Rendi A. Witular and Rangga D. Fadillah, Jakarta – The fatal shooting by police of a local worker of Freeport McMoran during a union protest on Monday will likely exacerbate a long-standing row between the US mining giant and its local stakeholders.
The protest in Timika, Papua, about 70 kilometers from the company's Grasberg gold and copper mine site, erupted amid repeated calls from politicians and officials for the government to renegotiate its contract with Freeport.
The government said the contract, renewed in 1991 and due to expire in 2021, had positioned Indonesia on the losing side.
Coordinating Economic Minister Hatta Rajasa said the government wanted to revise several sections of the contact, including clauses covering royalties, divestment, the size of the mining concession, a ban on raw material exports, the use of domestic services and the length of the contract period.
Lawmaker Sohibul Iman was pessimistic. "My concern is that the shooting incident may botch efforts to renegotiate the contract instead of accelerating them."
"The incident should be used to force Freeport back to the negotiation table and help resolve problems plaguing the company's relations with local residents," Sohibul, a member of House Commission VII overseeing mining, said on Monday.
Since its inception in 1967, Freeport's assets have lured many, triggering countless incidents of violence between the company's security force and residents.
Freeport's Grasberg mine is the world's largest single reserve of both copper and gold. In the first half of this year, the company paid US$1.4 billion in financial obligations to the government. From 1992 to June 2011, the company paid $12.8 billion to the Indonesian government, according to Freeport.
Freeport McMoran, however, controls a whopping 90.64 percent of PT Freeport Indonesia, while the Indonesian government holds the remaining 9.36 percent stake.
A politician who declined to be named said the disturbances surrounding Freeport's operation were triggered by a "pie that was too big for the company to swallow alone".
"Local politically wired businessmen are trying to get some of the pie. They're after the company's stocks, smelter projects, suppliers and much more."
"It's too early to determine if the shooting was deliberately incited. One thing for sure is that there's always trouble in the area," the politician said.
The shooting occurred following the frequent street protests that broke out after 8,000 workers, comprising around 70 percent of the Grasberg mine's workforce, went on strike for higher wages on Sept. 15.
Indonesia Resources Studies director Marwan Batubara said he regretted that the government was not meditating a dispute in a volatile area such as Papua.