Jakarta to buy out mine

The Indonesian government plans to acquire Rio Tinto’s 40-per-cent participating interest in the huge Grasberg copper mine in the unstable province of Papua. 

It is operated by the Indonesian subsidiary of Phoenix-based Freeport-McMoRan.

Under a joint venture established in 1996, Rio’s stake in the Grasberg contract entitles it to 40 per cent of production above a designated level until 2021 and 40 per cent of all output after 2022.

Under a framework agreement announced in August, Freeport said it would transfer 51 per cent of its Indonesian arm, PT Freeport, to the authorities. Until now it had been unclear what was happening to Rio’s stake.

Energy and Mineral Resources Minister Ignasius Jonan said Indonesia planned next year to buy out Rio’s interest in Grasberg and the 51-per-cent controlled by Freeport.

“To achieve the 51 per cent, there’s Rio Tinto’s 40 per cent participating interest that will be acquired by the State-Owned Enterprise Ministry, which has been appointed by the government, along with regional-owned enterprises and tribes [from Papua Province] linked to the operations of PT Freeport Indonesia,” Jonan told the media.

Ethnic Papuans benefit little from Grasberg and protest against its environmental footprint.

“Negotiations are underway and discussion of legal drafting have begun,” he said.

In Papua’s independence struggle, the United Liberation Movement for West Papua (ULMWP) has condemned an order from the Jakarta authorities for its members to be arrested.

The separatist movement has just concluded a summit in Vanuatu, where activist Benny Wenda, who lives in exile in Oxford, was elected its chairman.

Indonesian Minister of Defence Ryamizard Ryacudu called for the group’s members based in Papua to be arrested when they returned to the western half of the giant island.

Regional diplomat Akouboo Douw called the order “abusive”.

He said Vanuatu was a suitable location for talks as part of the organisation’s role in the Melanesian Spearhead Group (MSG).

Papuans regard themselves as Melanesian, ethnically distinct from the rest of Indonesia.

Douw said the Papuan meeting did not contravene Indonesia’s constitution or its vague, secular “Pancasila” philosophy.

“It is not going to be big disaster for your nation but also Indonesia has to respect the ULMWP as an entity of the MSG,” Douw told the media

He called on Australia and New Zealand to monitor the Papua-based Liberation Movement’s members returning to Indonesian-held territory to ensure they avoided arrest.

While the organisation has observer status in the Melanesian Spearhead Group, Jakarta opposes representation of Papuan separatists on international bodies.

Douw said other MSG members, including Papua New Guinea, Solomon Islands, Fiji and Vanuatu, backed the right to self-determination for all Melanesians.



Grasberg. Picture credit: YouTube