pension Fund came to blacklist the mining giant Rio Tinto. The first part can
be found here.
Part 2: A history of exploitation
New Guinea, geographically as well as historically, is Australia's closest
relative. Separated from the mainland during the last glacial period, the
waters filled in what now separates them: about 152km of the Torres Strait.
While Australia and New Guinea both have enviable mineral stores, economic and
political exploitation has left the latter as home to many of the poorest
people on Earth. New Guinea is also an island of two histories.
The eastern half forms the independent state of Papua New Guinea - a status it
has enjoyed since breaking from Australia in 1975. With its natural resources
of oil and industrial metals, Papua New Guinea has long been exploited for its
minerals at places like Ok Tedi and Bougainville.
Both projects ended in social and environmental disaster. The environmental
impact of Ok Tedi was so great that, in 1999, Paul Anderson, then chief
executive of Australian mining company BHP, conceded that the mine was "not
compatible with our environmental values". But it did serve the company's
pursuit of profit. It was not until the Ok Tedi environmental disaster three
years later that the true impact of BHP's mining practices came to the
attention of the global public. BHP subsequently sold its interest, established
a fund to restore the sustainable development of the affected people, and
received immunity from further prosecution.
BHP Billiton acknowledged that its mine at Ok Tedi was 'not compatible
with our environmental values' [GALLO/GETTY]
The western half of New Guinea has had a lesser-known but equally tragic
history centred around the Jayawijaya Mountain, home to the Amungme, and
farther downstream, the Kamoro people. As with much of East Asia, the indigenes
were under Dutch rule when a geological expedition in 1936 located a
significant ertsberg (ore mountain) deep in the southwestern highlands. World
War II intervened, and the Japanese claimed Indonesia and some of the western
parts of New Guinea.
Following defeat in the war, the Japanese were marshalled back to their home
territory, and Dutch colonialism resumed. Importantly, when Indonesian
independence was obtained from the Dutch in 1949, few knew of the ertsberg
(mineral ore) hidden deep in West Papua's wilderness.
The Dutch began a ten-year Papuanisation programme in 1957 that would see West
Papua handed back to the indigenes, and would create the independent state of
West Papua around 1972.
Despite multiple territorial claims, the ore mountain lay dormant for over 20
years.
On March 6, 1959, the New York Times reported the presence of alluvial gold in
the Arafura Sea just off the coast of West Papua. Reminded of their earlier
discovery, Dutch geologists were said to be returning to the ore mountain, now
simply known as Ertsberg.
Independence denied
The indigenes, meanwhile, as part of their programme toward independence,
established a Papuan National Council and provisional government as well as
their own military, police force, currency, national anthem, and flag. At the
time, West Papua's independence was due before the United Nations
Decolonisation Commission, and representatives took part in various cultural
and political activities throughout the region. By December 1, 1961, the West
Papuan "Morning Star" flag had been raised alongside the Dutch for the first
time. Many assumed that independence was imminent.
Unbeknown to both the indigenes and the Dutch, US mining company
Freeport-McMoRan Copper and Gold was negotiating directly with Suharto - at the
time an Indonesian army general - for a small group of its experts to prospect
this ore mountain. The path into West Papua through Suharto promised to be
fruitful for Freeport, since its board was stacked with the Rockefeller's
Indonesian oil interests who already were versed in the general's way of doing
business. An exploration agreement was reached, and soon after a geologist from
Freeport was forging his way through the wilderness toward Ertsberg.
West Papua was about to change hands again.
Armed with Chinese and Soviet weapons, as well as an increasingly public
friendship with the communists, Indonesia declared war on the Netherlands. To
protect Western interests from the threat of communism, on August 15, 1962, the
United Nations and the United States orchestrated a meeting between Dutch and
Indonesian officials during which interim control of West Papua was signed over
to Indonesia.
Six years of UN interregnum followed, after which a plebiscite would decide
whether to form a separate nation or integrate into Indonesia. All 815,000 West
Papuans were to vote in an Act of Free Choice.
To ensure a favourable outcome, the Indonesians worked to suppress Papuan
identity. Raising the West Papuan flag and singing of the national anthem were
banned, and all political activities were deemed subversive. Indonesia ruled
through force, for self-interest. Alarmed by ongoing media reports, on April 5,
1967, in the British House of Lords, Lord Ogmore called for a UN investigation.
By early 1968, with Suharto having assumed the presidency of Indonesia, a US
consular visit almost unanimously agreed that "Indonesia could not win an open
election" in West Papua.
West Papua still wanted its independence.
In a desperate attempt to secure West Papua's right to self-determination, two
junior politicians crossed the border into Australian-administered Papua and
New Guinea on May 29, 1969. They carried damning evidence of Indonesian
repression; the hopes of a yet-unformed nation rested on the politicians
reaching the UN. As Australia and its allies were amenable to Indonesian
control of West Papua, the two were imprisoned upon crossing the border until
after the referendum. Their brave plea was silenced.
Between July and August 1969, less than a quarter of one per cent of the
population - some 1,026 West Papuans - signed the country's freedom over to
Indonesia. The election, held under the aegis of the UN, was far from an act of
free choice. The following day West Papua was declared a military operation
zone, the local people's movement was restricted, and expression of their
national identity banned under Indonesian law.
Poor, neglected West Papua.
Selling West Papua
Control of West Papua proved a lucrative business deal for the Indonesians. Two
years prior to the Act of Free Choice - coincidentally on the same day the
plight of Papua was raised in the House of Lords - Freeport signed a contract
of work with the Suharto government entitling a jointly owned company, PT
Freeport Indonesia (Freeport-Indonesia), full rights to the Ertsberg mine. In
return, Indonesia would derive significant tax revenues and fees as well as a
minority 9.36 per cent shareholding. Without the authority to do so, Indonesia
nevertheless cut itself into a deal that sold large tracts of West Papua to the
US company, intent on sifting it for copper and gold.
