Mining, murder and mayhem: The impact of the mining industry in the South

The mineral extraction industry has wreaked a heavy environmental and social toll on many Third World countries. In addition to providing an overview of this phenomenon, Danny Kennedy, in the following article, illustrates the case against the mining industry (particularly the multinationals) with the example of the Grasberg gold mine in Irian Jaya, Indonesia, the largest gold mine in the world. Fortunately, as he notes, the people and communities affected are organising against these abuses by the mining companies and fighting back.

by Danny Kennedy

WHEN it comes to mining, the past portends a frightening future for indigenous communities, environmentalists and anyone interested in more sustainable and humane societies. The mineral extraction industry has and continues to have a huge toll on the planet and its peoples, in particular in the Third World. The good news is that these same people are organising against systematic abuses by mining companies and fighting back.

One and a half centuries ago, gold miners, known as argonauts or the 49-ers, arrived in droves in California and decimated the native population whilst destroying rivers, mountains and most anything in their path. Of course, a similar fate had met the Incas 350 years before them, with the invasion of the Conquistadors into Latin America scouring the Andes for gold. In short, murder and mayhem have been the fate of indigenous peoples and places in this pursuit of gold and other metals.

But what most people do not realise is that this is still going on today in the new global economy. And what is more, it is getting worse rather than better, with more dollars spent on mining development in the Third World; technological advancements in digging up peoples' backyards quicker, deeper and cheaper; and a disturbing trend in the increased collusion of military and commercial interests in pursuit of precious metals.

It is self-evident that mining has historically had enormous environmental and social impacts, especially for countries in the Third World - places colonised more often than not in pursuit of minerals. It is also true that it has made some people rich. But that experience is so rare and the wealth so maldistributed that it may not weigh up against the negative impacts. These range from degradation of ecosystems, which cumulatively puts mining ahead of the international timber trade or agribusiness in terms of destruction of the environment and subsistence lifestyles, to the imposition of handout dependency and boom-to-bust economic models on much of the South. Despite this, mining per se is not generally seen as such a great threat to people and the planet.

How big is the problem?

Sixty percent of foreign direct investment in Africa last year was in the mineral extraction sector. Spending on exploration for metals in Latin America rose from $200 million in 1991 to $1,770 million in 1997. The situation in the Philippines optimises this massive expansion. Since the Philippines national government created its GATT-consistent investment regimes and new mining laws in the mid-1990s, over 25% of that country has fallen prey to foreign-owned exploration or extraction concessions. The economic model is clearly one of extraction and export to core countries - not of enrichment for producing nations.

From a fiscal perspective, the outlook is not much better. At least 14 developing countries get a third or more of their export revenues from minerals. On average, their external debts are 1.4 times as much as their gross national product. The average ratio of debt to GNP among nations the World Bank lists as severely indebted is 0.6. This sort of empirical evidence has led to a growing acceptance of the 'Resource Curse Thesis' (which even Jeffrey Sachs, author of shock-therapy structural adjustment programmes in Eastern Europe, advocates) that foreign capital inputs needed for mining impoverish rather than enrich a nation.

Basically, this academic theory concludes that natural-resource-rich nations, like say Papua New Guinea, are less likely to continue on an upward development curve than human- resource-rich nations, such as Singapore. Anyone who has lived in a boom town which is now a ghost town could have told them that, but the World Bank has only now borne it out in its data-crunching. Of course, the bitter irony for countries like Ghana is that the Bank continues to push mineral dependency as a basis for development, despite its propensity to destroy sustainable local economies.

The impacts of mining manifest themselves locally in a number of ways, often resulting in violence to people and places. At worst, this is demonstrated by the massive mining catastrophes like Cambior's spill of millions of gallons of cyanide-laced waste water into the Essequibo River in Guyana in 1995, or Marcopper's massive waste dump on Marinduque in the Philippines the following year. From a social perspective, the extreme is in the mercenary operations to retake diamond concessions in Sierra Leone and Angola - with the dogs of war hired by foreign mining companies - or the devastating civil war on Bougainville which started as a result of the Panguna copper mine operated by CRA and which has cost ten thousand lives over the last decade.

Mining companies are also notorious for engendering dependency amongst communities around major resource projects, a debilitating and humiliating trajectory for people. Likewise, national governments become addicted to mineral revenue, such as taxes and royalties. This means that these governments are often poor enforcers of sound environmental and social regulations. Instead, the clean-up costs of a legacy of mines are externalised to future generations rather than accounted for by the operating companies responsible for them.

Perhaps the case that is most emblematic of these problems is that of the Grasberg gold mine, the world's largest gold mine, in Irian Jaya, Indonesia, operated by Freeport McMoRan, a New Orleans-based company.

