MAC: Mines and Communities

Mountain of gold leaves a river of waste

Published by MAC on 2005-12-29

Mountain of gold leaves a river of waste

By Jane Perlez and Raymond Bonner / The New York Times

29th December 2005

JAKARTA. As Freeport-McMoRan Copper and Gold sealed its relations with the military, the fledgling Indonesian Environment Ministry could do little but watch while the waste piled up from the company's mine in Papua, the easternmost province of Indonesia.

This year, Freeport-McMoRan told the Indonesian government that the waste rock in the highlands now covers about eight square kilometres, or three square miles, and in some places is 275 meters deep, or 900 feet.

Down below, about 230 square kilometres of wetlands, once one of the richest freshwater habitats in the world, are virtually buried in mine waste, with levels of copper and sediment so high that almost all the fish have disappeared, according to Indonesian Environment Ministry documents.

The waste, the consistency and colour of wet cement, belts down the rivers and inundates and smothers all in its path, said Russell Dodt, an Australian civil engineer who managed those tailings for Freeport-McMoRan on the wetlands for 10 years until 2004.

About a third of the waste has moved into the coastal estuary, an essential breeding ground for fish, and much of that "was ripped out to sea by the falling tide that acted like a big vacuum cleaner," he said.

But no government, even in the new era of democracy in Indonesia, has dared encroach on Freeport-McMoRan's prerogatives. The strongest challenge came in 2000, when Sonny Keraf, a politician who was sympathetic to the Papuans, was appointed environment minister.

As he had done once before, James Moffett, chairman of Freeport-McMoRan, which is based in New Orleans, flew out to Jakarta.

Keraf initially refused to see Moffett but eventually agreed, and on the day kept him waiting an hour and a half. "He came in so arrogant," Keraf recalled of the meeting in a recent interview.

Freeport-McMoRan declined to comment on the meeting. The U.S. ambassador to Indonesia at the time, Robert Gelbard, said in an interview, "It was a terrible meeting."

Keraf said Moffett had recounted that his company had never polluted. "I told him that he should spend the money he spent on paying off people not to talk about the mine to properly dispose of the waste," Keraf said.

Behind the scenes, Keraf kept up the pressure, angered that the company was using the rivers, forest and wetlands for its mine waste, a process allowed during the Suharto years.

An internal ministry memorandum from 2000 said the mine tailings had killed all life in the rivers and noted that this violated the criminal section of a 1997 environmental law.

In January 2001, Keraf wrote to the coordinating minister for economic affairs, arguing that Freeport-McMoRan should be forced to pay compensation for the rivers, forests and fish that its operations had destroyed.

Six months later, one of his deputies, Masnellyarti Hilman, wrote to Freeport-McMoRan, saying a special environmental commission had recommended that the company stop using the river as a waste chute and instead build a system of pipes. She also told Freeport-McMoRan to build sturdier damlike walls to replace the less solid levees that it used to contain the waste on the wetlands. The levees are still there.

Freeport-McMoRan said that local and regional governments approved its waste management plans and that the central government approved its environmental impact statement and other monitoring plans.

But in a July 2001 letter, Keraf took the governor of Papua to task for having granted Freeport-McMoRan a permit in 1996 to use the rivers for its waste. The governor, Keraf said, had no authority to grant permits more lenient than the provisions of national laws.

Despite all these efforts, nothing happened. Keraf was unable to secure the support of other government agencies or his superiors in the cabinet.

In August 2001, a new government came to power, and a less aggressive minister, Nabiel Makarim, replaced Keraf. At first, he, too, talked publicly of setting stricter limits on Freeport-McMoRan. Soon his efforts petered out.

The Environment Ministry has begun trying to put teeth to its rules where it can. It brought a criminal case against the world's largest gold company, Newmont Mining that included a charge of not having a permit to dispose of mine waste into the sea. Newmont has fought the charges vigorously.

But in the case of Freeport-McMoRan, the ministry has had no traction.

Freeport-McMoRan still does not hold a permit from the national government to dispose of mine waste, as required by the 1999 hazardous waste regulations, according to Rasio Ridho Sani, assistant deputy for toxic waste management at the ministry. Stanley Arkin, legal counsel for Freeport-McMoRan, said that the company cooperated well with the ministry and that Freeport-McMoRan would not otherwise comment.

"Freeport-McMoRan says their waste is not hazardous waste," Rasio said. "We cannot say it is not hazardous waste."

He said his division and Freeport-McMoRan were now in negotiations on resolving the permit question.

'A massive die-off'

The ministry was not the first to challenge Freeport-McMoRan over how it has disposed of its waste in Papua.

The Overseas Private Investment Corp., a U.S. government agency that insures U.S. corporations for political risk in uncertain corners of the world, revoked Freeport-McMoRan's insurance policy in October 1995. It was a landmark decision, the first time that the agency had cut off insurance to any U.S. company for environmental or human rights concerns.

In doing so, two environmental experts, Harvey Himberg, an official at the agency, and David Nelson, a consultant, after visiting the mine for several days, issued a report critical of Freeport-McMoRan's operations, especially the vast amount of waste it had sent into rivers, something that would not be allowed in the United States.

