Mining in Papua & West Papua: A Culprit that Helps Improving the Economy


Mining in both Papua and West Papua has been quite a dispute between the mining company and the locals. There was a report about how local indigenous Papuans around the mining site remained living in poverty and the mining waste that added to environmental problems. Nonetheless, it is safe enough to say that mining is the biggest industry that contributes to the region’s economy. Check out the facts here.

History of Grasberg Mining Site


Back in 1936, Jean Jacques Dozy, a Dutch geologist, climbed the highest island peak in the world, Mount Carstensz—a silver crag covered in snow. The place was then known as Dutch New Guinea. While Dozy was on his 4,800-meter climb, he noticed an unusual rock stratum veined with green stripes. Thus, he brought some samples back to confirm that the mountains were rich in copper and gold deposits.

Today, the sharp-edged mountains are part of West Papua Province, Indonesia—which are also the well-known Grasberg mining site. Grasberg is one of the world’s biggest gold mining sites and the world’s third-largest copper mine run and owned by an American mining company, Freeport McMoran.

Despite the fact there had been some injustice cases towards the local indigenous Papuans around the mining site during the company’s early occupation back in the 1960s, Grasberg mine is currently the biggest taxpayer in Indonesia, with reserves valued as much as USD 100 billion. This indicates that the mining industry can be a huge asset to help improve the economy of the land of Cendrawasih birds.

Freeport Vs West Papua’s Economy Growth


Former Minister of State Owned Enterprises (BUMN) Rini M Soemarno visited Grasberg gold mine managed by PT Freeport Indonesia in Timika, West Papua. This is the first visit since the visit of President Joko Widodo regarding the 51% Freeport shares taken over by Indonesia through BUMN’s mining firm, PT Indonesia Asahan Aluminum (Persero) or known as Inalum.

During the visit, Former Minister Rini stated that the existence of the Freeport mine must be able to increase the people capacity in West Papua, especially the Mimika area. This is because 94% of Mimika’s original revenue comes from the gold mine.

She explained that mining management should be able to improve the national economy—especially West Papua Province. This is a joint responsibility between Freeport and Inalum. The companies should hold programs for the community that cover human resource and infrastructure sectors. So, Mimika’s community and around the mining site can become economically independent if Freeport does not exist there anymore.

Other Mining Potentials


The government, along with the local residents, has known for long about Papua’s rich coal deposits. As coal was proven to become valuable and technology advanced, more mining companies opened in the area of Bintuni Bay, West Papua.

In addition to coal, Bintuni Bay is also a potential site worth USD 10 billion gas. Another mining firm called BP Tangguh LNG then started investing in the gas field since 2009. Certainly, there were always pros and cons on these newer mining activities, but once again, they contribute quite a lot to the province’s economy.

The Bright sides


In general, there is actually an improvement in the local community welfare nowadays. Based on a study, the number of people living under the poverty line in Papua has decreased from 27.76% to 27.43%. The Poverty Depth Index (2019) has decreased to 5.91 in figure compared to the previous year reaching 6.24.

Meanwhile, the Papuan Farmer Exchange Rate increased with an index of 91.82 in 2019. This value indicates an increase in the welfare of farmers in Papua.

Empowering communities in mining areas is a tough duty for the government and all the mining companies. Therefore, it is expected that mining companies collaborating with Inalum build a processing plant or smelter around the mining sites so the economy of the local people can improve.

Furthermore, both Freeport and BP Tangguh LNG hold many social programs for the community. In 2019, PT Freeport Indonesia in collaboration with AMINEF (American Indonesian Exchange Foundation) sent four participants of the Community College Initiative (CCI) Program from both Papua and West Papua to study in the US, out of 26 CCI scholarship recipients from all over Indonesia this year.

PT Freeport Indonesia’s Senior Advisor, Michael Manufandu, conveyed that CCI is the right program for Papuan youth. It’s because the program does not only facilitate the academic development of scholarship recipients but can also hone their leadership skills. The total funds allocated by PT Freeport Indonesia to support the CCI Program for the period between 2016 and 2020 reached USD 1 million.

Meanwhile, BP Tangguh LNG has been holding Technician Apprenticeship Program. It is a program that aims to train participants, so they have technical abilities to work as reliable technicians and are ready to work both at BP as well as other oil and gas projects.

There were 112 participants from both Papua and West Papua participated in this program. Thirty-two of them had completed a series of programs over three years, so they are now working as technicians at the Tangguh LNG plant.

The program is a reflection of Tangguh LNG’s commitment to developing a local workforce of up to 85% of workers from Papua and West Papua in 2029. Through this program, the company is expected to prepare local talents for better development of economy and human resource in West Papua.