CASE STUDY: The Grasberg Gold Mine

PT Freeport Indonesia, the subsidiary that operates the Grasberg copper and gold mine, has been accused of environmental abuse that simply would not be brooked in developed countries, especially the dumping of 130,000 tons of waste rock (known as tailings) a day into local rivers as a means of disposal. Grasberg has also become notorious for the human rights abuses committed by the thousands of soldiers on the site who are allegedly there to protect the mine from disgruntled locals, whose home the company has dug up or on which it dumps the tailings.

Grasberg is, from an engineering standpoint, in a notoriously difficult place to mine. At 13,500 feet in the Jayawijaya Range of New Guinea, it is a demonstration of the lengths that people will go to for gold. Already the company has hewn 400 feet off this structure, a sacred mountain to the Amungme people, and when it leaves in 40 years' time, it will have created a 1,500-foot crater. Some of the difficulties may explain the environmental impact, but nothing can excuse the belligerence of the corporation to the concerns of local communities. It can only be understood as a demonstration of the racism and the double standards practised by company and state towards the local indigenous peoples.

In a retort to claims of ecological damage, the Chief Executive Officer of Freeport McMoRan, James R Moffett, told the Australian Financial Review that the environmental impact of the mine 'is like me pissing in the Arafura Sea'. And knowing full well that the Amungme considered Grasberg to be the head of their mother, in terms of the totemic landscape, he has described Grasberg as a 'volcano decapitated by nature, and we're mining the esophagus, if you will'. For Jim Bob, ravaging these peoples' mother by digging the Grasberg mine constitutes 'thrusting the spear of development into the heart of New Guinea'.

Human rights issues at Grasberg

The human rights violations perpetrated by the mining company have been well-documented. They are part and parcel of the resource development experience because the laws which, in effect, sanction such violations were designed by Suharto's New Order government to guarantee an investor like Freeport McMoRan security in its activities (Mining Law no 11/1967 and its regulations, supported by the Foreign Investment Law no 1/1967 and Domestic Investment Law no 6/1968 and its implementing regulations).

While such a set-up is not unusual in some Third World countries, in the Indonesian context especially, it has made operating companies privy to a number of rights which are designed to facilitate profitable outcomes for the company and the regime through the revenue and tax arrangements. In the case of Grasberg, these laws also benefit the Suharto family which has invested heavily in PT Freeport Indonesia.

These special rights, combined with the full support of the state and its security apparatus, have opened the floodgates for the human rights violations perpetrated by the company or the government on the communities living around their operations. For the communities living around PT Freeport's Grasberg mine, this cooperative arrangement has been a 'truly risky business' (see a recent report published by Project Underground called 'Risky Business - An Independent Annual Report on PT Freeport Indonesia').

In general, human rights violations at the mine have included:

  • Violation of the Right to Self-Determination

Traditional land rights held by individuals, families or a tribe are not recognised as these are extinguished by the mining company's title. As a result, the basis of the indigenous people's social organisation is denied (this despite the January Agreement of 1974 between PT Freeport and the Amungme).

  • Violation of the Right to Life

The conflict over limited land and resources between tribes competing for land, has been exacerbated now that the mine has acquired so much territory. People die as a result of this fighting , as a result of security forces' abuse and may potentially die as a result of the environmental health impacts of mining.

The OPIC Decision

IN response to the US Federal Government Overseas Private Investment Corporation's cancellation in October 1995 of PT Freeport's political risk insurance on environmental grounds, the parent company, Freeport McMoRan, launched an expensive lobbying and legal campaign against OPIC's decision. It enlisted former US Secretary of State, Henry Kissinger (a director of Freeport McMoRan), and former CIA director, James Woolsey, as formidable apologists.

Kissinger and others sought to intimidate other OPIC customers, threatened to lobby the US Congress to cut OPIC funding, and even tried (unsuccessfully) to pressure the US government to cut its funding to the environmental organisation, WALHI, which had been the first Indonesian NGO to raise public concern about the environmental impact of the mine. Louisiana politicians, Democrat Senator John Breaux and Republican Representative Billy Tauzin - who had each received major campaign contributions from Freeport McMoRan - were amongst the most vocal critics of OPIC. With the cost to OPIC of the dispute estimated at between $100,000 and $200,000 a month in legal fees, the agency subsequently reinstated the insurance for a limited period of six months, in exchange for a commitment by the company to set up a $100-million trust fund to remediate the site when the mine is closed.

Nevertheless, in February 1997, Indonesia's Environment Minister, Sarwono Kusumaatmaja, accused PT Freeport of carelessness and negligence in its management of tailings, declaring that the company's mistakes made it difficult for it to repair its reputation.

