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Bull's-Eye global activists have a new target: Freeport

Far Eastern Economic Review - December 4, 1997

John McBeth, Jakarta – Last February, an Indonesian military intelligence team filmed American human-rights activist Danny Kennedy lifting samples from the silt-laden Aikwa River in the lowlands of southern Irian Jaya. Later, when Kennedy attempted to airfreight the vials of water to Australia, he was detained and quickly deported. His crime: conducting scientific research without proper authorization.

Why were intelligence agents filming a lone activist in Irian Jaya? Well, the Aikwa is no ordinary river. It carries millions of tonnes of finely crushed rock in a 2,700-metre plunge from Freeport Indonesia's giant Grasberg copper and gold mine to a final resting place near the clapboard town of Timika. Environmentalists claim these "tailings" from the mine are toxic. Freeport insists it has the scientific evidence to prove they aren't.

And that's just the beginning of the battle. Kennedy's deportation was part of a steadily escalating conflict between Freeport and a loose coalition of environmental and human-rights groups. The organizations are angry about Freeport's plan to double the mine's production and also its perceived failure to come to grips with problems affecting the 20,000-strong local Irianese tribal community.

Better funded and now able to employ the Internet and other new tactics to fight what they see as corporate abuses, activists say they want to build greater democratic control over multinational corporations. "The worldwide green movement is moving towards highly sophisticated point attacks," observes Geoff Dews, a Brisbane-based marine scientist for the Torres Strait Regional Authority. "They don't say mining is bad, but they pick out a company and throw all the resources they have at it."

Freeport is in the crosshairs because, quite simply, it's an activist's dream: a big multinational seen to be colluding with a corrupt, authoritarian regime and struggling to cope with a cocktail of environmental and human-rights issues. Like Unocal in Burma, Shell in Nigeria and Exxon in Alaska, it has become a symbol of a larger battle. "We're a big, easy target," sighs Paul Murphy, Freeport Indonesia's executive director. "We're in a pristine part of the world with a project area extending from an equatorial glacier to a warm tropical sea, and we have primitive people walking around wearing penis gourds."

Freeport isn't lying down in the face of the protests. On one hand, it has spent millions on environmental projects and improving the lives of villagers, doing the sort of touchy-feely things that don't come easy to a mining company. On the other, it is employing retired American and Indonesian military officers, ex-policemen, former U.S. federal agents and other security consultants to safeguard the mine and to counter the activists.

Freeport is also forking out $35 million for barracks and other facilities for an 800-strong military task force the government brought in after anti-Freeport rioters rampaged through Timika and the high-altitude Tembagapura mining camp in March 1996. The Indonesian army recently assigned six armoured cars to Timika, which one activist now calls "the most militarized district in Indonesia."

The stakes are enormous. Grasberg is the world's third-largest copper resource and, at 108 million ounces, its biggest gold reserve–enough to keep parent company Freeport McMoRan Copper & Gold in Irian Jaya for at least another 30 years. The first large foreign investor under Indonesia's New Order government in the early 1970s, Freeport's rise and success parallels that of President Suharto, who sees the Grasberg mine as the cornerstone of his eastern Indonesia development policy. The government has a 10% stake in Freeport Indonesia, with another 5% owned by Nusamba, a Suharto foundation run by presidential ally Mohamad "Bob" Hasan.

In keeping with their new-found sophistication, activists have attacked Freeport on several fronts. Apart from opposing its application for an environmental-impact permit to cover the mine expansion, campaigners are actively supporting a $6 billion class-action lawsuit brought by tribal leader Tom Beanal, accusing the company of eco-terrorism and blaming it for abuses committed by the Indonesian military against indigenous Irianese.

Activists have also created minority-shareholder lobbies, either by buying stock or acting as proxies. They have sought to drive a wedge between Freeport and British-based partner Rio Tinto Zinc. And they have been trying to raise the company's alleged misdeeds with the maritime-resources working group of the Asia-Pacific Economic Cooperation forum and the Geneva-based United Nations Human Rights Commission.