The company went to court to block publication of the report, and only a censored version was later released. A person who thought it should be made public provided an uncensored copy to The Times.

Freeport-McMoRan says the report reached "inaccurate conclusions." The company says it has considered a full range of alternatives for managing and disposing of its waste, instead of using the river, and settled on the best one.

A storage area would not be large enough and would require a tall dam in a region of heavy rainfalls and earthquakes, it said. A waste pipeline, rather than the river, would be too costly and prone to landslides and floods.

To the U.S. auditors, such arguments were not convincing. Freeport-McMoRan "characterizes engineered alternatives as having the highest potential for catastrophic failure when the project otherwise takes credit for legendary feats," the audit noted, like the pipelines more than 100 kilometres long that carry fuel and copper and gold slurry down the mountains.

At the time of the investigation, the waste was jumping the riverbanks, "resulting in a massive die-off of vegetation," the report said.

Freeport-McMoRan threatened to take the agency to court over the cancellation of its insurance. After protracted negotiations, the policy was reinstated for a few months. That was a face-saving gesture to Moffett, according to Ruth Harkin, then the head of the agency. The policy was not renewed.

Bright green water

Many of the same problems persist, but on a vastly larger scale. A perpetual worry is where to put all the mine's waste, which is accumulating at a rate of some 700,000 tons a day.

The danger is that the waste rock atop the mountain will trickle out acids into the honeycomb of caverns beneath the mine in a wet climate that gets up to 3.5 meters of rain a year, say environmental experts who have worked at the mine.

Stuart Miller, an Australian geochemist who manages Freeport-McMoRan's waste rock, told a mining conference in 2003 that the first acid runoffs began in 1993.

The company could prevent much of it, he said, by blending in the mountain's abundant limestone with the potentially acid-producing rock, which is also plentiful. Freeport-McMoRan says it collects the acid runoff and neutralizes it.

A report, obtained by The Times, written by Parametrix, a consulting company that did a study for Freeport-McMoRan, noted that before 2004, the mine had "an excess of acid-generating material." A geologist who worked at the mine, who declined to be named because of fear of jeopardizing future employment, said acids were already flowing into the groundwater.

Bright green springs can be seen spouting several kilometres away, he said, a telltale sign that acids had leached out copper and traveled much farther from the mine than the company has acknowledged.

"That meant the acid water travelled a long way," he said.

Freeport-McMoRan says the green springs are "located several miles from our operations in the Lorentz World Heritage site and are not associated with our operations."

The geologist agreed that the springs were probably in the Lorentz National Park, but said this showed that acids and copper from the mine were affecting the park, considered a world treasure for its ecological diversity.

Freeport-McMoRan says that the tailings are not toxic and that the river it uses for its waste meets Indonesian and U.S. drinking water standards for dissolved metals. The coastal estuary, it says, is a "functioning ecosystem."

The Parametrix report said that copper levels in some of the surface waters were high enough to kill sensitive aquatic life in a short time, said Ann Maest, a geochemist who consults on mining issues.

The report showed that nearly half of the sediment samples in parts of the coastal estuary were toxic to the sensitive aquatic organisms at the bottom of the food chain, she said.

An uneasy coexistence

If the accumulating waste is the despair of critics, for Freeport-McMoRan it signals ever-expanding production. To keep its mine running, the company has increasingly had to play caretaker for the world that it has created.

After anti-mine sentiment erupted in riots in 1996, shutting the mine for three days, Freeport-McMoRan began dedicating 1 percent of annual revenue to a development fund for Papua to pay for schools, medical services, roads - whatever the people wanted.

The company built clinics and two hospitals. Other services include programs to control malaria and AIDS and a "recognition" fund of several million dollars for the Kamoro and Amungme tribes. By the end of 2004, Freeport-McMoRan had spent $152 million on the community development fund, the company said.

A report commissioned by the company concluded in October that the company had successfully introduced a human rights training program for its employees and had doubled the number of Papuan employees by 2001. The company is poised to double the number of Papuans in the work force again by 2006, the audit said.

Still, Thom Beanal, the leader of the Amungme, said the combined weight of the Indonesian government and Freeport-McMoRan had left his people in bad shape. Yes, the company provided electricity, schools and hospitals, but the infrastructure was built mainly for the benefit of Freeport-McMoRan, he said.

Beanal, a vocal supporter of independence for Papua, has fought the company from outside and inside. In 2000, he decided that harmony was the better path, and accepted an offer to join the company's advisory board.

In November, he and other Amungme and Komoro tribal members met with Moffett at the Sheraton Hotel in the lowland city of Timika. In an interview in Jakarta not long afterward, Beanal said he told Moffett that the flood of money from the community fund was ruining people's lives.

When the company arrived, he noted, there were several hundred people in Timika. Now it is home to more than 100,000 in a Wild West atmosphere of alcohol, shootouts between soldiers and the police, AIDS and prostitution, protected by the military.

Beanal said he was angry and increasingly impatient with the presence of both the soldiers and the mine.

"We never feel secure there," he said. "What are they guarding? We don't know. Ask Moffett, it's his company."

Evelyn Rusli contributed reporting.

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