MAC: Mines and Communities

Papua: Freeport-Rio Tinto labour battles have no end in sight

Published by MAC on 2011-11-08
Source: Jakarata Globe, Reuters, Tempo, AP, SMH

Indonesian Police accused of accepting bribes

There's no end in sight to the world's biggest wages-related mining strike, as Freeport workers continue blockading (West) Papua's Grasberg operations, following Indonesian police attacks that have already claimed several lives. 

Meanwhile, the police have admitted receiving money from the company to perform "security" duties: funds one spokesperson described as "lunch money" but the country's Corruption Eradication Commission (KPK) calls "bribery".

Paying the police to assist in breaking lawful industrial action - and committing grave human rights abuses as a result - clearly runs counter to Indonesian law.

According to a report in Indonesian Tribunnews (cited by Mineweb on 7 November 2011), Indonesia's National Police has now agreed to allow the KPK to investigate these allegations.

A police spokesman recently admitted the force had received US$14 million last year from the company and that, among the alleged beneficiaries, were 356 police officers who each received US$130 per month.

UK Connect

To date, little attention has been paid to two British companies and their possible part in aggravating the recent conflict.

The Grasberg mine's internal "security" is in the hands of PT Securicor Indonesia - part of G4S, the world's most extended network of its kind that is based in the English county of West Sussex.

(For recent details of Securicor's behaviour in Papua, see: Papuans struggle - and die - as mining conflict intensifies).

London-listed Rio Tinto has also been indispensable to Freeport, acting as its critical 40% joint-venture partner at the mine for over a decade.

In September 2008, Norway's State Pension Fund disinvested from Rio Tinto on grounds that this partnership contributed significantly to the mine's unacceptable environmental risks.

In April the previous year, the Fund had already sold all its shares in Freeport on similar grounds. See: Mining company excluded from the investment universe of the Norwegian Government Pension Fund

Importantly, in advising the Fund to disinvest from Rio Tinto, the Norwegian Council on Ethics pointed out that the company's 40 per cent share of the mine's production exceeding 118,000 tons, lasts until 2021. "After this the company has a 40 per cent share in the whole output at the Grasberg mine (Block A)".

The Council stated that:"According to Freeport, Rio Tinto also has ‘a 40 percent interest in PT Freeport Indonesia's Contract of Work and Eastern Minerals' Contract of Work.

"In addition, Rio Tinto has the option to participate in 40 percent of any of our other future exploration projects in Papua.' To the Council's knowledge, Rio Tinto has so far exercised its option to participate in all exploration projects".

In a letter to the Council, Rio Tinto "confirmed its role and participation in the Grasberg mine".

But the company argued that, "[w]hile PT Freeport Indonesia is responsible for the management of the Grasberg operation, Rio Tinto engages with Freeport and positively influences outcomes on a wide range of operational, community and environmental issues." See: World's second biggest pension fund dumps Rio Tinto

Clearly we need to ask whether - and if so how - Rio Tinto has exercised any "influence"  during the recent upheavals as Freeport battles so belligerently against roughly half its current workforce.

Rio Tinto has failed to issue any statement dissociating itself from Freeport's obduracy or its actions (although this is not strictly the same as endorsing them).

Rio Tinto's cash has contributed materially, if indirectly, to the alleged "bribery" of police which have attacked the strikers so viciously in recent weeks.

At the very least, any claim by the UK-Australian company that it's "engaging" with its senior partner, to bring about a positive outcome of the current situation, appears totally unfounded.

Indeed, there is no evidence whatever that Rio Tinto has sought to modify the 2004 agreement which initiated payments to the Indonesian police, and that are now subject to an official investigation.

[Comment by Nostromo Research, 8 November 2011]

Police Admit to Receiving Freeport 'Lunch Money'

By Farouk Arnaz

28 October 2011

The police admitted on Friday what much of the country has long known - that they accepted millions of dollars from Freeport Indonesia to provide security for the miner's operations in Papua.

