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3 Apr 2017

Indonesia: Protests escalate in support of govt. move to nationalise Freeport-McMoran mine; company threatens arbitration if regulations are implemented

Freeport-McMoran operates Grasberg, the world's biggest gold mine, in Mimika Regency at the Papua province of Indonesia.  The company is American owned and operated.  When it started operating in 1967, the Suharto-led government granted the company a decade-long tax holiday and a reprieve from paying royalties.  

In February of 2017, the government sought to implement provisions of the 2009 mining law and in effect, required Freeport to participate in efforts to move resource exports higher up in the value chain from just raw materials by building a US$2.9 billion smelter. The government also required Freeport-McMoran to divert the majority of its shares to Indonesian ownership within 10 years. Pursuant to the law, Indonesian officials, led by Mines and Energy Minister Ignasius Jonan, are pressuring the company to convert its contract to a "Special Business License".

Freeport-McMoran, arguing that all these new regulations violate their contract, have threatened to sue the government for damages, through an arbitration case. In February 2017, it started to dismiss tens of thousands of workers and is currently operating at only 40% of its capacity.

Protests continue to occur, with participants calling for the shutdown of the company and its eventual nationalisation, and asking that revenues be used to meet basic needs of Indonesians.