Freeport mine's business as usual after landslip deaths

Published by MAC on 2003-10-18

Freeport mine's business as usual after landslip deaths

By John Garnaut, Syndey Morning Herald

October 18 2003

The world's largest, most profitable and most controversial gold and copper mine will be shut down for weeks as Indonesian officials investigate causes of its latest disaster.

Two workers have been confirmed dead and six are feared missing beneath 2.5 million tonnes of dirt that collapsed down the south face of Freeport-McMoran's Grasberg mine, in Indonesia's easternmost province of Papua.

Workers were operating bulldozers and other heavy equipment in wet weather at 5.30am on October 8 when the mine wall above them collapsed. Trucks and mining equipment were also buried, but the company has released little information.

Access to the higher-grade mine areas was blocked by the avalanche but production continued in lower-production sections of the pit.

Indonesian authorities said the higher-grade section would be closed for at least two weeks while investigators probed the accident.

"During the two-week closure, we will decide whether it can reopen or not," Indonesia's director general of mining, Whimpy Tjetjep, told the Jakarta Post.

But the company described the landslide as a "material slippage" and dispelled speculation that it threatened the mine's future.

"It looks like a disaster," said an analyst from an American investment bank. "But from a production point of view this will really be a fourth-quarter blip.

"The question is, will the rest of the mine slip in?"

A company statement said "the slide has not hindered long-term access to the ores". It predicted the avalanche would trim only 10 per cent from annual production.

After a third-quarter profit of $US56 million ($81 million) was announced in New Orleans on Thursday, rising copper prices drove the Freeport share price to $US37.19. The share price has more than doubled in six months. Rio Tinto owns 16 per cent of Freeport.

Human rights activists said Indonesia had no plans to close the mine, the country's largest single source of tax revenue and also one of its largest unofficial revenue sources.

Freeport last year admitted to paying millions of dollars to local military units for security services.

Kopassus soldiers have been convicted of shooting three people, including two Americans, dead last year and wounding 11 others on a picnic convoy near the mine site last year. Activists say the killings was part of a contest for mine resources.

"The markets have long ignored the true cost of the mine to the environment and indigenous people," said Danny Kennedy, campaigns manager for Greenpeace Australia who has written on Freeport.

"Freeport McMoran have been dumping on human rights . . . colluding in the deaths of up to 2000 indigenous protesters at the hands of the Indonesian military, who repressed opposition and got housing, food and transport in return."

The American market analyst said Freeport's latest public relations problem would become a commercial problem only "when the Indonesian Government decides to say 'OK, close your operations' - but they haven't done that".