Officials say Freeport's Papuan workers receive the lowest wages of any Freeport facility in the world
Officials say Freeport's Papuan workers receive the lowest wages
of any Freeport facility in the world. Source: EPA / Al Jazeera

National Police chief Gen. Timur Pradopo called the payments "lunch money" paid in addition to state-allocated security funding. "It was operational funding given directly to police personnel to help them make ends meet," he said.

He also claimed it was normal practice for the police to receive money in the course of duty. "If, for instance, the party being secured offers to pay lunch money to the officers, and if the conditions of the job are particularly difficult, then I believe we can account for that money," Timur said.

Timur was responding to reports from the human rights group Imparsial that the police received $64 million from Freeport between 1995 and 2004.

"That money is audited, OK? Just ask the police's operational assistant," Timur said.

Security forces have long been understood to be receiving direct payments from the miner to help guard its massive Grasberg copper and gold mine.

The mine and its workers have been the target of frequent attacks, mostly blamed by police on the separatist Free Papua Organization (OPM).

But rights activists have also accused it of using security forces to quell local opposition to its mining operations and crack down on worker protests.

The mine is in the grip of a massive workers' strike that began on Sept. 15. On Oct. 10, two people died in a clash between police and striking workers.

Timur denied that the money from Freeport had made the force subservient to the miner, insisting that the payments went no higher than to personnel on the ground.

In its 2009 report on "Working Toward Sustainable Development," Freeport revealed that it contributed millions of dollars toward "government-provided" security operations near its Papua mine: $10 million for 2009 alone.

"This supplemental support consists of various infrastructure and other costs, such as food, housing, fuel, travel, vehicle repairs, allowances to cover incidental and administrative costs, and community assistance programs conducted by the military and police to promote harmony with local communities," Freeport said in the report.

In the wake of Timur's admission, legislators said they would summon the police chief to clarify the issue. Benny K. Harman, chairman of House of Representatives Commission III, which oversees legal affairs, said if the money was given directly to personnel - as Timur claimed - then "that's reasonable."

However, fellow Democrat Saan Mustofa advised against such a relationship and the image it created. "Freeport shouldn't have paid the money, even if it was to individual officers," he said. "It could be accused of bribery."

Additional reporting by Markus Junianto Sihaloho

Police opposing workers' stand-off on the books of mining company

By Tom Allard

Sydney Morning Herald

1 November 2011

JAKARTA: Indonesian police have admitted they are on the payroll of the giant Freeport gold and copper mine, the world's most profitable, as they prepare to bust a long-running strike as early as today.

Workers at the mine have conducted industrial action for more than a month, claiming they are the lowest paid workers in the global operations of Freeport McMoRan, the US company that owns the concession in the highlands of the restive province of Papua.

Production at the mine has been crippled, infrastructure sabotaged and seven people have been killed in clashes between workers and police and mysterious hit and run attacks.

The local police chief, Deny Edward Siregar, accused the workers of ''anarchy'' and threatening a national asset, and warned the police would take ''stern action'' if the site of the picket line wasn't moved by today.

Union officials responded by saying they were going nowhere, setting the scene for possibly more violence. However, a police spokesman, Wachyono, defined the foreshadowed ''stern action'' as ''opening further negotiations with union management''.

Indonesia's national police chief, Timur Pradopo, conceded on Friday that hundreds of police who secure the massive concession and its infrastructure were paid ''pocket money'' by Freeport.

He declined to say how much but the human rights group Kontras obtained and released a letter from Papua police saying Freeport paid 1,250,000 rupiah ($134) a month for about 635 police and military personnel. The payment would raise the salaries of the security forces by between a quarter and a half.

''How can they enforce the law [impartially] if they receive bribes?'' asked Samsul Alam Agus, a Kontras deputy co-ordinator.

Relations between police and the local indigenous population have been tense for decades around Freeport.

Freeport has offered striking workers a pay increase of 30 per cent but unions rejected the upgrade, saying it was still vastly below comparable salaries for other Freeport McMoRan staff.


