SECURITY ISSUES AT FREEPORT MINE IN PAPUA,

C O N F I D E N T I A L SECTION 01 OF 03 JAKARTA 000932 SIPDIS SIPDIS FBI PLS PASS CTD/ITOS I, CTD/ITOS II, GOU STATE FOR EAP/MTS, DS/DSS, DS/IP/EAP, DS/EAP/ITA, AND CA/ACS/OCS E.O. 12958: DECL: 03/30/2017 TAGS: ASEC PHUM PGOV EMIN CASC ID SUBJECT: SECURITY ISSUES AT FREEPORT MINE IN PAPUA, INDONESIA REF: 06 JAKARTA 03404 (ANTI-FREEPORT DEMONSTRATIONS ESCALATE INTO VIOLENCE) JAKARTA 00000932 001.2 OF 003 Classified By: Marc L. Desjardins, Political Counselor. Reason: 1.4 (b , d) ¶1. (C) Summary. Executives of the U.S.-owned Freeport mine near Timika, Papua, report that despite a difficult start, police Mobile Brigade personnel have successfully taken over the Indonesian Armed Forces' old role in supporting the company's security operations. Freeport provides some financial and materiel support to these units, and has taken steps to improve transparency and accountability in this regard. Over the longer term, however, Freeport would like in-house personnel to take responsibility for all the company's security requirements. Illegal miners in the company's area of operations pose the most serious current threat to Freeport's security. End summary. Mobile Brigade Replaces TNI at Freeport -------------- ¶2. (SBU) In June 2006, about 650 members of the Indonesian National Police's elite Mobile Brigades replaced a roughly equivalent number of Indonesian Army (TNI) personnel providing security at the copper and gold mine operated by the U.S. firm Freeport McMoran near Timika, Papua. Like the TNI before it, Mobile Brigades' mission is to provide limited perimeter security around the mine's roughly 2,000-square mile area of operations and, more importantly, to control access and security along the 70-plus mile road connecting the lowlands towns of Timika and Kuala Kencana with the company-built support town of Tembagapura and the mine itself, at an elevation of 13,000 feet in the Sudirman mountain range. Freeport employs over 18,000 Indonesians in this area. The Mobile Brigades units are augmented by Freeport's 900-strong in-house security force. About 250 organic TNI troops, posted in Mimika regency as part of the military's nationwide territorial command structure, provide security indirectly. A small number of Indonesian Marine and Air Force personnel support Freeport-related security operations at the Timika airport and the company's port on the Arafura coast. ¶3. (SBU) In a mid-March visit to Timika, Freeport management briefed Embassy officers on its experience with the Mobile Brigades to date. The first six-month deployment, Amole I, was not a success. These Mobile Brigades personnel, normally based in Jakarta, were poorly disciplined and engaged in predatory behavior including theft of Freeport property and collaboration with illegal miners (see below). In one incident, a security camera recorded a Mobile Brigades officer using a bulldozer to try to break into a building where gold ore concentrate was stored. Because travel by sea to and from Jakarta was counted as part of its deployment, Amole I was on site in Papua for significantly less than six months. Unfamiliarity with the area and mission meant that Amole I personnel never learned how to perform their duties. Accordingly, Freeport made fundamental changes in planning for its successor force, Amole II. (Note: "amole" is word used as a greeting in a Papuan language.) ¶4. (SBU) Amole II was deployed in January 2007. Unlike Amole I, it does not have a fixed term of deployment. Its constituent units, drawn from Papua-based Mobile Brigades, are individually rotated or replaced as needed. This has made for significant improvements in capacity and discipline. ¶5. (SBU) Freeport provides some funding, materiel support and other benefits to Amole II personnel. However, the Indonesian National Police refuses in principle to formalize these or other arrangements with Freeport in a Memorandum of Understanding. Its position is that the INP's responsibility for law enforcement in Indonesia is absolute, and not subject to regulation or restriction by binding agreements with Freeport or any other foreign entity. Law 3 of 2002 on National Defense shifted principal responsibility for the security of vital national assets to the civilian police. Prior to this time, the legal basis for army involvement in the security of national vital assets had been merely a TNI JAKARTA 00000932 002.2 OF 003 decree. ¶6. (SBU) While Freeport does not pay Mobile Brigades salaries, it does pay Amole II personnel voluntary support allowances. Funds for these allowances are deposited directly into bank accounts associated with individual Mobile Brigades units. To prevent skimming or diversion of funds, Freeport directly informs Amole II personnel how much money is being deposited and how much each member can expect to