Tuesday, August 29, 2017

1) Freeport agrees to 51% divestment, other terms: CEO


2) Korindo strikes back against NGO campaign.

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1) Freeport agrees to 51% divestment, other terms: CEO
Fedina S. Sundaryani The Jakarta Post
Jakarta | Tue, August 29, 2017 | 01:31 pm

Gold and copper miner PT Freeport Indonesia (PTFI) has finally agreed to divest 51 percent of its shares and to other terms related to its contractual extension, after a long tug-of-war negotiation with the Indonesian government.
Freeport Indonesia, a subsidiary of US mining giant Freeport McMoRan, also agreed to convert its contract of work (CoW) into a Special Mining License (IUPK), build a smelter within the next five years and increase its contribution to state revenues from its Grasberg mine in Papua, announced a government-Freeport joint press conference on Tuesday.
In return, Freeport’s contract, originally set to expire in 2021, will be extended to 2041 under the new terms.
Freeport McMoRan CEO Richard Adkerson said the compromise with the government was essential for the firm because although the open mine reserves were depleting, his company had seen large potential in its underground mine.
PTFI plans to invest US$20 billion over the next two decades, with $17 billion to be invested by 2031, he added.
“To reach our objectives meant that we have to be willing to cooperate and build a smelter and divest 51 percent. We are working cooperatively with the government to achieve the objectives,” Adkerson said during the press conference.
“We have agreed to increase Indonesian ownership from 9.36 percent to 51 percent over time in a way that compensates the fair market value. We still have work to do to reach the compromise,” he said. (bbn)
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2) Korindo strikes back against NGO campaign.


