In April 1967, two years before the fraudulent Act of Free Choice which led to West Papua’s formal incorporation into the Indonesian Republic, Suharto  acting then not as president but as General Suharto, a member of the cabinet, signed the unique and highly favourable First Generation contract of work with  the New-Orleans based Freeport-McMoran company, the text of which was written by the company. This granted the company a 30-year concession to mine copper in West Papua within a 250,000-acre concession, free from land rent or royalties.i  President Sukarno who was under house arrest before being formally removed from power in 1967 had firmly rejected foreign investment and foreign aid and a law on foreign investment was still two years down the road.

During the closing decades of the Dutch colonisation of West Papua, the territory was used primarily as the destination for Indonesians who were banished for taking part in the anti-colonial struggle and there was little mention of the natural resources that were to bring such huge profits to Indonesia. However, as TAPOL wrote in 1983ii, important discoveries of oil and copper were made by multinational corporations in the 1920s and 1930s, and when Allied troops under General McArthur landed in West Papua in April 1944, a year ahead of the Allied assault that put an end to Japan’s three-year occupation of Indonesia from 1942 to 1945, they brought with them geological teams to evaluate these discoveries and to conduct their own explorations.  Besides the discovery of nickel and cobalt ore in the Cyclops Mountains, they confirmed the presence of a deposit of copper along the southern reaches of the Cartensz Range, later described as the world’s largest outcrop of copper with a surprisingly high concentration of gold.

Sukarno forestalls Papuan independence
When sovereignty was formally transferred from The Netherlands to the Indonesian Republic in 1949, West Papua, then known as Netherlands New Guinea, was not included. This led to years of unsuccessful diplomatic lobbying by Indonesia at the United Nations and became a cause around which President Sukarno rallied the population with a slogan calling for the ‘liberation’ of West Papua and its ‘return’ to the fold of the Republic. Sukarno was in a hurry to assert Indonesia’s claim to the territory, as a counterblast to Dutch efforts in support of West Papua’s eventual independence by 1970. In 1961, a New Guinea Council had met and adopted a constitution consisting of 129 articles for the future state as well as a national flag, the Morning Star (Kejora), and a national anthem. The flag has since become a powerful symbol for the Papuan people of their separate identity and many Papuans have faced imprisonment or worse for the act of unfurling it.

The dispute between Indonesia and The Netherlands had raged on for years and came to a head with Sukarno’s decision to mount an armed attack on the territory in 1962, thus placing the military in the forefront of the campaign. In early 1962, Suharto, who then held the rank of major-general, was given command of the Mandala campaign to capture West Papua from the Dutch. At the time, he was first deputy to the army chief of staff in charge of intelligence and also commander of the army’s new Strategic Reserve force, which later become known as KOSTRAD.  Suharto had gathered round him a clique of military officers who later became his close allies once he had gained power in late 1965. Among them was a commando officer, Benny Murdani, one of the soldiers parachuted into West Papua. Another was Ali Murtopo who was put in charge of testing the ‘combat intelligence’ unit attached to the Strategic Reserve. Murtopo later took charge of Opsus, the special operations unit notorious for political manipulations guided by Suharto after 1965.

During the early stages of the Mandala campaign, Indonesian troops carried out a series of small-scale air-drops from boats based in nearby islands but many became ensnared in the thick jungle or landed in swamps, unable to cope with the humid tropical atmosphere, while much of their equipment was damaged or lost. Although this was proclaimed as an act of liberation, the troops were not welcomed by the Papuans. Instead they were attacked, many were caught and handed over to the Dutch. According to figures available at the time, of the 1,419 troops who were dropped, 216 were killed or never found and 296 were captured. Mandala was a dismal failure both militarily and politically.

However, regardless of what the Papuans may have felt, their future status was to be decided by the competing interests of the Dutch, the USA and Indonesia.  At the heart of the contest was the knowledge, never publicly mentioned at the time, of the natural resources which existed in such great abundance in West Papua.