Freeport Indonesia Miners, Tribesmen Defend Road Blockades

Jakarta Globe (Reuters)

4 November 2011

Timika, Papua - Police failed to lift road blockades stopping fuel and food reaching Freeport McMoRan Copper & Gold's mining operations in Indonesia's Papua region, after clashes with striking miners and local tribesmen on Friday.

Miners have been striking at Grasberg, the world's second-biggest copper mine, since mid-September, disrupting output and stopping shipments. Violence has escalated in recent weeks with sabotage to pipelines and deadly attacks on employees.

Angry workers and people from seven local tribes are blocking the main road near an airport in Timika that links Freeport's port to the Grasberg mine, and refused to shift after police gave them a deadline to move by Tuesday.

"People fought back. The police gave several warning shots but they have left now," said a striking worker, adding there were no casualties reported. "The tribes have conducted war ceremonies. They are ready to die for this."

The worker dispute over pay has drawn in local tribes, armed with spears and arrows, who have their own grievances over land rights, pollution and a lack of apparent benefit for the region from its resource wealth.

The police and army have been criticized for human rights violations in the remote mountainous region, where a separatist movement has simmered for decades, while Freeport has come under fire for payments to authorities for security.

The blockades are part of a prolonged strike by around 12,000 of the mine's 23,000 workers. The company has offered a 30 percent pay rise but the union is holding out for a fivefold increase.

Freeport said on Tuesday production and processing rates at Grasberg had fallen below levels needed to meet fourth-quarter sales targets.

It also said it could take a month to fix its main sabotage-hit pipeline to take concentrate to its port where there are no stockpiles left for shipping. On Oct. 26, Freeport Indonesia declared force majeure on affected concentrate sales.

The energy ministry said on Thursday that Freeport Indonesia was now producing at 5 percent of its full capacity due to damage in the pipeline.

KPK Urged to Investigate Freeport Money for the Police

TEMPO Interactive

31 October, 2011

Jakarta - Anti-corruption activists are urging the Corruption Eradication Commission (KPK) to investigate the money sent by PT Freeport to the police. Indonesia Police Watch (IPW) said that the KPK must look into the US$ 14 million sent every four months by the American mining company, said IPW president chief Neta S. Pane yesterday.

Based on the document on PT Freeport Indonesia's website, the company has disbursed Rp120 billion for security infrastructure, food, housing, fuel, transportation, car repairs, allowance and community assistance program.

National Police chief Gen. Timur Pradopo confirmed the fund. "All operations are funded by the government. But if the party who receives the security gives allowance money for the personnel, they will give it straight to them, especially for a difficult task and situation," he said last week.

Neta said the fund was categorized as bribery as police officials could be charged with corruption and PT Freeport could be accused of bribing. "They must be brought to court," she said.

Police analyst Bambang Widodo Umar said the police should have rejected gratification. "Police are the state's tool not a company's tool," he said. "If they receive the money, that must be reported to the KPK. The KPK should not sit still," he added.

National Police Commission member, Novel Ali, firmly denied that the police received the money from the company. "When the police guarded Freeport, which is currently in a dire condition, the police are thought to be the company's bodyguard. This is a dilemma for the police," he said.

PT Freeport's spokesman Ramdani Sirait said the money was given through the government. "You can read the details in our website," he said. Until the news went to print, the KPK could not be reached for comment.

Freeport Indonesia mine wage talks deadlocked - union


28 October 2011

JAKARTA -Pay talks between Freeport McMoRan Copper & Gold and a union representing striking workers at its Indonesia mine are deadlocked after a week of negotiations, the union said on Friday.

The U.S. miner, which was compelled on Wednesday to declare force majeure on shipments from the world's second-biggest copper mine, has offered workers a 30 percent pay rise, up from 25 percent when talks restarted on Oct. 21, the union said.

The union is still holding out for a hike to $7.5 an hour, as much as a fivefold increase from the $1.5-$3.0 per hour that workers at the remote mountain mine currently earn, but much lower than its initial demand for $30-$200 per hour.

"There was a silver lining in the previous meeting but now the talk is making a U-turn," said Juli Parorrongan, the union's spokesman.