  • Disappearances and Arbitrary Arrests

This has occurred within PT Freeport's concession and sphere of influence with disturbing frequency, through the agency of the state apparatus . Other actions by security forces have involved violation of the rights to a presumption of innocence and fair trial, and, at times, the right to peaceful assembly and freedom of expression.

  • Violation of the Right to be Free from Fear

Stigmatisation with political labels such as GPK or OPM directed at community members living around the Grasberg mine has created an atmosphere of fear and anxiety. Even alleged association with these organisations can lead to persecution.

  • Violation of the Right to Freedom from Torture and Cruel, Inhuman Treatment

A number of arrests followed by torture and degrading treatment causing physical and mental harm have taken place at Grasberg. While these are said to be for reasons of maintaining social stability, it is clear that this violent approach is used to secure the asset - Grasberg.

  • Violation of the Right to Subsistence

At Grasberg, violation of this right is systematically perpetrated, for example, against the downstream subsistence agriculturists, whose land is now flooded with tailings.

  • Violation of the Right to an Adequate Standard of Living and Health

Forced removal, eviction and appropriation of land have taken place, adversely affecting the people's previously adequate standard of living, by depriving them of their land. The environmental pollution and destruction has also violated their right to health.

  • Violation of Children's Right to Protection

The conduct of security personnel implementing forced removal or penertiban (restoration of order) at Grasberg frequently results in an abuse of this right. Great trauma is visited upon children growing up in these conditions.

Caught red-handed exploring in a National Park

SUSPICIONS that PT Freeport is operating in Lorentz National Park have recently been confirmed through an extract from the Freeport Contract of Work. This previously unreleased document clearly confirms the conflicts between the mining concessions and the National Park. The contract states:

'Within (Freeport) Contract Area B, the only existing Nature Reserves are Lorentz Nature Reserve (i.e., the National Park) and the Memberamo Nature Reserve'.

Under Indonesian law, mining in a National Park is illegal. But given that acid mine drainage from the tailings deposition area may destroy the watershed of Lorentz anyway, PT Freeport could be considering this as another acceptable sacrifice to its lust for gold.

Environmental problems at Grasberg

Apart from the problems faced by the Amungme, it is clear that the downstream community, a tribe known as the Komoro, has a lot to complain about, with the death of a substantial tract of rainforest in the lowlands below the mine where the tailings have been dumped. (This rock waste is transported mostly by the Ajkwa River.) Currently, the company admits that 30 square kilometres of forest is dead, and over the life of the mine, expects the destruction to spread to at least 130 square kilometres. All of this was once the fertile garden of a clan of Komoro people, who have been forcibly relocated to make way for the mine's needs on several occasions. But it is not only the Komoro who claim PT Freeport is killing their forest.

US Federal Government consultants, working for the Overseas Private Investment Corporation which held a political risk insurance policy for PT Freeport, made detailed assessments of the mine in 1995. They stated that PT Freeport's 'tailings management and disposal practices have severely degraded the rainforests surrounding the Ajkwa and Minajerwi Rivers' and in addition, 'the Project ...continues to pose unreasonable or major environmental, health, or safety hazards' for 'the rivers,...the surrounding terrestrial ecosystem and the local inhabitants'. As a result, OPIC cancelled its guarantee for the Grasberg mine.

The way this devastation occurred is a warning to other nations willing to permit riverine tailings disposal, despite the fact that it is known to destroy watersheds in the long run and has been banned in the First World for at least 15 years. In 1990, there was a blockage of the Ajkwa River, caused by the sediment being dumped at Grasberg, which changed its course and caused it to sheet over into the neighbouring Minajerwi River . The wastes have basically created an artificial floodplain, and caused widespread flooding of surrounding rainforests and destruction of the river ecology. The death of 30 square kilometres of forest is most likely due to the combined effects of copper mobilisation , acid mine drainage and the smothering of tree roots with anaerobic muds.

PT Freeport has built 'levees' on either side of the Ajkwa River to prevent lateral transport of tailings, but damage to this ecosystem is already irreparable. Apart from the tailings deposition and exaggerated braiding of the Ajkwa River, other river courses changed by the mine include those of the Pika, Uamiau and Aimua, according to an expert from the Indonesian Ministry for the Population and Environment. On the basis of a comparison of the conditions below Grasberg with an analogous situation on the Ok Tedi River in Papua New Guinea, it seems unlikely that these forest areas will recover for decades.