Initially, Washington sided with its Dutch NATO ally, but perhaps alarmed by the Dutch plan to grant West Papua eventual independence, Washington switched sides. Washington was also concerned about Indonesia’s ties with the Soviet Union with whom it was negotiating an arms deal. Under pressure from Washington, the Dutch government entered into negotiations with Sukarno brokered by the US. This led to the New York Agreement between The Netherlands and Indonesia and to the Indonesian takeover of West Papua after a six-month interregnum under a UN transitional executive authority, UNTEA.
Papuans were not represented in the negotiations regarding their future. With the departure of UNTEA in 1963, the Indonesian military took control and began a crackdown against Papuan resistance that led in 1965 to the creation of the OPM, the Free Papua Movement.

In 1969, the fraudulent Act of Free Choice resulted in West Papua’s formal incorporation into the Indonesian Republic. Although the New York Agreement stated that the Act should take place ‘in accordance with international practice’, what happened was that 1,022 hand-picked Papuans, under intense pressure from the Indonesian military, voted unanimously to become part of Indonesia.

Freeport’s entry into West Papua
Within two months of the 1965 coup that brought Suharto to power, the geologist Forbes Wilson, who had been involved years earlier in the geological investigations in West Papua, received a call from Freeport’s CEO saying he had been privately approached by two oil executives and told that  negotiations would immediately begin about mining Erstberg, the first copper outcrop. The Washington government supported Freeport’s association with the new regime by guaranteeing a $60 million loan to the company that enabled it to proceed with the extremely expensive initial stages of the project. The Ertsberg mine was officially opened by Suharto in March 1973, on which occasion he announced that the territory would be called Irian Jaya. (Many years later, President Abdurrahman Wahid reversed this decision and named it Papua.)

Freeport needed to build the infrastructure for the copper and gold mine in Tembagapura at an elevation of 4,500 metres through what the company called ‘inhospitable country’, 68 miles from the coast. This meant installing a pipeline to carry the copper slurry down to the coast. Construction took five years to complete before production could begin and was described at the time as a ‘stupendous engineering’ feat. For Papuans living in the vicinity, the project violated and destroyed their mountain, which they regarded as their ‘spiritual mother’. Their ancestral ties with the land were simply ignored and they were evicted from their homes, to be re-settled in coastal hamlets, without a thought about the impact of the new environment, away from the cool, clear air around their mountain homes to the hot, malaria-infested coastal plain.

The leading Indonesian weekly Tempo wrote: It is logical for these mountain perople not to feel at home. Besides the climate, the houses built for them by the local government are quite unsuitable. They are very basic, just bare huts with a roof and an earthen floor. In their native villages, these people had houses with wooden floors. ‘We feel ill. We can’t sleep,’ said one woman living in one of these huts, pointing to the earthen floors on which they have to sleep.iii

A Jayapura-based newspaper reported that an epidemic swept through their kampungs, killing 216 children, more than 20 percent of the infant population. A doctor complained of the lack of funds for medicines to fight the epidemic, only a stone’s throw from Freeport which was by then already worth $150 million a year.iv

During its twenty-year life-span, Erstberg produced  thirty-two million tonnes of copper, silver and gold and generated an annual income for the company of around $300 million.

Grasberg, a bottomless pit

But the Erstberg find was overshadowed by the discovery of Grasberg.  This resulted in Freeport signing two new Contracts of Work with Jakarta in 1991 and 1994, gaining exploration rights to approximately nine million acres and the right to mine further discoveries in the area for another fifty years. By the end of the decade, Grasberg was annually producing more than double the ore recovered from Erstberg during its life. Grasberg is famed for having the world’s largest deposit of gold, far in excess of the output of South Africa’s largest mine. It holds the world’s third largest open-pit copper reserves and at extraction rates of 10 cents per pound is the lowest-cost copper producer in the world. According to Denise Leith, ‘Estimates of Grasberg’s worth continue to increase so that despite all predictions the final worth of the mine is impossible to predict; it is classified as ‘open at depth’, which is a euphemism for a bottomless pit.’v