Project Underground, the Berkeley, California-based group that Kennedy heads, coordinates 20-odd international and Indonesian non-governmental organizations which are taking on Freeport, ranging from Britain's MineWatch to the Sierra Club, Australia's Minerals Policy Institute and the Indonesian Forum on the Environment, or Wahli.

Kennedy and other activists insist they aren't anti-mining and that they're only sticking up for the rights of local people and demanding more corporate accountability. Both Project Underground and MPI are working together on an international database of 200 mining companies to ensure, as MPI Coordinator Chris Harris puts it, "wherever they go, their track records will go before them." Project Underground has also been getting under Freeport's skin by acting as a proxy for minority shareholders. Earlier this year, Kennedy spoke at the company's annual meeting on behalf of the Seattle Menonite Church, which owns a small parcel of Freeport stock. Freeport's hard-bitten chairman, James "Jim Bob" Moffett, gave him two minutes to say his piece, in part a dig at Moffett's $42 million annual salary, then abruptly cut him off.

The Indonesian military is watching events with no small interest given its contention that activist NGOs were involved in last year's Timika riots, though it has offered no proof of such a link. Following those disturbances, the government listed Wahli as one of 32 "problematic" NGOs – organizations deemed to be carrying out activities that exceed their charter.

Wahli's feisty director, Emmy Hafild, has since been called in several times by the Armed Forces Intelligence Agency to explain her ties with Western activists. (Wahli is partly funded by the San Francisco-based Tides Foundation through the International Rivers Network, the group which played a key role in getting the federal Overseas Private Investment Corp. to cancel Freeport's $100 million political risk-insurance policy in 1995.)

When Kennedy calls Freeport "the biggest rogue American multinational in the world today," the rhetoric is nothing new. Freeport took too long to get to grips with its environmental and social problems, and so much mud has stuck to the company that few are prepared to listen to what it has to say in its defence. What is particularly disturbing to Freeport is the way it is being held responsible for the actions of its partners, including the army's abuses against Irianese living in the company's area of operations.

On the environmental front, Murphy contends Freeport is doing everything right. He says the company has commissioned studies on everything from the top of the Carstensz Glacier which overlooks the mine to the marine floor more than 100 kilometres away. "There's no place on the planet Earth that's had so much scrutiny as has our project area," he insists.

But that hasn't solved one big problem with the expansion. Freeport must figure out how to store 3 billion tonnes of waste ore over the next 30 years. Murphy says the company has narrowed itself down to two options: expanding its present lowlands deposition area in the Aikwa River or building a pipeline from the mill to a 90-square-kilometre dumping site just north of Timika – a project that would cost $300 million-500 million and which even Murphy admits is environmentally problematic.

But Murphy claims the environmental battle is being won; it's social issues where he admits "we're vulnerable." That's for sure. In the wake of the 1996 riots, Freeport hurriedly implemented a scheme to parcel out 1% of mine revenues – about $15 million annually – to local Irianese villagers. But this collapsed after the first year, largely because of corruption and mismanagement among the provincial officials who administered it and the central government's insistence on parcelling out the money to tribal foundations. Freeport is continuing to add to an escrow account while a new spending mechanism is worked out.

Tribal conflicts, however, will always remain a concern. The prospect of work at the mine has brought historic enemies into close proximity with each other for the first time. The 3,000- strong Amungme tribe, for example, settled around the Grasberg near the turn of the century after being hounded out of areas farther north by the more populous Dani. Now the Amungme find they are outnumbered in their own bailiwick by Dani tribesmen, who the Amungme feel are horning in on what's rightfully theirs.

Today's battles, of course, may be mere preludes to longer-term political questions. "After Suharto is gone," says one mining source, "Freeport won't have the influence it has now and there's a potential it may be regarded negatively." But then, it wouldn't be the first time.