With its $3.85b mine takeover, Indonesia inherits a $13b pollution problem

With its $3.85b mine takeover, Indonesia inherits a $13b pollution problem

JAKARTA — When the Indonesian government took a controlling stake in the operator of one of the world’s richest gold mines at the end of 2018, proponents hailed the move as a historic step toward national and economic resource sovereignty. The breathless media coverage of the transaction, which saw the government take a 51 percent stake in PT Freeport Indonesia (PTFI), previously majority-owned by Arizona-based Freeport-McMoRan, framed it as the “return” of a prized asset — the Grasberg gold and copper mine — to the Indonesian public after decades of foreign control. But little was said about the long legacy of toxic pollution from the mine, or how exactly the new arrangement, at a cost of $3.85 billion to Indonesia, would finally bring real benefits to the indigenous people on whose land the mine sits, and who remain among the most impoverished communities in Indonesia. Officials from the Indonesian government and Freeport-McMoRan announce the acquisition deal for PT Freeport Indonesia. President Joko Widodo and Freeport CEO Richard Adkerson are seen shaking hands. Image courtesy of the Indonesian Cabinet Secretariat. Inheriting a pollution problem Under the terms of the acquisition, a 41.2 percent stake in PTFI goes to state-owned smelting company PT Indonesia Asahan Aluminium, better known as Inalum. A 10 percent stake is held by the government of Papua province, where Grasberg is located. That latter stake, in turn, is managed 60:40 between an Inalum-controlled company and a province-owned firm. Freeport remains the operator of the mine. But along with…

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