Although Ertsberg fulfilled its promise, as production slowed in the mid-1980s,
Freeport-Indonesia began to explore surrounding mountains and ridges for other
reserves. As is often the case, the best place to establish a new mine is next
to another. Sure enough, significant copper and gold reserves were located at
Grasberg only a couple of miles southwest of Ertsberg.
Grasberg has the largest recoverable reserves of copper and gold in the world.
It's also Indonesia's economic beachhead.
Observing the Grasberg mine via Google Earth, one sees a scar like no other:
Located about 13,000 feet (4,000 meters) above sea level, open-pit (above
ground) mining has bored a hole through the top of the mountain more than half
a mile (1 km) wide. What they're digging for is more than $40bn worth of copper
and gold. Every day the operation discharges 230,000 tons of tailings (waste
rock) into the Aghawagon River. This process is expected to continue for up to
six more years, at which point exploration will go underground until there's no
value left. Freeport estimates that will occur by 2041.
The operation is so large that it has shifted the borders of the adjacent
Lorenz National Park. Listed as a World Heritage site by the UN's Educational,
Scientific, and Cultural Organisation (UNESCO) in 1999, the park is "the only
protected area in the world to incorporate a continuous, intact transect from
snowcap to tropical marine environment, including extensive lowland wetlands".
For the Amungme and Kamoro indigenes, corporate imperialism had replaced
European colonialism.
The ramifications are both environmental and social.
'Slow-motion genocide'
The social and economic condition of the indigenous Amungme and Kamoro poses
fundamental human rights concerns. Although Freeport-Indonesia directly or
indirectly employs a large number of West Papuans and is regularly Indonesia's
biggest taxpayer, in 2005, the World Bank found that Papua remained the poorest
province in Indonesia. With a marked rise in military personnel and foreign
staff has come a number of social issues, including alcohol abuse and
prostitution such that Papua now has the highest rate of HIV/AIDS in Indonesia.
Indonesian control of West Papua has been characterised by the ongoing and
disproportionate repression of largely peaceful opposition. Few sustained
violent interactions have occurred; however, in one major conflict in 1977,
more than 1,000 civilian men, women, and children were killed by the Indonesian
military in Operasi Tumpas ("Operation Annihilation") after a slurry pipe was
severed and partially closed the Ertsberg mine.
More recently, in 1995, the Australian Council for Overseas Aid reported that
the Indonesian army and security forces killed 37 people involved in protests
over the mine in the preceding seven-month period. While the level of violence
is difficult to establish, academics at the Centre for Peace and Conflict
Studies at the University of Sydney maintain that up to 100,000 West Papuans
may have been killed since Indonesian occupation. They call what's happening to
West Papua "slow-motion genocide".
"Grasberg's reserves are so vast that extracting them is expected to
create 6 billion tons of industrial waste."
There are also two primary environmental concerns over Grasberg. The first is
that the mine discharges 230,000 tons of waste rock a day into surrounding
waterways; given the escalating rate of processing, this rate is arguably above
that allowed by national law. Secondly, acid rock drainage - the outflow of
acidic water - has resulted from the disposal of a further 360,000 to 510,000
tons a day of overburden and waste rock in two adjacent valleys covering 4
miles (6.5 km), up to 975 feet (300 metres) deep. The mine operators dispute
both claims.
Riverine methods of waste disposal are banned in every developed country on
Earth. The World Bank no longer funds projects that operate this way, due to
the irreversible ecological devastation, and the International Finance
Corporation requires that rock be treated prior to disposal, which is not a
practice carried out at Grasberg. Since the mid-1990s, a number of independent
environmental assessments have found unacceptably high levels of toxicity and
sediment as far as 140 miles away.
Freeport and Rio Tinto maintain that riverine tailings disposal is the best
solution, given the difficult terrain, the threat of earthquakes, and heavy
rainfall.
Grasberg's reserves are so vast that extracting them is expected to create 6
billion tons of industrial waste.
President Suharto, who is now recognised as one of the most corrupt and
tyrannical leaders in history, renewed Freeport-Indonesia's exclusive mining
rights in 1991 for a further 30 years with an option of two 10-year extensions.
The license included an option to prospect another 6.5 million acres (2.6
million hectares), as far as the Papua New Guinea border. "The potential is
only limited by the imagination," Freeport's chairman, James Moffett, remarked
to shareholders in March 1995. "Every other mining company wants to get into
Irian Jaya [West Papua]. Bougainville and Ok Tedi don't hold a candle to
Grasberg."
Part 3 to follow next week.
This is an extract of a chapter from the book, Evolutions in Sustainable
Investing: Strategies, Funds and Thought Leadership, to be published by Wiley
in December 2011.
NAJ Taylor is a PhD candidate in the School of Political Science and
International Studies at the University of Queensland, and casual lecturer in
the Faculty of Law and Management at La Trobe University.
Follow NAJ Taylor on Twitter: @najtaylordotcom
The views expressed in this article are the author's own and do not necessarily
reflect Al Jazeera's editorial policy.
[Non-text portions of this message have been removed]
------------------------------------
Post message: [email protected]
Subscribe : [email protected]
Unsubscribe : [email protected]
List owner : [email protected]
Homepage : http://proletar.8m.com/Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/proletar/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/proletar/join
(Yahoo! ID required)
<*> To change settings via email:
[email protected]
[email protected]
<*> To unsubscribe from this group, send an email to:
[email protected]
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