The outlook for the plantation industry in Papua has started to show signs of change recently, both because of a sustainability drive in the palm oil supply chain, which has forced many companies to suspend deforestation plans, and better-informed indigenous communities increasingly opposing companies’ attempts to acquire their land. Not all companies are taking these challenges lying down, however.
Korindo is a Korean company which has dominated the Digoel valley in Merauke and Boven Digoel for decades through its logging concessions which supply its plywood factory in Asiki and several oil palm plantations, which have expanded rapidly since 2012. Alarmed by the rate of deforestation it was noticing on satellite images, Mighty Earth, a US-based NGO, produced a report intended to spark a campaign against Korindo. The first target was palm oil traders with sustainability commitments, who were asked to refrain from buying Korindo’s palm oil, citing issues such as deforestation, evidence of illegal burning and abuse of indigenous people’s rights in Papua and on the island of Halmahera, Maluku.
Korindo responded to the pressure by publicly declaring a moratorium on new land-clearing to ensure it didn’t lose customers for its palm oil, but promptly violated this by continuing to clear primary rainforest in its PT Papua Agro Lestari concession. No longer trusting the company to keep its word, Mighty stepped up the pressure, focussing on Korindo’s other business interests, including its wind turbine business in the US. They also successfully persuaded the FSC to investigate Korindo’s certification for its plywood products, by pointing out that by clearing primary forest, the company was violating the conditions of the certification. Most recently they have focussed on pressuring Samsung to abandon a recently-announced joint venture with Korindo.
It seems like the combination of challenges to its various business interests has hurt Korindo significantly. Apparently determined to continue clearing forest, the company has gone on a major propaganda drive, and its strategy has been to portray the NGO as an obstacle to community development. The company’s main argument has focussed on one of the plantations, PT Dongin Prabhawa, on the border of Merauke and Mappi Regencies. Korindo is claiming that it has to continue to deforest to meet its commitment to provide 20% of the plantation area to the local people in the form of small-holdings, known as a plasma scheme, which is an obligation for all plantation companies under Indonesian law.
On 24th July, the company organised a ‘stakeholder meeting’ in Jakarta. However the only stakeholders present were those who supported the company. The company brought several indigenous members of the co-operatives it had formed to manage these plasma schemes to speak at the meeting. Other local people had signed statements opposing what they described as the ‘moratorium from the LSM’. The company also brought the Bupatis of both Merauke and Boven Digoel to the meeting, who spoke in favour of the scheme.
In a sign that this meeting may have been part of a wider backlash against the moves by several major palm oil traders to eliminate deforestation from their supply chain, other speakers included Firman Soebagyo, a member of parliament who is head of the working committee preparing a new law on oil palm plantations, a law which NGOs judge as superfluous and pandering to oil palm industry interests. Nyoto Santoso also spoke, a professor from Bogor Agricultural University who has also recently had to deal with severe criticism from NGOs – they have revealed that he has a history of writing partial, incomplete, biassed or even downright false environmental and social impact assessments, including in Papua for the Noble and Goodhope groups.
While it is totally reasonable for local people to demand the 20% smallholding area they have been promised, the company is not being entirely honest by portraying this as the main issue at stake here. There is no reason, other than possibly the cost, why these schemes could not be developed in areas already cleared. The reason why Korindo felt forced to declare a moratorium is because major palm oil traders have issued policies declaring they will not buy from companies which deforest.
But is this really a clash between the global agenda to halt tropical deforestation and a local desire for economic development? It’s not as simple as that. Another serious problem with Korindo’s operations was highlighted in a press conference held in Merauke on 9th August, the Day of the World’s Indigenous Peoples. Villagers from Nakias, whose customary lands are part of PT Dongin Prabhawa’s concession, alleged that they had never given the company permission to use the land, and that the people who had received compensation money from the company were not the real customary landowners. Korindo did not carry out a participative process to ensure there was consensus on customary land boundaries, or that there was agreement between all members of landowning clans, and this has caused a long running conflict between the indigenous people living in the area.
The upshot is that the land Korindo wants to use for its plasma programme is actually still subject to a land dispute. Opponents of the plantation feel that Korindo is creating divisions by persuading certain individuals to support its side. For example, Melkior Wayoken, the elected village head of Nakias village, alleged that a villager masquerading as the village head had stolen the village seal to sign a document supporting Korindo, and then joined the company’s trip to Jakarta to speak on its behalf.
Linus Omba also spoke on behalf of the Wambon Tekamerob indigenous association, which represents Mandobo people living the Merauke-Boven Digoel border, near to another Korindo concession, PT Berkat Cipta Abadi, as well as Posco Daewoo’s PT Bio Inti Agrindo companies. He stated that there has also been a long running conflict between the Mandobo and Marind ethnic groups who dispute which group holds the customary rights to the land.
Outside the press conference, someone from Salamepe village explained that how company had sought to divide the clans, by choosing individuals who they thought could support them, without waiting for all the clan members to reach a consensus. These individuals were then taken to Merauke city, a day’s journey from the plantation site, to sign the land surrender documents, away from the village where other villagers might object.
These conflicts can be very serious. People in Merauke do not tend to engage in physical violence, but have a strong belief in black magic known locally as suanggi, and some aspects of customary law require the use of such curses. In PT Dongin Prabhawa’s area several local sources have claimed that dozens of people have died as a result of this, but it has not been documented independently, maybe because black magic is not regarded as credible outside indigenous societies. After people started dying, other clan elders felt they had no choice but to sign, to calm the threat of black magic. Most of the elders who signed the land release certificate are now dead, as are some opponents of the company. No independent investigation into these deaths has taken place, and the cultural and spiritual impact of plantation development in Merauke has never been seriously studied by any outside party, even though unexplained deaths have occurred around many new plantations.
Faced with such conflicts, a responsible company would aim to resolve the conflict first, before bringing a group of supporters to lobby on its behalf in Jakarta, a move which is likely to aggravate existing community tensions. However, Korindo has shown no sign of even acknowledging that these conflicts exist. It has also not made public the indigenous land ownership maps which it based its compensation on.
A second ‘stakeholder dialogue’ was organised in the Swissbel Hotel in Merauke on 15th August. Although is meeting also appeared to have been initiated by Korindo, the more accessible location meant that many different stakeholders were able to attend and a broader range of views were represented. Those local residents who felt cheated out of their land had a chance to speak, as did those who wanted their plasma to go ahead. Speakers from the national human rights commission, the Catholic Justice and Peace Secretariat (SKP) and the Regency-level Indigenous Association (LMA) confirmed that there were serious indigenous rights issues that needed to be addressed.
No national politicians were present at this second meeting, but high-ranking officials at the provincial level spoke about their visions of development for Southern Papua, with large plantations as a major component. Most spoke fairly generally, without demonstrating much knowledge of the specific conflicts around Korindo’s plantations. A Korindo spokesperson continued the company’s attempt to portray NGOs as anti-smallholder, and did not acknowledge the complaints about the conflict, even stating as the meeting closed “Korindo feels that we don’t have a problem – maybe there is a difference with the community”.
After almost four hours, many voices had been heard, but time didn’t allow for debate on any of the range of points raised. The discussion’s moderator, Agus Sumule, made his own summary of the meeting, which he condensed into five points:
1. The local governments in Merauke , Boven Digoel and Mappi should take immediate action to resolve issues around administrative and customary land borders.
2. Companies should take immediate action to resolve the problems involving indigenous people in Merauke and Boven Digoel
3. The local government should issue local regulations concerning indigenous land and develop plasma cooperatives within 20% of the HGU area (i.e. the core estate)
4. Government, NGOs and stakeholders (companies and customary rights holders) to engage in intensive dialogue.
5. Investment must respect indigenous land use structures and the environment and be in accordance with the law.
The recommendation for further dialogue appeared to attract murmurs of agreement from different parties, however the process has illustrated a very fundamental reappraisal is necessary to explore if it could ever be possible that large-scale plantation development represents a positive change for indigenous peoples.
This is indeed a challenge which local stakeholders need to explore, but would be a long process involving thorough investigation of the hidden impacts of large-scale development, a strong indigenous movement that can define its own agenda, and a government willing to consider a broader range of development options. It is doubtful that company-sponsored ‘stakeholder dialogues’ are the way to go about it.
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