"What we are demanding is the final price, $7.50 and no less. And this is small money for a firm that we know earned so much revenue from the mine," he said.

Freeport Indonesia spokesman Ramdani Sirait declined to comment on the details of the negotiations.

"I hope we can find a solution soon," Sirait said.

The firm is trying to keep limited output at Grasberg going, but production and its operations have been disrupted by the strike, worker blockades, attacks by gunmen on employees and sabotage to a main pipeline running from the mine to its port.

Freeport's force majeure decision freed it from some of its contractual obligations to supply buyers of metal produced at Grasberg, which holds more gold and copper reserves than any other mine and also produces silver.

Freeport's CEO Richard Adkerson has said that an eight-day strike in July and the second continuing strike at Grasberg led to a loss of about 70 million pounds of copper and 100,000 ounces of gold in the third quarter.

The firm is also facing strike action in Peru, where the union at the Cerro Verde copper mine on Wednesday rejected a request from Freeport to go into labour arbitration to end a month-old strike.

(Reporting by Olivia Rondonuwu; Editing by Neil Chatterjee)

Steelworkers Call For FCPA Probe Of Freeport-McMoRan

A major union found a new venue to defend workers of the world: The U.S. legal system

By Samuel Rubenfeld

Associated Press

2 November 2011

The United Steelworkers sent a letter to the U.S. Justice Department requesting a foreign-bribery investigation into Freeport-McMoRan Copper & Gold Inc. Citing reports in the Indonesian media, the union argued that payments to police from Phoenix, Ariz.-based Freeport-McMoRan's local subsidiary in the Indonesian province of Papua constitute bribes.

"We believe that it is reasonable to construe direct payments by PT Freeport Indonesia to police and military personnel providing security for its a bribe intended to persuade the personnel to act in defense of Freeport-McMoRan's interests even when those interests conflict with the police and military personnel's lawful duty to protect Indonesian people," the letter said (pdf).

The union said those payments are bribes under the Foreign Corrupt Practices Act, which bars the bribery of foreign officials for business purposes.

A Justice Department official declined to comment.

Indonesian police have played a role in miners' strikes in Papua recently, including fatally shooting one striker during a demonstration on Oct. 10. Last week the Indonesian government sent paramilitary forces to the restive province following other deaths, including the shooting of a police chief.

The company, which said in an email statement it is an endorser of the Extractive Industries Transparency Initiative, also said it reports on its financial contributions to governments, including what it gives to security forces when security is required.

"The support for the government-provided security includes in-kind assistance and monetary allowances to mitigate living costs and the hardship elements of a remote posting assignment to our mining area in Papua," the statement said.

PT Freeport Indonesia's share of government-provided security was $14 million in 2010, and about 80% of it came in the form of in-kind support such as meals, health care and transportation assistance, the company said.

"Support for the government security institutions assigned to our area of operations represents a prudent and considered step by us to protect our workforce and property," it said.

Mike Koehler, an assistant professor of business law at Butler University who blogs under the name FCPAProfessor, wrote a post Wednesday about the peculiar case, calling it "a delicious fact pattern" befitting an exam question.

Freeport Declares Force Majeure at Strike-Hit Grasberg Mine in Papua

By Olivia Rondonuwu


26 October 2011

Freeport-McMoRan Copper & Gold declared force majeure on some concentrate sales from its strike-hit Grasberg mine in Papua on Wednesday, a move that kept benchmark copper prices close to a one-month high.

Freeport's decision frees it from some of its contractual obligations to supply buyers of metal produced at the world's second-largest copper mine. The news buoyed copper prices on the London Metal Exchange on Wednesday and the benchmark contract rose as much as 3.5 percent to $7,785 a tonne. That was just below a one-month peak of $7,820 hit on Tuesday.

Grasbeg holds the greatest gold and copper reserves in the world and also produces silver. A monthlong strike over pay and conditions, road blockades and damage to a pipeline have hit output at the open-pit mine.

"The lower concentrate production has impacted our ability to fully perform our sales commitments and as a result, we were required to declare force majeure on the affected concentrate sales agreements," Freeport Indonesia spokesman Ramdani Sirait said.

