Who runs the mines in Papua?

Foreign mining companies are exiting Papua, amid accusations of Indonesian corruption.

Who runs the mines in Papua?

Zacharias Szumer

Themonthly.com.au

November 2021

Like many political firestorms in Australia’s social media–saturated northern neighbour, this one started online. In August, two of Indonesia’s most prominent human rights advocates, Haris Azhar and Fatia Maulidiyanti, released a YouTube video in which they claim senior political, military and police figures have financial interests in mining operations in areas of Papua that have been the focus of large military operations. The imbroglio involves a senior government minister who is suing Haris and Fatia for defamation, and an Australian mining company that is, so far, keeping shtum about the whole thing.

The video lays out the findings of a report issued by a group of Indonesian non-government organisations in August, titled “The Political-Economy of Military Deployment in Papua”. The report focuses on Intan Jaya, a regency in Indonesia’s Papua province where a large military operation has been under way since 2019. The highland areas around Intan Jaya host some of the most active cells of armed Papuan resistance to Indonesian rule. For the past few years conflict has been constant, claiming many lives.

In February, hundreds fled their homes after rebels shot a civilian, whom they suspected was a spy. One displaced resident interviewed by BBC News Indonesia said locals feared reprisal by security forces, who suspected them of sheltering and providing supplies to armed rebel groups. In April, a senior intelligence official was shot by rebels in a neighbouring regency. In response, the Indonesian government formally designated armed political groups in Papua as terrorists, providing a legal avenue for the military to play a greater role in security operations.

The “Political-Economy of Military Deployment” report suggests that the military operation in Intan Jaya is not designed solely to crush the armed resistance and guarantee public safety, it also aims to facilitate access to the area’s rich mineral deposits. This isn’t a new claim. In 2015, for example, a Papuan member of the Indonesian national parliament said, “For the sake of gold, companies in Papua cooperate with the police and military and ignore the interests of the people.” But the report goes further, revealing the names of several high-ranking police and military figures, both active and retired, who are either commissioners or shareholders in companies that hold mining concessions in Intan Jaya.

One of these mining concessions belongs to a subsidiary of Australian company West Wits Mining, which has been trying for a decade to open up a mine there. Progress has been stymied by an inability to procure environmental permits, remove small-scale, unregulated miners from the area and provide security for the mine site. In 2016, an excavator belonging to the company was torched, causing more than $70,000 of damage. In West Wits’ 2017 annual report, the company announced that it had partnered with local firms, including one with “connections to key decision makers in government and law enforcement”, which was “actively leveraging these assets to advance the Derewo River project on behalf of the business alliance”.

The new firms were subsidiaries of Toba Sejahtra, a company founded in 2004 by retired general Luhut Binsar Pandjaitan, who is now one of President Joko “Jokowi” Widodo’s senior ministers. As a former mining executive who now oversees Indonesia’s ministry of energy and mineral resources, and the nation’s investment coordinating board, Luhut is known as a major powerbroker in the resources sector. Many activists consider his financial involvement in the sector as a conflict of interest.

Luhut has strongly denied claims that he is involved in Papuan mining and is pressing defamation charges against Haris and Fatia. It seems Luhut’s case rests on the colourful language with which the video’s presenters describe him, not the fact that he remains a minority shareholder of the company in question. In September, a representative of KontraS – the human-rights organisation that Fatia leads – told me that Luhut had still not provided any evidence that contradicted the claims made in the report. West Wits has made no public comments and did not respond to The Monthly’s requests for clarification.

Regardless of the details of this specific case, the style of nepotism alleged by the report is common across Indonesia’s resources sector, which, like Australia, shares a fairly active revolving door with politics. In 2019, Indonesian anti-corruption organisations claimed that one third of Jokowi’s cabinet members had links with mining companies. In an interview with Greenpeace, the former ombudsman of Indonesia said, “[In Indonesia, the] extractive, energy, and infrastructure sectors are big boys’ games. In order to succeed, you need to know the big boys, keep a good rapport, and use their influence to make, curtail, or even break the rules in your favour.”

