MAC: Mines and Communities

Indonesia update

Published by MAC on 2007-08-13

Indonesia update

13th August 2007

It's not often that we hear about opposition to marble mining, yet this is one of the most hazardous occupational sectors in the industry - especially in India, the world's biggest single source of the highly-valued building stone.

Recently a group of Indigenous people (particularly women) took direct action against Indonesian marble companies operating in South Central Timor , where they were met with violence from thugs apparently be tacitly supported by the local government.

Following widespread demands last year from West Papuan peoples and national NGOs, that Freeport-Rio Tinto's Grasberg copper-gold project be closed, the government initiated an inquiry into its operations. While failing to endorse a closure, the Indonesian administration has called for output from the mine to be reduced by up to a third, and for royalties to be increased. However, the government does not envisage confronting the company head-on, for fear of "sending a bad signal" to other investors; rather it plans to negotiate a friendly agreement.

Women lead marble mining opposition

Down to Earth Newsletter, number 7

4th August 2007

The Molo people are currently battling to stop mining companies extracting marble from their customary [adat] lands. There are now 3,000 supporters in four sub-districts of South Central Timor (TTS) where several companies are operating. Some are local NGOs and students, but the majority are ordinary villagers - most of whom are farmers with little or no formal education. The marble is for use in luxury buildings in Indonesia, but is also exported to USA, China, Singapore and Korea.

Indigenous women have played a prominent role in this battle. They see it as their role to provide food for their families even though, under adat law, only men inherit land. Their campaign was based on the view that the community's life was inseparable from their natural resources. Animism is still strong in this area and many people believe that people, animals, water and rocks are all part of one whole.

Gunung Molo is a cool fertile area which is used for farming and raising livestock. It is an important source of water for the western part of Timor. Marble mining leaves whole areas derelict. The operations make the once clear rivers and streams muddy and unfit to drink or wash in, or to use for irrigating crops. Landslides, such as the one at Tunua in December 2005, have become more frequent and more severe, ruining crops and rendering land unsuitable for cultivation.

Interestingly, a reversal of roles took place during this campaign: women went out to fight the mining company and the men stayed at home and cooked. The women have confronted the police and armed security forces employed by mining companies. They have even bared their breasts as a symbolic action to shame the men who opposed them and to remind them that it was women who had nurtured them just as Mother Earth nurtures the community and their environment.

One leading local activist has walked from village to village informing people about the mining threat and motivating them to unite. She has faced intimidation with thugs throwing stones at her house at night and hurling insults at her by day. As a result she had to move to another village with her children who have had to change schools. The police have done nothing to protect her.

This has been a long struggle. In 2001, Molo communities succeeded in driving one marble company from their lands after a two-year campaign in which some women slept out on the rocks night after night to protect the threatened area. They had no funding from anywhere - they just did it because they wanted to protect their environment.

However, the local government has granted permits to several other companies. PT Sumber Alam Makmur started operations in 2003 at Naitapan, above the village of Tunua. Hundreds of women and children set up a blockade and occupied the site in March 2006. Men employed by the company threw stones at them but, when the villagers retaliated, the police arrested activists and local leaders.

Another company, PT Teja Sekawan, began bulldozing fields in Kuanoel - Fatumnasi in November 2006. A large crowd of women protested. Some of women climbed onto the boulders and covered them with tarpaulin, but machine operators tried to cut the rocks away from under the women while armed 'security guards' threatened them with knives and pistols. Three women were covered in dust from the drills (one died several weeks later). Police eventually intervened in the confrontation and the community decided to continue its opposition through legal action.

The local authorities are clearly on the side of the company. The district head of TTS refused to meet protestors even when they occupied his offices in Soe for two weeks last November. Eight truckloads of armed thugs, apparently hired by the mining company, broke up the demonstration in December. Only 50 were there at the time as many others had gone home to plant their fields. Villagers who presented evidence to the court in Soe in late March 2007 were attacked by a crowd of thugs as they left the hearing of their case against the mining company. The police did nothing to stop the violence, during which a women carrying her child was hit, but detained the pick-up truck which the community's lawyer used to carry the villagers to safety.5

For more information on the Moro people's campaign see:;


Indonesia wants to renegotiate copper contract

By Bambang Dwi Djanuarto and Claire Leow, Bloomberg News

13th August 2007

Indonesia wants to renegotiate its contract with Freeport-McMoRan Copper & Gold, the world's second-largest copper producer, [* see note] potentially cutting output and increasing royalties from its Grasberg mine, a minister said.

"Both parties must agree to change the contract of work," Purnomo Yusgiantoro, the minister of Energy and Mineral Resources, said Monday. The government wants to lower the daily output ceiling at the mine and increase local smelting, Purnomo said.

Freeport, based in Phoenix, Arizona, has not received formal notice of the plan, Mindo Pangaribuan, a spokesman for the company's Indonesian unit, said by telephone Monday.

Grasberg accounted for 4 percent of all copper mined last year, and lower output may extend this year's 18 percent rally in prices on the London Metal Exchange. The mine, located in Papua province, operates under a 30-year contract signed in 1992, which may be extended for as many as 20 years.

"It has to be a win-win situation, and cannot be at the expense of the company or it will send a bad signal to mining companies," Ahmad Solihin, an analyst at Mandiri Sekuritas in Jakarta, said by telephone. "It has to be agreed to by both parties."

Indonesia wants to lower maximum daily production at Grasberg to between 200,000 tons and 250,000 tons of copper ore from 300,000 tons, Purnomo said in Jakarta. The proposal comes after a state audit of the mine's operations. The company targets daily output of 220,000 tons to 230,000 tons under a five-year plan, Pangaribuan, of Freeport, said.

The government also wants as much as 50 percent of Grasberg's output to be smelted at a facility in East Java province, the minister said. At present, the smelter processes about 30 percent of the mine's output.

Shares in Freeport, which is led by Richard Adkerson, have gained 63 percent over the past 12 months, and settled at $86.46 in New York on Friday. The company said last month that second-quarter profit gained to $1.17 billion from $382 million a year earlier, bolstered by the $26 billion acquisition of Phelps Dodge.

"It is not easy" to amend the U.S. company's contract of work, Purnomo said Monday, adding that any changes needed to be agreed to through negotiations.

Still, "we have not received any notification," said Pangaribuan, the spokesman for Freeport's Indonesian unit. "The royalty is calculated on a quarterly basis using a complex formula related to copper prices and production."

Grasberg is second only to Escondida in Chile in terms of copper output. Freeport plans to produce 1.1 billion pounds of copper from the site this year, compared with 1.2 billion pounds in 2006. Gold output may gain 6 percent to 1.8 million ounces.

Three-month copper futures in London traded at $7,506 per metric ton in late afternoon trading in Jakarta on Monday.

* Editorial note: Freeport-Phelps Dodge is the world's biggest producer of copper

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