Indigenous peoples in Papua are seeking a role in the next stage of negotiations between the central government and United States mining giant Freeport McMoRan (FCX) with the latter set to relinquish its controlling stake in gold and copper miner PT Freeport Indonesia (PTFI).
Although PTFI has been operating its Grasberg mine for more than five decades in Timika, the capital of Mimika regency in Papua, many have criticized the fact that locals have enjoyed little of the fruits of the largest integrated gold mine in the world.
However, FCX’s recent agreement with the government for the company to reduce its stake in PTFI to allow national entities to own at least 51 percent has been seen as a political victory for the administration of President Joko “Jokowi” Widodo, although no settlement has been reached so far on the valuation of the shares to be divested, nor on the time frame for doing so.
Nevertheless, indigenous peoples in Papua have asked to be involved in the negotiations to determine the details of the divestment and to ensure their rights in any deal made. The head of the Amungme Tribe Customary Institution (LEMASA), Odizeus Beanal, met with Energy and Mineral Resources Minister Ignasius Jonan recently to discuss the prospects of increased involvement.
“We hope that we can be involved in the upcoming negotiations on the details in order to come up with an agreement that will be best for the locals,” he said.
“We highly appreciate what has been done and we hope that in the future, an agreement can be made with ulayat [indigenous land] owners and also the people of Papua and Indonesia,” Odizeus, who represents the Amungme tribe in the Papuan highlands, said following the meeting.
Odizeus was accompanied by colleagues from other groups representing Papua’s customary peoples.
The group of five emphasized that the government needed to heed existing regulations that acknowledged customary law and traditions when conducting the negotiations with Freeport.
Freeport, Indonesia’s oldest foreign investor, has long been synonymous domestically with gold, not copper, and is usually looked on with suspicion. Affairs related to the company have always been political, with many officials and activists referring to it as a symbol of US economic imperialism in Indonesia.
PTFI’s activities account for around 42 percent of the economy in Papua, Indonesia’s poorest province. A labor dispute that has led to a massive strike at the company’s site since early this year has crippled the province’s economy.
Papua Provincial Legislative Council representative Carolus Bolly said the Papua provincial administration and the Mimika regency, where the PTFI mine is located, had the rights to own some part of the shares that will be divested by FCX.
“I suggest that the Papua administration get 10 percent while the Mimika regency gets 5 percent. This opportunity must be seized to fund to our regional budget,” Carolus told The Jakarta Post, adding that Papua’s role in the divestment must be discussed in depth.
At present, FCX owns 90.64 percent of PTFI, while 9.36 percent is owned by the central government.
Carolus also took the opportunity to demand that PTFI pay taxes and penalties amounting to Rp 3.5 trillion (US$263 million) that it owed to the Papua administration before the company moved forward with extending its contract.
A court in Papua earlier this year ruled that PTFI had to pay the sum related to water taxes for the period from January 2011 through July 2015.
The company has challenged the verdict, and is still waiting for a Supreme Court decision.
Jonan has promised that the central government will involve the Papuan provincial administration and the Mimika regional administration in the next stage of negotiations.
“The Papuan and Mimika administrations will be involved in discussing FCX’s divestment of 51 percent of its shares [in PTFI]. We are still considering whether around 5 percent or 10 percent should be given to the Papua and Mimika administrations,” he said.
Jonan noted that the State-Owned Enterprises (SOE) Ministry would lead the next stage of negotiations as the government would assign state enterprises to execute the divestment.
The SOE ministry is in the process of assigning a state-owned mining holding company, the formation of which is ongoing and which will comprise several state miners, to purchase the stake based on the price arrived at by an independent valuator.
The planned holding company will form a consortium that will include local governments to take up the stake.
Source: Fedina S. SUndaryani and Nethy Dharma Somba / The Jakarta Post
6 September 2017