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Indonesia hits back over Freeport's Grasberg mine environmental claims

Posted by On 1:20 AM

Indonesia hits back over Freeport's Grasberg mine environmental claims

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Jakarta: The Indonesian government has hit back at suggestions that tough new environmental regulations imposed on the giant Grasberg copper mine are politically motivated, or related to the partial-nationalisation of the mine.

The Grasberg mine is the world's second-largest copper mine and is located in the highlands of the restive Indonesian province of Papua. It is 90.64 per cent owned by US miner Freeport McMoran, while Rio Tinto also holds a stake.

Policemen stand guard in front of the entrance to Grasberg mine run by Freeport McMoran Copper & Gold Inc. in Timika in Indonesia's Papua province in 2009.

Photo: STRINGER/INDONESIA

The Indonesian government has asked Freeport to reduce the volume of "tailings", the waste byproduct from the mining operation, dis posed of in nearby rivers from 50 per cent to five per cent. The rest of the tailings are disposed of on land.

That request has drawn an angry response from Freeport, which is negotiating with Indonesia to sell down part of its stake so the government would control at least 51 per cent of the mine.

But the Inspector-General at the Indonesian Ministry of Environment and Forestry, Ilyas As’ad, on Wednesday fired back at criticism from Freeport chief executive Richard Adkerson over the new rules.

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A ship is loaded with copper-gold concentrate from Freeport McMoRan Inc.'s Grasberg copper and gold mine at the company's loading facility in the port of Amamapare, Papua province, Indonesia.

Photo: Bloomberg

Mr Ilyas explicitly dismissed suggestions the new edict was politically motivated or designed to force Freeport's hand during the divestment negotiations.

"We are only ta lking about environmental issues," Mr Ilyas told journalists on Wednesday, "it’s completely about the environment".

Mr Ilyas, one of the most senior officials in the Environment Department, said the government planned "intense discussions" with Freeport over the next six months to resolve the problem. Meetings are planned with the company about every two weeks to resolve the matter.

"We have to find out what technology [can] handle it [the tailings], we have to seek the way out, we won’t sacrifice everything, right, because 16,000 people are working out there," he said.

Earlier, Mr Adkerson had told journalists that a deal had been struck 20 years ago with the Indonesian government on how and where to dispose of the tailings and that change, given the mountainous terrain, was simply unachievable.

From left to right, Richard Adkerson, CEO of Freeport-McMoRan; Indonesian Finance Minister Sri Mulyani Ind rawati; and Energy and Minerals Minister Ignasius Jonan speak prior to the start of a press conference in Jakarta, Indonesia in 2017.

Photo: AP

“I’m concerned that behind it was political motivations,” he said, according to the Wall Street Journal. Freeport's share price has tumbled on news of the proposed change to tailings disposal.

"It cannot be done within six months, 24 months, five years. This is so far out of bounds it cannot be done and as I said it is addressing a problem that doesn't exist," Mr Adkerson said.

Mr Ilyas said the government did not want all operations to halt at the mine but that "some operations did not have permits yet. We want them to process the permit. So [the order to] stop operations is only related to activities that do not have permit yet".

He said the legal division of his Department had found 47 violations of environmental regulations during a vis it to the site in September 2017. Thirty-nine had subsequently been fixed but "the big ones left are mostly related to tailings".

The ministry's view, put by officials a meeting with journalists in Jakarta, is that Freeport's Indonesia office was notified some time ago that stricter regulations about how and where the tailings were to be disposed of were imminent.

The Grasberg mine creates produces 10,000 tonnes of tailings per hour, half of which is disposed of in rivers, according to the Department.

Back in March Indonesian President Joko "Jokowi" Widodo ordered his Energy Minister Ignasius Jonan to conclude long-drawn out negotiations over Indonesia taking a majority stake in the mine, through a state-owned company, by the end of April.

Mining giant Rio Tinto has the right to 40 per of copper produced by the mine above a certain quota until 2021, and after 2021 it is due to receive 40 per cent of all production.

Rio has been negotiating with Indonesia to sell its stake in Grasberg, which would go some way towards Indonesia realising its desire to hold a majority stake in the mine.

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  • Mining
  • Indonesia
  • Rio Tinto
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James Massola
James Massola
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James Massola is south-east Asia correspondent, based in Jakarta. He was previously chief political correspondent for The Sydney Morning Herald and The Age, based in Canberra. He has been a Walkley and Quills finalist on three occasions.

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