FREEPORT PAPUA MINE CLOSED BY ILLEGAL MINERS

UNCLAS JAKARTA 002492

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EAP/MTS AND EB/IFD/OIA
COMMERCE FOR 4430/GOLIKE
DOE FOR TOM CUTLER/PI-32 AND JANE NAKANO/PI-42

E.O. 12958: N/A
TAGS: ECON EMIN ENIV PGOV ID
SUBJECT: FREEPORT PAPUA MINE CLOSED BY ILLEGAL MINERS

REF: JAKARTA 1185


1. (SBU) Summary. Approximately 400 illegal miners in Papua
launched a picket of Freeport-McMoRan,s Grasberg Mine on
February 21, forcing its temporary closure for the past 48
hours. As of COB February 23, the mine remained closed. In a
separate but perhaps related incident, at approximately 04:00
on 23 February about 30 Papuan students attacked the building
in which Freeport rents space for its Jakarta office. None
was injured. It is unclear whether the two incidents are
related to the recent, controversial New York Times reports
on Freeport,s payments to the Indonesian armed forces for
security services. End summary.


2. (SBU) On February 21, approximately 400 illegal miners in
Papua launched a picket of Freeport-McMoRan,s Grasberg Mine,
forcing its closure through COB February 23. Some of the
illegal miners fired arrows at police and Freeport employees
on February 21, resulting in six injured. The illegal miners
sift through mine tailings looking for minute traces of
copper and gold, a practice the company discourages because
the illegal miners use harmful chemicals to leach out the
minerals. Freeport is concerned about the legal liability
for the environmental damage that illegal miners cause, as
well as the possibility of exposing themselves to public
relations attacks for contributing, even if only indirectly,
to harming the environment.


3. (U) The picket began when Indonesian security forces
attempted to evict the miners on February 21. The miners are
requesting a meeting with Freeport managers and the mayor of
Timika, the local town around the mine. Freeport Chairman
Jim Bob Moffett told the Ambassador in a February 23
telephone call that his first priority is the safety of his
employees, and that Freeport has requested that the
Indonesian police do everything possible to resolve the
stand-off in a peaceful manner.


4. (U) In a separate but perhaps related incident, at
approximately 04:00 on February 23 about 30 Papuan students
attacked the building in which Freeport rents space for its
Jakarta office. The attackers broke some of the building,s
ground floor windows and damaged the main security post,
according to a Freeport spokesman. The incident got coverage
on local early morning TV news programs, suggesting a well
orchestrated publicity stunt.


5. (SBU) Moffett said Freeport is certain that the mine
protest was "bought and paid for" by someone, but the company
is not sure who signed the check. They are also unsure of
the connection, if any, with the incident at their offices in
Jakarta last night. Senior Vice President Dan Bowman told us
that the timing of the two incidents is unlikely to be
coincidental. Bowman said they are also unsure if a
connection exists between the two recent incidents and the
recent New York Times stories on Freeport,s payments to the
TNI and police. He also said it is unclear whether
Freeport,s opponents in Indonesia are independently taking
the opportunity to score public relations victories, or
perhaps seeking payoffs to end the protests, or whether the
two events are part of an orchestrated campaign by powerful
economic nationalists to drive the company out of Indonesia
and obtain the ten percent Government of Indonesia equity
stake in the Papua mine on the cheap. (see reftel).


6. (U) The mine protest has attracted significant local
press attention and increasing international media interest.
On 23 February, President Susilo Bambang Yudhoyono reportedly
announced that he has ordered Minister of Energy and Mineral
Resources Purnomo Yusgiantoro to coordinate with security
officials to resolve the mine dispute, saying he feared a
loss of national income and royalty payments if the mines
stay closed.

PASCOE