Already the river water is undrinkable because of the high silt levels. It probably also contains a number of metals at toxic levels, especially copper. PT Freeport and the Indonesian military do not allow independent monitoring of the river water quality, as the author knows from first hand experience, having been deported for trying to ship water samples to the US in 1997. However, even subcontractors of PT Freeport working for the company's lab have released evidence that poisons, such as mercury for example, exist in these waters at four times the level considered safe for human consumption.

Worse is yet to come

Through a chemical weathering process by which sulphites in the tailings are exposed to air and water, the so-called Ajkwa Deposition Area (the area surrounded by the massive corporate-made levees) could become a perpetual pollution machine, slowly leaching sulphuric acid into the ecosystem. Acid mine drainage has already been recorded within the main waste-rock dump, and is likely to accelerate. As a result of this time-bomb of acid mine drainage, the worst impact of PT Freeport's operations is yet to be felt. Right now, this process has been slowed down by the presence of natural limestone deposits, but their capacity to neutralise the acid will soon run out due to the finite chemical reaction between them.

The potential effects of acid mine drainage are devastating. They include destroying the ecology of entire river systems, both by raising acidity to dangerous levels and by releasing dissolved heavy metals into the river system. The altered pH levels in the Ajkwa River have already restricted the growth of microbial benthic organisms - a prime food source at the bottom of the food chain . This acidic environment will cause associated metals such as copper, mercury and arsenic to come out of the rock in the leachate and enter the water table and the surrounding environment. Once acid mine generation begins around the Ajkwa Deposition Area, the accumulated toxic substances could spread through the water table and cause the biological death of much of the region, including the Lorentz National Park, located just a few miles eastward.

A planned expansion, which Rio Tinto is funding, by PT Freeport to a level that would require dumping 285,000 tons of tailings a day ensures that Grasberg's already deleterious impacts on the environment will worsen. The site for further tailings disposal has not yet been finalised but options include damming a local river valley for tailings storage, and piping tailings to the Arafura Sea or to the north for submarine disposal offshore in Cenderawasih Bay. All of this threatens to compound the environmental toll PT Freeport has already exacted on the region.

The good news

The Amungme and Komoro people at Grasberg, and other communities from the Third World hit by unscrupulous mining operators, are fighting back. In the case of Freeport McMoRan, because of the difficulty of securing justice in Indonesia, the local leadership has sued the company in US courts for human rights and environmental damage for claims totalling $6 billion. While CEO Moffett tried to dismiss this case as a lawsuit which US courts would not consider (rather than fight it on its merits), the contrary view has been expressed by two judges in the Louisiana State Courts. Jim Bob now faces the possibility of a jury trial, and was recently subpoenaed to explain his company's part in the violent human rights violations documented at Grasberg.

When BHP, an Australian mining company operating the Ok Tedi copper and gold mine in Papua New Guinea, was faced with the prospect of a similarly embarrassing court case, it decided to settle out-of-court with 15,000 litigants from the downstream community. The agreement it reached in 1996 after fighting the suit for two years (which claimed environmental damages in a Victorian court) cost it at least $100 million in a package of compensation and clean-up commitments it made to the Ok Tedi landowners. While this out-of-court settlement is not a perfect solution, it has shown that companies from the North may be held accountable for their abuses in the South.

This victory over BHP also galvanised another struggle across the planet against the same company. On Dominica, the nature island of the Caribbean, BHP had discovered a potential copper deposit and this led to plans to excavate one-tenth of the land surface of this island nation. The community did not want it to do so, but did not really know how to stop it. On hearing of the fight of the Ok Tedi landowners against BHP, the community got organised locally with education campaigns (using the Ok Tedi story as an example) and petition drives against such a mine on Dominica. It also networked its cause globally until allies in Australia staged a protest at a BHP shareholders' meeting in October 1996, demanding the company abandon this plan. By April of 1997, it had done so.

Moving examples of success by well-organised communities in the South resisting abuse by mining interests and working with allies in the North for corporate accountability abound. In the long run, much as the world rainforest movement has done, solutions will have to be sought through developing alternatives and efficiencies in modern materials production, as well as fighting back, mine by mine. (Third World Resurgence No. 93, May 1998)

Danny Kennedy is the Director of Project Underground and a long-standing activist working on international issues, especially those surrounding the environment, development and multinational corporations.

Project Underground exists as a vehicle to support people threatened by the mining and oil industries. Towards this end, it promotes networking among communities struggling in resistance to the problems created by the industries-problems mostly faced by people in the Third World but also notably by indigenous peoples in so-called developed nations-and raises awareness of these struggles amonst the consumer economies of the world. The contact address is : 7847 Berkeley Way, Berkeley CA 94703, USA; tel: 1-510-705-8981; fax: 1-510-705-8983; email: Project or go to