It was until the end of todays class, I couldn’t come up with first nation issues on my own. But when Mr. Jackes mentions about how first nations issue reminds me of home, I suddenly remember about the Freeport mining and decided to create a post regarding this issue.
Image source: http://www.tribunnews.com/bisnis/2014/10/08/banyak-faktor-kecelakaan-pt-freeport-indonesia-tak-dapat-penghargaan
Freeport-McMoRan Copper & Gold Inc is one of biggest gold producer in a world. This US company has one of its branch located in Papua,Jaya Pura, Indonesia. This Company exploited Gold, Coper, Nickel, and Uranium in the High Mountain of Cartenz. The product of the mining is transported around the world.
Since the company was first operated in 1967, there has been massive issues regarding environmental,cultural and sustainability in surroundings mining area. In addition, recently, there has been rumour saying that Freeport wants to extend their contract for another 20 years after the 40 years of operation in Indonesia. Even though the deal between Indonesian government and the Free port management has not been resolved, a lot of controversy has been going on especially in social media such as twitter.
One of the biggest issue that considered is the quality of life of the worker; several local news recorded, there has been numerous deadly accident. Not only this year, in May 2013 another accident killed 28 employees all at once. Most of the accident caused by the burial of workers in the construction sites due to the collapsed of underground mine . In addition,this mining site is well known as one of the hardest mining operation in the world. Even from the building process of the construction site itself, Free port has to exploit large part of mangrove forests around Cartenz mountain.
Looking from financial point of view, Freeport has been successful and prosperous. In 2013, the company sold 4 billion pounds of copper at an average realized price of about $3.28 per pound. It generated $13.4 billion in revenues from the sale of copper, over $1.5 billion from gold mining and nearly $1.2 billion from its molybdenum operations. Forbes added “It holds a 90.64% interest in these mining operations with the balance held by the Indonesian government” This means, Indonesia government only owns less then 10% from the total revenue of the production in the country. This amount remain questionable and unaccepted by Indonesians since the operation itself has brought damages on the environment and the threat the availability of natural resources for the future generation.
Even though The Freeport has paid 20 million us dollars during 1998-2004 to secure the reserve, the amount of externalities of this operations is far beyond what the company paid.I have question the business ethics of a large company such as Freeport and consider their responsibility of operating in other country. First, the mining site is located in Papua, one of biggest island in Indonesia that still populated with 255 indigenous tribe who still live under the old tradition system. Secondly, there has been massive environmental destruction and ecosystem in the surrounding areas. In this case,I believe not extending the partnership with Free Port is the best choice. In short term, government will be able to at least try to evaluate and recover the damages after years of operation. In long term, this will allows the local tribe to maximize their natural resources,maintain environment sustainability and therefore have better quality of life for the future generations .
More link
Freeport Indonesia Video highlight
The Kamoro- Papua Indigenous Tribe
Strike workers demanding same salaries as FreePort employees in other country
References;
Free Port full Financial analysis
May 2013 accident, killed 28 workers
http://www.forbes.com/sites/greatspeculations/2014/10/06/a-closer-look-at-freeports-indonesian-mining-operations/