receive. These monthly allowances typically work out to IDR 350,000 (just under USD 40) for rank and file and IDR 500,000 (just under USD 60) for officers. When units complete their Amole II deployment, Freeport rewards good behavior with performance bonuses ranging from IDR 750,000 - 900,000 (less than USD 100) per member. Illegal Miners' Encroachment Threatens Security -------------- -- ¶7. (SBU) Freeport also provides Amole II with ground transportation in the form of vehicles and gasoline vouchers, with strict controls in place to prevent abuses. Freeport also provides equipment and amenities for guard posts along the main road, including Motorola radios for duty-related communication. Freeport's in-house airline, Airfast, provides a limited number of tickets to Jakarta for Amole II personnel. Issuance of these tickets is approved individually by company management to prevent abuse. Freeport also provides phone cards for cell phone use. ¶8. (C) Freeport does not train Mobile Brigades, and is concerned about the INP's poor capacity in the skill sets required for national asset protection. While Freeport finds that Amole II is an improvement over TNI personnel previously involved in providing security, the company wants to move towards much greater reliance on its in-house security force, possibly phasing out Mobile Brigades entirely. ¶9. (SBU) Currently, Freeport's main security headache is the presence of illegal miners working in its area of operation. While Freeport management estimates that these miners number in the thousands, police and other sources put the figure in the hundreds. Some are reportedly backed by business interests in Makassar who were previously linked to illegal mining in the Nabire area. They began arriving in large numbers in 2006, and pan for gold from tailings in the Ajkwa and Otomona rivers. The miners are from around Timika as well as from elsewhere in Papua and other parts of Indonesia, and have reportedly bribed Mobile Brigades for access to the area. Some Mobile Brigades personnel have started a lucrative sideline in selling supplies and daily necessities to the illegal miners, a practice Freeport security is attempting to clamp down on. In early 2006, illegal miners occupied Freeport-owned base camp facilities (reftel),a situation that was resolved by negotiation after several months' standoff. ¶10. (SBU) Disputes among the illegal miners over choice prospecting sites could lead to security problems. Some illegal miners have already formed associations based on tribal affiliation, and these groups lay claims to specific areas for their operations. The illegal miners' activities also present safely hazards. Many are working on dangerous terrain, and there could easily be fatalities or injuries resulting from falls, drowning, or landslides. Finally, Freeport says that many of the prospectors are using nitric acid in their operations, and this poses a threat to the environment. ¶11. (SBU) Freeport's current strategy to deal with the situation is to prevent further encroachment on its area of operations by building fences and beefing up security patrols, but to avoid direct confrontation, which could easily touch off a violent escalation. ¶12. (SBU) With regard to other potential security threats, Freeport remains concerned about the potential for violent incidents orchestrated by outside agitators, along the lines of the attack on the Freeport-owned Timika Sheraton Hotel last March (reftel). Freeport believes that in the past, JAKARTA 00000932 003.2 OF 003 elements of the Jakarta business and political establishment have planned these actions to bring pressure on the U.S. company. The separatist OPM/TPN guerrilla group, which was behind the August 2002 murders of three Freeport employees at Mile 62 on the company road, also poses a threat to security. Comment -------------- ¶13. (C) Although Freeport management regards Amole II as something of an improvement over the TNI units that previously supported its security operations, the company is tired of relying on poorly-trained Indonesian security personnel, whether military or police, who are a drain on its resources and of dubious reliability in a real crisis. As last March's events showed, Indonesian security are reluctant to respond to potentially violent threats without direct authorization from Jakarta, which might well arrive either too late or not at all. Indonesian sovereignty sensitivities would probably preclude a total privatization of Freeport's security operations, since such an arrangement would suggest the existence of a foreign colony on Indonesian soil. However, Freeport would like to move in this direction over the longer term. The company is contemplating a locally-recruited, well-trained in-house security force, with a token police presence for oversight purposes. End comment. HEFFERN