"It is almost a certainty that Freeport's declaration of force majeure has supported copper prices today," said Gavin Wendt, a mining analyst. "News of the strike isn't new but the situation hasn't been improving.

Analysts also said that the declaration came at the same time that many miners and smelters were involved in negotiations on fees for processing copper. The declaration would likely support the miners' position in those negotiations as there would be less raw material to process, forcing smelters to be more competitive on fees for taking on the work.

The company said last week that an eight-day strike in July and the second, continuing strike at Grasberg led to a loss of about 70 million pounds of copper and 100,000 ounces of gold in the third quarter. It also cut its sales forecast for 2012.

Phoenix Protest of Killings of Freeport McMoran Striking Workers in Indonesia


27 October 2011

The Phoenix Industrial Workers of the World, East Timor and Indonesia Action Network/Arizona, and the United Steelworkers will march to the headquarter offices of Freeport McMoran Copper & Gold in protest of killings of workers in West Papua, Indonesia.

The protest will begin at 3:00p.m. at Cesar Chavez Plaza, site of recent Occupy Phoenix protests, and head to Freeport McMoran's offices for a protest ending at 6:00 p.m.

Elizabeth Venable, member of the East Timor and Indonesia Action Network's Executive Committee, described the issues of concern, saying, "We are deeply concerned by the escalating violence in the area of U.S.-based Freeport McMoran's massive gold and cooper mining operation located in the Timika-Tembagapura area of West Papua.
This violence has led to at least 7 worker deaths. Workers have been on strike since September 15 seeking higher wages on par with those that Freeport pays workers at its mines elsewhere. Freeport's response has been to stonewall, reject worker demands, and hire scab workers."

Jacobe Illich, of the International Workers of the World union, stated, "This picket is in response to Freeport's hired security forces opening fire on striking miners in Indonesia, killing seven so far and wounding many. Rather than negotiating with the miners to grant them a living wage, Freeport has chosen to murder them. Freeport is also responsible for the extreme environmental and community damage it has caused the citizens of West Papua." The situation in West Papua is considered a genocide by many experts­similar to the genocide in East Timor caused by the Indonesian military.

To date, at least 7 workers have been killed. Indonesian police are paid directly by Freeport for protection. A worker was killed and others were injured by police at a large demonstration when police fired live ammunition into the crowd of protesting workers. An attack on a vehicle carrying police and Freeport personnel led to two deaths and injury to two others. Perpetrators have not been caught. In the past, similar assaults against security and Freeport personnel have been attributed to conflicts among police, military and Freeport security personnel who have long feuded over the division of spoils from extortion practices that target Freeport, as well as conflict over freelance gold-mining efforts by local people.

The growing tensions, which are at their highest levels in the area since military-organized riots in 1996, come against a backdrop of decades of human rights abuse by police and military units acting in service of Freeport's interests, the forced evacuation of villages to facilitate Freeport operations, and ongoing pollution of the local environment. Freeport's disposal of tailings has destroyed vast stretches of forest and an entire river system (the Ajkwa). The company's human rights and environmental practices have long been criticized by major institutional investors, including the Norwegian Ministry of Finance, which publicly divested all Freeport stock holdings from the country's Government Pension Fund - Global.

Demands of Workers at PT Freeport Indonesia

Pimpinian Unit Kerja statement

21 October 2011


1. Leaders of PT Freeport Indonesia immediately answer requests for adjustment of the basic worker wage from US$ 7.5/hrs to US$ 33.00/hrs for the lowest level Non-Supervisor and Level of Supervisor.

2. The company should remove all disciplinary action taken against Freeport workers, privatised workers and contractors because of strike action.

3. The company to pay the basic salary of Freeport workers, privatised workers and contractors for their time during the strike.

4. Other Financial and Non Financial benefits will be negotiated later, after the date set by both sides before strike action ended.

5. If all of these demands are answered, then the strike action will end.

Sekretariat : Jl.21, Telp/Fax: 0901-407842, PO Box 2168, Tembagapura - Papua, 99930

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