Further exploration of more than six thousand sites had by 2001 identified about seventy potential mining sites with drilling commencing on about ten of these. Freeport’s owner, Jim-Bob Moffett, a loud-mouthed tycoon from New Orleans, believes that the region will eventually produce other Grasbergs, eclipsing the riches of Pangguna, Ok Tedi, Lihir and Porgera in Papua New

In May 1995, the British mining giant, Rio Tinto, became involved in Grasberg at a time when Freeport, with expenditures mounting, was forced to look for an experienced and well-capitalised partner. The contract with Rio Tinto gave it an interest of about 14 percent for an initial payment of $1.7 billion. About half of this amount was in the form of a loan to be spent on future exploration and development in Freeport regarding contracts of work in West Papua. Under the deal, Rio Tinto’s interest was limited to the Grasberg operation, entitling it to 40 percent of discoveries and expansions proven after December 1994 together with any output at Grasberg above 118,000 tonnes per day.

In 2004, Rio Tinto sold its shares in Grasberg for $883  million while retaining its 40 percent joint venture interest in reserves as a consequence of  expansions and developments at the Grasberg mine since 1998.

The Suharto-Moffett duo
Moffett’s ties with Suharto and his inner circle are known to have been very close. Between 1991 and 1997, the company made at least $673 million of loan guarantees to three Indonesians closely tied to Suharto. Suharto allies, including at least one cabinet minister, bought assets from the company such as housing and a hotel near the mine.  Freeport not only helped to finance the deals but also guaranteed the buyers sizable annual profits. The company also agreed to subsidise interest payments for a Suharto family business partner, enabling him to purchase 4.7% of Freeport’s Indonesian unit.

According to the New York Times, ‘For years, to secure Freeport’s domain, James R Moffett… the company’s chairman, assiduously courted Indonesia’s long-term dictator, President Suharto, and his cronies, having Freeport pay for their vacations and some of their children’s college education, and cutting them in on deals that made them rich, current and former employees said.’vii

In 1997, when Freeport wanted to more than double its Grasberg output, Moffett took the case directly to  Suharto who scrawled  his approval of the controversial expansion  in the margins of Moffett’s personal letter to him. But this was just one year before Suharto’s fall from power. In an article published by the Wall Street Journal four months after the dictator’s downfall, it was stated that in the mid-1990s, Moffett, through building a personal relation with one of Suharto’s closest confidants, Bob Hassan, began spending time with the first family. He golfed with the president and became close friends with his second daughter, Siti Hedianti.

Shares in Freeport that were in the hands of the Bakrie family, not a close ally of the President, were liquidated on the orders of Suharto and were bought by PT Nusamba Mineral Industri, the parent company of which, Nusamba, was widely known to be controlled by the Suharto family. According to Bob Hasan, Nusamba was 80% owned by three Suharto-chaired foundations, 10% owned by his eldest son and 10% owned by Bob Hasan. (Suharto had set up a number of foundations or yayasan during his New Order, ostensibly for charitable purposes but which became the means by which he and his family gained control of a large number of businesses.)viii One Freeport official described Bob Hasan as being ‘part and parcel of the Suharto family’.

Resistance to Freeport
In 1977, attention was drawn to grave human rights problems around the Freeport mine when Amnesty International reported that the military who were guarding the project were using steel containers  obtained from the Freeport mine as cells to incarcerate Papuans for long periods. These arrests followed in the wake of tension that erupted when local people cut the pipeline.  The incident was documented by a church publication, Berita Oeikumene in April 1980.

‘..the background to the conflict around Tembagapura … is that the local inhabitants felt disadvantage by the presence of a foreign mining company whilst their complaints do not receive proper response, either from the company or from the government… The underground movement against the American company burst open at 6am on 18 June 1977… by attacking a police post… then blocking the Ilaga airstrip near Tembagapura with tree stakes. When the army launched a counter attack, they withdrew to the forest…. A pipe transporting copper slurry mixed with gold from the mine at a height of 11.5 thousand feet down to the Timika harbour on the Arafura Sea was blown up by guerrilla forces. A bridge was also blown up and some Freeport oil storage tanks were destroyed by fire. Over a period of several months, Freeport was sustaining losses of several million dollars a day.’