Unlike in Australia, however, the Indonesian security apparatus is financially invested in the nation’s mining sector. Not only are many former military and police figures financial stakeholders in mining companies, the involvement of military and police is often part and parcel of large projects, whether to remove small artisanal miners from sites or to control local opposition. In Papua, even large infrastructure projects such as the Trans-Papua Highway are being built by the military, after deadly attacks on civilian contractors.

Economic symbiosis between the resources sector and the military is most prominent at sites such as the massive Freeport gold and copper mine, located south-east of Intan Jaya. Freeport’s operators have long paid the military and police large sums to provide security at the mine, which has been a hotspot of violence. In 1977, armed rebels briefly managed to halt the slurry line, triggering a military reprisal that reportedly killed 800 Papuans and displaced thousands. Last year a skirmish between Papuan independence fighters and security forces left several dead on both sides.

For some Papuans, the Freeport mine symbolises their struggle against state and corporate power extracting vast wealth from a region with high levels of poverty. For some Indonesians, the mine represents the nation’s long struggle against foreign economic exploitation. Indonesia’s state-owned mining company took a controlling stake of the Freeport mine in 2018, after decades of foreign ownership.

Although some foreign mining companies still hold Indonesian investments, many have sold their stake to domestic conglomerates or state-owned companies. In 2016, BHP Billiton left the Indonesian market, selling its stake to an Indonesian coal company. In 2020, Melbourne-based Newcrest Mining sold its share of a massive goldmine in North Maluku province. In the same year, Adelaide-based Hillgrove Resources sold its Indonesian subsidiaries, ending plans to mine gold in the Bird’s Head region of Papua. West Wits is also trying to relinquish a controlling interest in its Indonesian subsidiaries. The list could be extended to many other projects across the archipelago.

The reputational risk of being connected to a project embroiled in corruption and conflict is only one reason foreign mining companies are departing. Lian Sinclair, a researcher based at Murdoch University who specialises in mining projects in Indonesia, says regulatory changes implemented over the past decade have played a major part: “Newcrest, [American company] Newmont and BHP all pulled out of Indonesia because of requirements to divest 51 per cent of their ownership and invest in downstream processing.”

On occasion, foreign mining giants haven’t gone quietly. In 2012, British firm Churchill Mining and its Australian subsidiary filed a case with the World Bank’s investment tribunal after a mining licence in the region of Kalimantan was revoked by local officials. The investment tribunal ruled that the mining licences were based on fraudulent paperwork, allegedly organised by Churchill’s local subsidiary. The case, along with their claim for $1.75 billion in compensation, was thrown out. The concession was then granted to a company partly owned by Indonesian defence minister Prabowo Subianto, a former military general who has significant resource-sector assets and a personal net worth of $185 million.

Jokowi made Prabowo his defence minister after defeating him in the 2019 presidential race – an appointment widely perceived as an appeasement of Prabowo and the nationalist right. In his two presidential campaigns against Jokowi, Prabowo denounced foreign corporations, especially those in the natural resources sector, as parasites feeding on Indonesia’s natural wealth. Given Prabowo’s strong showing in both the 2014 and 2019 elections, and the degree to which this kind of discourse is commonplace in Indonesian politics, it’s clear that economic nationalism has a high level of public support.

This nationalist sentiment also shapes the views of some Indonesians when it comes to international advocacy for Papua. While working as a subeditor at The Jakarta Post several years ago, I asked a journalist what would happen if Indonesia’s Papuan provinces tried to secede. “Countries like Australia would swoop in to take their resources,” was her answer. At the time, I thought her response was exaggerated, but given Australia’s political manoeuvres around oil and gas fields in East Timor’s territorial waters, it’s hard to argue that Australia’s geopolitical strategy in South-East Asia is separable from its economic interests.

Indonesian control of Papua, however, has only tightened in recent years. Jokowi continues to push ahead with large-scale military deployments to Papua, and with infrastructure projects that will strengthen military and police capabilities and unlock new areas for mining and agricultural plantations such as palm oil. New resource projects often trigger conflict, to which the central government then responds with more military force, only increasing Papuan disenfranchisement. For the most part, Australia now just watches on.