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Asia Crisis

FACTBOX-Huge Indonesian mine in Papua source of controversy

(For related story see INDONESIA-PAPUA/FREEPORT or [ID:nSP226031])

Sept 15 (Reuters) - A separatist group in Indonesia's Papua province claimed responsibility on Monday for a series of recent bomb attacks in the area and called for the closure of a huge copper and gold mine.

The Grasberg mine -- operated by a local unit of U.S. firm Freeport McMoRan Copper & Gold Inc.

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and one of the world's largest copper and gold mines -- has been a frequent source of controversy.

Here are some facts on Papua and the disputed mine:

LOCATION:

- Formerly known as Irian Jaya, remote Papua lies at the easternmost end of the Indonesian archipelago, a few hundred miles north of Australia in the South Pacific.

INDONESIAN RULE:

- Papua was incorporated into Indonesia under a widely criticised U.N.-backed vote in 1969, after Jakarta took over the area in 1963 at the end of Dutch colonial rule.

SEPARATISTS:

- The separatist Free Papua Movement (OPM) has waged a low-level rebellion against Jakarta for almost four decades.

- The OPM says thousands of Papuans have been killed and imprisoned by Indonesian security forces since 1963, an allegation denied by Indonesia.

GRASBERG MINE:

- U.S. miner Freeport-McMoRan began gold and copper mining in Papua in 1967 with the permission of the Indonesian government and open-pit mining at Grasberg began in 1990.

- Grasberg accounts for 40 percent of Freeport's total copper reserves of 93 billion pounds. Open-pit mining is expected to cease in 2015, when underground mining will begin. The company expects the mine to remain profitable until around 2041.

- Freeport Indonesia is the largest single foreign taxpayer in Indonesia, paying $1.8 billion in royalties, taxes, and dividends in 2007.

SIMMERING DISPUTES:

- A 2001 Special Autonomy Law gave Papua a larger share of revenue from its rich resources and more political autonomy. However, critics say there has been little real progress.

- The mine has been a frequent source of controversy because of its environmental impact, the share of revenue going to Papuans, and the legality of payments to Indonesian security forces who helped guard the site.

ECONOMIC IMPACT:

- Both Freeport-McMoRan and mining major Rio Tinto

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, a 40 per cent shareholder in the opencast pit under a joint venture, have been targeted by campaign groups over alleged human rights and environmental issues at Grasberg.

- On Sept 9, 2008 one of Rio Tinto's major shareholders, the Norwegian sovereign wealth fund, sold its entire $850 million stake in the company citing environmental damage at Grasberg.

- Freeport was excluded by the Norwegian fund in June 2006 for the same reason, a move the company said stemmed from a 'misunderstanding'.

INTERNATIONAL RELATIONS:

- In March 2006, Indonesia recalled its ambassador in Australia, when Canberra granted asylum to 42 Papuans who arrived by outrigger canoe. An angry Indonesia said the move legitimised the group's claims of escaping a feared 'genocide'.

- A group of 40 U.S. Congress members also recently sent a letter to Indonesia's president calling for the "immediate and unconditional release" of two jailed Papuan separatists and warning that the human rights situation there was deteriorating.

Sources: Reuters, Freeport-McMoRan website (

here

)

Writing by Gillian Murdoch, Beijing Editorial Reference Unit; Editing by Ed Davies and Sanjeev Miglani

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