However, the Amungme people were to suffer greatly… ‘At the end of August, two OV-10 Bronco bombers rained the region of Akimuga with bullets. Those who survived fled to the forests…. These counter-guerrilla attacks were not confined to air attacks; ground attacks went on for several months as well as arrests and detentions.’

According to an Australian journalist, Denis Reinhardt,ix  ‘Three Irianese villages associated with the mine, the shanty town at Tembagapura, and encampments at Waa, five kilometres from Tembagapura, and at Timika are reported to have been levelled by Indonesian troops in the days following the sabotage. One European who recently returned from the area alleges that Indonesian troops mortared Waa village for two days before moving in and burning the remnants.’x

Another wave of protest against Freeport erupted in February 2006 when about four hundred local miners barricaded the road to the mine, protesting against their forced removal from the area because they had been sifting through the waste pumped from the Grasberg mine. Two days earlier, police and company security guards had approached a group of gold panners and told them to leave the area.  One newspaper wrote: ‘Many locals earn their living through retrieving and selling tiny amounts of copper and gold from tailings, or waste rock, dumped by the mine. The Freeport mine… has long had an uneasy relationship with locals, many of whom are poor.’  

These activities led to the closure of the mine for two days. Meanwhile, reports which referred to the local miners as ‘illegal’ were angrily refuted.
The incidents in the vicinity of the mine led to a series of demonstrations in Jakarta in front of the head office of Freeport. The protesters said that the mining operations had not brought any benefits to local residents during its 40 years of operations. One of the protesters said: ‘Freeport has to be closed because the environment has been damaged and many locals were massacred just because of its presence in Papua.’xi This allegation goes back to the findings of two researchers. An Australian anthropologist, Chris Ballard who worked for Freeport, and Abigail Abrash, an American human rights campaigner, estimated that 160 people had been killed by the military between 1975 and 1997 in the mine area and its surroundings.xii

Damning evidence about human rights abuses committed in the vicinity of Freeport was made public by Bishop Munninghoff in Jayapura in a 28-page report in August 1995. One of the many shocking incidents was an attack by Indonesian troops who opened fire on a group of villagers gathered together for an act of worship. Eleven people were shot dead, including four children. The villagers had spent several months in the forest, seeking refuge from the fighting between local guerrillas and the Indonesian army. As they gathered in Hoea, trying to decide whether to remain in the forest or return to their village, they were discovered by a unit of soldiers on a mission to hunt down members of the OPM. The troops opened fire without warning and with horrifying consequences.xiii

No action against environmental damage

It was not until 2000 that anyone in government in Jakarta criticised Freeport for the tremendous environmental damage it caused. The Environment Minister in the government of Abdurrahman Wahid, Sonny Keraf announced that the government was planning to revoke a permit allowing the company to dump tailings into rivers near the mine. He accused the company of causing far too much pollution, ‘which in turn had made life difficult for natives living nearby the mining areas’.  A press report pointed out that the company processes 200,000 tonnes of ore every day, of which only about 3.5% yields copper and gold The remaining crushed waste ore known as tailings form grey muck which is discarded in the Aghawagon-Otomona-Ajkya river system. More than 210,000 tons of tailings are deposited downstream as fine sand every day. ‘Tailings have inflicted massive damage to forests located south of the mine, with some literally buried under the crushed waste ore.’xiv

Environmentalists were not convinced that the minister’s get-tough message would have any impact and they were right. The same press report said: ‘Due to pressure on the government, no serious action was taken against Freeport, not even when it was revealed that  13,300 hectares of forest-land had been laid waste by the tailings.’

