PAPUA: CONTROVERSY CONTINUES TO SWIRL AROUND HUGE

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 002783

SIPDIS

SIPDIS

DEPT FOR EAP, EAP/MTS, EAP/ANP, INR/EAP, EB, DRL

E.O. 12958: DECL: 10/02/2017
TAGS: PGOV PINS EMIN SENV PHUM ID
SUBJECT: PAPUA: CONTROVERSY CONTINUES TO SWIRL AROUND HUGE
U.S. MINING OPERATION

REF: A. JAKARTA 2769

B. JAKARTA 2735

C. 06 JAKARTA 2492

JAKARTA 00002783 001.2 OF 002


Classified By: Pol/C Joseph Legend Novak, reasons 1.4 (b,d).


1. (C) SUMMARY: In recent meetings with poloff, Freeport
McMoran officials insist they are doing everything possible
to address security and environmental concerns surrounding
their massive mine in central Papua. The use of police
instead of military for security around the mine has not yet
resulted in any significant human rights violations. The
mine also has a significant environmental impact, although it
causes less damage than many activists claim. Given all the
problems--plus continued pressure to revisit its contract
with the GOI--Freeport McMoran officials continue to be a bit
on edge. END SUMMARY.


2. (SBU) Poloff visited, September 19-21: Timika, the
capital of Mimika regency; Tembagapura, Freeport's "company
town" that supports mining operations; and the huge Grasberg
mine. Freeport officials provided access to key areas of
their large-scale operation. (Note: This cable is the third
in a series on poloff's recent travel to Papua. Ref A
reports poloff's visit to Jayapura, the Papuan provincial
capital. Ref B covers the HIV/AIDS situation there.)

ALL QUIET ON SECURITY FRONT


3. (C) Security-wise it has been quiet around the mine.
There have been no major security incidents or credible
allegations of human rights violations since the National
Police Mobile Brigade replaced the Indonesian military (TNI)
in providing security on the perimeter of Freeport's nearly
2,000 square-mile operations in June 2006. The current
deployment of approximately 700 Papua-based Mobile Brigade
personnel, which began in January 2007, is working out in
more effective fashion than the initial deployment of
officers from outside the province. Freeport officials
concede, however, that some Mobile Brigade personnel are
poorly trained and poorly disciplined. They also report that
there are no established protocols for coordinating the
operations of the Mobile Brigade and Freeport's own security
force of approximately 900 personnel.


4. (C) Freeport continues to provide some funding and
material support to the Mobile Brigade, although it does not
pay their salaries. Freeport officials are frustrated,
however, that these arrangements are not formalized in a
memorandum of understanding with the Indonesian National
Police. Nevertheless, Freeport officials assert that
sufficient safeguards are in place to prevent the diversion
of funds for illegitimate purposes.


5. (C) All Mobile Brigade personnel assigned to Freeport
operations receive human rights training directly from the
Indonesian National Police. Freeport's own security
personnel also receive human rights training as part of the
company's human rights policy. Freeport admits, however,
that they have little control over the operational activities
of the Mobile Brigade.


6. (C) One potential source of trouble are the hundreds of
illegal miners who continue to pan for gold in the Ajkwa
River, downstream of Freeport's operations. Freeport
officials allege that the illegal miners have bribed Mobile
Brigade officers to allow their activities. They also charge
that Mobile Brigade personnel sell food and other supplies to
the miners. The fact that the miners operate openly along a
road regularly patrolled by the Mobile Brigade lends some
credence to Freeport's charge of police complicity.


7. (C) At Freeport's urging, the police have removed illegal
miners from highland areas closest to Freeport's operations,
but tolerate their activities in lowland areas near Timika.
Freeport continues to press local officials to remove illegal
miners from the entire Ajkwa River area and an order for the
Mobile Brigade to do so currently awaits a key local
official's approval. Should the police attempt to remove the

JAKARTA 00002783 002.2 OF 002


miners, violent incidents are possible, especially if the
miners, many of whom are armed with spears and bows and
arrows, attempt to resist. (Note: Protests by illegal
miners closed Freeport's operations for several days in
February 2006. Ref C.)

CLEAN AND GREEN?


8. (SBU) Freeport wants to appear green-conscious. Officials
assured poloff that they take every possible precaution to
minimize the mine's environmental impact. They have
constructed a system of levees to contain mine tailings in
the Ajkwa River and prevent contamination of neighboring
areas. (Note: Tailings are the finely crushed waste rock
disposed of into the river after Freeport has extracted gold,
silver and copper ore.) Freeport also monitors the tailings
and blends them with crushed limestone to neutralize any
naturally occurring acidity.


9. (SBU) To demonstrate that tailings are not toxic, a charge
frequently made by Indonesian environmental activists,
Freeport officials showed poloff a demonstration area of
tailings reclaimed for agricultural purposes. Freeport has
demonstrated that tailings deposit areas become productive
agricultural land. This process cannot occur, however, in
active tailings deposit areas. Of the approximately 230,000
metric tons of rock Freeport crushes per day, only 2-3% of
which becomes ore, the remainder becomes tailings. With the
Grasberg open-pit mine expected to operate at least until
2015, and underground operations to continue beyond that, the
impact on the Ajkwa River ecosystem will continue to be
significant.


10. (SBU) Freeport is also experimenting with the use of
tailings for producing concrete. They are already using this
material for construction at the Timika airport and hope to
supply some concrete for the Papua provincial government's
infrastructure development plans. A Malaysian company has
also approached Freeport about exporting tailings to
Singapore for use in construction, although no specific plans
exist to do so. However creative these uses for tailings may
be, they can only absorb a small fraction of the mine's
enormous output.

FREEPORT: NOT POPULAR


11. (C) Papuan NGOs and civil society activists continue to
charge that Freeport is responsible for human rights
violations and environmental damage. The worst of their
claims do not appear substantiated. Nevertheless, there
remains a danger of violent incidents around the mine and
Freeport's operations do have a significant impact on the
enviironment& SQ long as the mine generates enormous
revenues, andPapua remains one of Indonesia's least
developedprovinces, it is likely to remain a target of
wiespread popular resentment. Given all the problems and
continued pressure to revisit its contract ith the GOI,
Freeport McMoran officials continueto be a bit on edge.
HEFFERN