Shawn Donnan, Jakarta – When hundreds of illegal miners last week blocked the access road to Freeport McMoRan's gold and copper mine in Indonesia's remote Papua province, it was tempting to describe the incident as just another clash between a multinational miner and its indigenous neighbours.
For Freeport, however, the four-day shutdown of the Grasberg mine that resulted from the blockade was the latest piece of unwelcome news in what is already emerging as a difficult year.
With gold and copper prices notching record highs in recent months, Freeport is well-positioned for another lucrative year after reporting profits of $934.6m in 2005 on revenues of $4.2bn.
But the miner is under growing pressure in Indonesia and the US over its environmental practices and its relationship with the Indonesian military.
US authorities have launched preliminary investigations into reports that it allegedly paid millions of dollars to individual Indonesian officers in recent years – on top of what it pays the military for security at the Grasberg mine. And Jakarta recently sent a team to investigate Freeport's environmental practices. The company denies any wrongdoing on all fronts.
Increasingly, the mine is also re-emerging as a target in the long-simmering battle for Papuan independence. Police in Jakarta yesterday used tear gas and water cannons to try to disperse hundreds of protesters outside Freeport's offices there and protests against the miner have become increasingly common in Papua.
Last week's blockade ended peacefully on Saturday after Freeport apparently agreed to extend the reach of its community programmes to the several hundred squatters-cum-illegal miners at the centre of the dispute. Freeport said production at the mine, which processes 200,000 tonnes of ore a day, resumed on Saturday evening.
The blockade began last Wednesday, a day after an operation by security forces to clear illegal miners away from the banks of a river into which Freeport dumps its tailings. The operation led to a clash during which police fired rubber bullets while the miners reportedly used bows and arrows. At least five people – including two of the illegal miners – were injured, according to police.
The incident and subsequent blockade highlighted the company's often awkward relationship with local communities in Papua. But current and former Freeport employees, say the incident also pointed to a relatively new issue for the US miner, which has been operating in Papua since the early 1970s.
Illegal mining was never a problem at Freeport before small-scale panning of the river near the mine began about 2000 or 2001, they said.
Since then the number of illegal miners around the mine has risen as gold prices have soared. Working in teams, the panners can recover one to two grams of gold a day, making the venture a lucrative business in a country where more than half the 220m people live on less than $2 a day. At current prices, one gram of gold is worth about $18.
"All of that has become a major problem," says Tom Greene, a former American diplomat who until 2004 was a Freeport executive. And, he says, "it's not going to be an easy problem to fix".
The attraction of a lucrative pay day has led to other social issues. Most of the panners are Papuans and live in a dishevelled camp near the Freeport mine. Many are gold rush migrants to the area and Dani tribesmen, historic enemies of the Amungme people, the original landowners.
A similar influx in the 1990s led to a 1997 tribal war between Dani and Amungme tribesmen that left 11 dead. It also resulted in a costly fix for Freeport, which spent millions funding the resettlement of 2,500 squatters. Many believe the security forces play some role in the increasingly organised illegal mining around Freeport's operations.
Mama Yosepha Alomang, a Papuan activist, says access to the area in which last week's clash occurred is heavily restricted. Local people cannot go there, she says, "if they don't have a link with the security forces". Allegations like that are hard to prove. But such links are common in Indonesia and Freeport has long had an uneasy relationship with the security forces.
Many believe the military played a role in at least inflaming 1996 riots near the mine. The 2002 ambush of a convoy of Freeport employees, which left three dead, has also been blamed by some on the military, al-ough eight Papuans are due to go on trial soon.