In 2006,WALHI, Indonesia’s leading environmental watchdog, issued a report about Freeport which said that the company, along with its joint venture partner, Rio Tinto, had failed to comply with government orders to amend its dangerous waste management practices despite years of official findings that it was in breach of environmental regulations. The organisation said: ‘The law is not enforced by the Ministry of Environment due to the joint venture’s pervasive financial and political influence, to the degree that a Freeport-Rio Tinto  proposal for circumventing water quality standards seems to be under consideration.’ WALHI said the company had been polluting the river system and the estuarine environment  in breach of regulatory water quality standards and that it was discharging acid rock drainage  without a hazardous waste licence  at levels breaching industrial effluent standards and has failed to establish mandatory monitoring points.xv

Wealth and poverty, cheek by jowl
For nearly forty years, the operations of Freeport have provided the Indonesian state with substantial earnings in the form of royalties, dividends and taxes, becoming by far the country’s largest taxpayer.

According to a statement by the company earlier this year, Freeport paid a total of $1.8 billion (Rp 17 trillion) to the Indonesian government in 2007, consisting of corporate income tax, employee income tax, regional tax and other taxes totalling $1.4 billion, royalties of $164 million and dividends worth $216 million.  This was higher than in 2006 when the figure was $1.6 billion. These figures show a hefty increase from its payments to Jakarta in the previous five years when the total was $6.9 billion.xvi

Freeport chairman, Jim-Bob Moffett and the company’s chief executive officer, Richard Adkherson, have pocketed huge earnings. According to a federal regulatory filing in June last year, Moffett’s earnings totalled $32.8 million in 2006, consisting of $2.6 million in salary, and $27,400,000 in cash incentive payments. He also received $234,864 in above-market or preferential earnings on deferred compensation and $2,331,292 in perquisites and other compensation, including contributions to his retirement plans, $278,644 in personal use of company aircraft, and $92,532 in insurance premiums.
The chief executive had to make do with a bit less, earning a salary of $1.25 million, $3,532,000 in cash incentives and stock awards with an estimated value of $18,048,000, plus more than $2 million in deferred compensation and contributions to his retirement plans.

As for Papuans whose resources these men have plundered for so many years, the vast majority are poor by any standards and still worse, they are becoming marginalized in their homeland with the arrival of hundreds of thousands of migrants from other parts of Indonesia. Poverty is the fate even of Papuans living in the vicinity of Freeport. According to the Mimika Statistics Agency, more than half the population in the regency, which is where Freeport is located, live below the poverty line. As many as 28,000 of the 45,000 families are poor and lack access to health care. Many of the houses in Timika as well as in Kwamki Lama villages, Karaka Island and Asmat village in East Mimika district are unsuitable for habitation. ‘Mimika is one of the biggest mining areas in the world but its people are still categorised as poor.’

 According to research carried out in 2002, health service care in Papua ‘is below acceptable standards’. The investigation concluded that 36.1% of Papuans had no access to health facilities while 61.6% had no access to clean water. The percentage of undernourished children under five was 28.3%.xvii

Following the political demise of Suharto, there were calls for the contract with Freeport to be renegotiated but these have led nowhere. One government minister said that pressure on Freeport might damage Indonesia’s reputation in the eyes of other potential foreign investors.

Suharto’s generous giveaway to a far-away US mining company was nothing less than the rape of Papua, assets stolen from the people of Papua that left them destitute and deprived them of the right to determine how, by whom or indeed whether their natural resources should be exploited.


i   Denise Leith, The Politics of Power: Freeport in Suharto’s Indonesia, 2003, p 60

ii  West Papua: The Obliteration of a People, 1983.

iii Tempo, 13 September, 1980.

iv Tifa Irian, June 1980.

v  Op.cit., note 1, p 63

vi  Op.cit, note1, page 69.

vii New York Times, ‘Below a Mountain of Wealth, A River of Waste’, 29 December, 2005

viii Wall Street Journal, 29 September 1998.

ix  Nation Review, 15-21 September 1977.

x  Op. cit. note 2.

xJakarta Post, 23 February and 1 March 2006

xii New York Times, 27 December 2005.

xiii Quoted in TAPOL Bulletin No 131, October 1995.

xiv Indonesian Observer, ‘Environmental minister blasts Freeport’, 17 June 2000.

xv WALHI Report on Freeport-Rio Tinto, May 2006.

xvi Antara News Agency, 6 February 2008

xvii Economic, Social and Cultural Rights in West-Papua, published by The Evangelical Church in the Rhineland, 2005.