ENVIRONMENT: Indonesia Gold Mine Gets US Political Risk Insurance

By Pratap Chatterjee Reprint | | Print |

Pratap Chatterjee

0SAN FRANCISCO, Apr 21 1996 (IPS) - The United States has renewed a 100- million-dollar political risk insurance for the world’s largest gold mine in Irian Jaya, the former Dutch colony of West New Guinea which became part of Indonesia in 1963.

Freeport McMoRan, a New Orleans-based company, operates the gold mine in Irian Jaya, and the U.S. government’s political risk insurance agency, Overseas Private Investment Corporation (OPIC), ended its policy for the operation last November.

In a letter to Freeport at the time, Robert O’Sullivan, a lawyer for OPIC, cited environmental problems associated with “acid mine drainage…toxic metals…and the mismanagement of solid and hazardous wastes at the site.”

U.S. government sources said that one of the unstated reasons for the cancellation of the insurance was a series of massacres of local indigeneous peoples by Indonesian army troops who are guarding the mine site.

But on Friday, OPIC chief executive Ruth Harkin and Freeport chief executive Jim Bob Moffett reached an agreement over the telephone to re-instate the OPIC insurance policy for a period of eight months, ending Dec. 31 1996.

The insurance was renewed as part of a settlement agreement that requires Freeport to create a special 100-million-dollar environmental trust fund over the life time of the mine to pay for clean-up activities, OPIC said.

In a statement, the agency said it was “encouraged by Freeport’s continuing efforts to manage the environmental impact of the mine.”

OPIC cited a study released in Jakarta by the environmental consulting firm Dames and Moore, which stated that the Freeport mine had not caused significant environmental damage.

“The most visible and most significant impact upon the environment is, and will continue to be, the disposal of waste,” the Dames and Moore report said. The authors, however, added that the waste was “non-toxic, only unsightly.”

The conclusions in the report, however, contrasted with stark aerial photographs of the forest, taken near the mine. Thousands of hectares of dead forest land can be seen along the river where the waste is dumped.

Activists said the report was unlikely to reduce the anger of local people who have complained of human rights abuses by the local army officials and environmental damage. Riots occurred for several days last month in Timika, the town nearest the mine and several deaths were reported while equipment damage at the mine was put at “millions of dollars.”

A number of incidents in the past month has caused fears of an impending army crackdown on local human rights groups. The London- based human rights group Tapol reported that army officials last week raided the offices of Lemasa, the non-governmental organisation (NGO) that represents the Amungme indigenous peoples.

“Soldiers searched all the rooms, adding to the sense of intimidation and crisis that has gripped the town,” a Tapol report said. Offices of NGO groups in Jayapura, the capital, were also being closely monitored, according to local sources.

The human rights groups reported thousands of troops have been ferried into the town by Hercules aircraft. Large quantities of ammunition have been brought in, while mortars have been installed around the airport, which is owned by Freeport.

Twelve army helicopters were believed stationed at Timika, and local people said that army aircraft now conduct “training” missions over areas suspected as being hiding places for rioters, humand rights observers said.

“We are all under a great deal of stress and feel very much intimidated because the military are watching our every move,” a Freeport employee who has worked for the company for more than 10 years told Tapol.

On Monday, an Indonesian commando ran amok at the airport, where he shot 15 people to death and wounded 13 others. Army officials say the soldier was upset at the sight of the bodies of two of his colleagues who were hacked to death by local villagers following the alleged rape of an indigenous woman.

Freeport tried to placate local people last Sunday by offering to invest one percent of its annual profits (roughly 15 million dollars) in local development schemes.

The offer was rejected by the head of Lemas, Tom Beanal, in a statement issued Monday.

“Speaking on behalf of the entire Amungme community from Delematagal to Jigimugi, (we) will continue to wage a struggle for the rights of the Amungme people as regards their rights to their natural resources and their environment which has been damaged by Freeport,” he said.

Beanal pointed out that Freeport had failed to consult with the entire community or to compensate them for the years of environmental damage and human rights abuse.