History of Freeport in West Papua: How the Company Has Boost Development in the Region

West Papua

About four-kilometer west of Puncak Jaya or Carstensz Pyramid lies a huge mining and exploration complex internationally known as the Grasberg mine. Owned by PT Freeport Indonesia with shares distributed between both the Government of Indonesia and Feeport-McMoRan Inc. (Freeport), the operation has impacted West Papua significantly.

Now, let’s first learn about the history of Freeport in this province.

Freeport in West Papua

West Papua

Although the Grasberg mine was only opened in 1988, exploration and mining operations had preceded long before this mine was established.

The Ertsberg Discovery

It was all started with a simple discovery of a strange-looking, greenish black rock on Gunung Jayawijaya (Mount Carstensz) by a Dutch geologist, Jean Jacques Dozy, in 1936. Working for a Shell’s exploration company, Dozy reported his findings three years later, calling it the Ertsberg report, meaning the ore mountain. In the report, he elaborated on the extraordinary amount of gold and copper deposits in the samples he studied.

However, it was not until 20 years after, in 1959, his discovery was brought to the attention of Forbes Wilson, a geologist who was also a vice president of then Freeport Minerals Co. With backing from Freeport, Wilson himself led an exploration to further investigate the Ertsberg’s value.

The findings of Wilson and his team of Freeport geological experts turned out to be truly astounding. With total orebody of 33 million tons and 2.5% of which is copper, this finding uncovered the fact that Erstberg could be the largest surface copper deposit on Earth then.

The Ertsberg Development

After the Act of Free Choice in 1963 transferred West Papua from the Dutch to Indonesia, the Erstberg was the first President Suharto’s administration opened for foreign investment in 1967. While Indonesia should have developed its own resources, the amount of resources and fundings required to built the required mining and exploration infrastructure was simply not available domestically. The Indonesian Government then was aware that having Freeport investing and running the operation would help Indonesia build its economy post-independence.

With initial investment of about 200 million dollars, Freeport constructed all primary and supporting infrastructure on the area from 1967 to 1981. The open pit mine, the long access road, the slurry transport pipeline, the world’s longest single span aerial tramway, the air field, the shipping port, the power plant, and subsequently the brand-new copper town, Tembagapura in the Mimika regency of West Papua. In between shipment after shipment of ores to other Freeport’s sites had taken place since its first in 1972. Each ton shipped contained 377 kilograms of dried concentrates, 84% of which copper, 8% gold and another 8% silver.

The Grasberg Mine

West Papua

Another exploration around the area was conducted in mid 80s as the Erstberg mine had depleted extensively. In 1988, just three kilometers from the original mine, ore value of up to 40 billions was discovered on the grass mountain—thus the name, Grasberg. With another millions of investment channeled, a winding road was built connecting both Ertsberg and Grasberg mining sites.

In 2017, in return of 51% of share ownership, the Government of Indonesia granted Freeport a special licence extending its mining right to 2041.

To date, with a total area of roughly 450,000 acres, Freeport conducted exploration, mining and production operations in two blocks: Block A which was a primary complex, and Block B which was mainly for exploration. With three mines currently in operation, the open pit and two underground mines, Freeport is currently developing the fourth underground mine. A new smelter is also coming in 2022.

Freeport Contribution to Regional Development

West Papua

Freeport’s exploration, mining and operation activities have primarily allowed easier access to West Papua. With buildings of infrastructure such as airports, air strips, shipping ports, streets and bridges, this province has been opened to more exposure to the outside world. Not only it can export its natural and native commodities, the region has also started to welcome quality exchange with outsiders. Migrant and expatriate workers that have settled in more than 3,000 public houses the company has built.

Additionally, Freeport has contributed human development in the region. It has opened many schools and training centers, and also sponsored more than 10,000 scholarships for the locals. In fact, having trained more than 4,000 indigenous people, 40% of the Freeport Indonesia’s employees are the Papuan natives, 3,000 workers estimatedly.

Furthermore, Freeport has also subsidized free medication program for more than 20 years now, as well as establishing a hospital and clinics for the tribes in Mimika. To contribute more to the communities’ health, Freeport has even built an international standard athletic stadium this year in Mimika. This allows the province to invite contingents from other provinces for national sports events there, which promotes more revenues for the region.

Today,  more than 200 small and medium enterprises doing businesses in constructions or even franchising American restaurant or café outlets are run by the local.

Important Task Ahead

Nevertheless, despite the 17.3 billion dollars revenue Indonesia collected from Freeport’s mining activities within 1992 to 2017, the HDI score of the West Papua is still the lowest of all Indonesian provinces. Therefore, it is indeed a huge task for both the Indonesian Government and Freeport to ensure that significant portion of the Grasberg mine’s profit is channeled and committed towards the development of the province and its people.