Sunday, December 23, 2018

1) Indonesian military describes reports of chemical weapon attacks on West Papuans as 'fake news'

2) Indonesia denies use of chemical weapons in Papua

3) World’s biggest gold mine nationalized in Indonesia
4) Government hopes larger state revenues from Freeport

5) Freeport set to have smelter operational in five years

1) Indonesian military describes reports of chemical weapon attacks on West Papuans as 'fake news'
By Indonesia correspondent David Lipson Updated about 5 hours ago
Indonesia's Military has dismissed "ridiculous" claims it used a banned chemical weapon to subdue separatist forces in West Papua.

Key points:

  • Reports claim white phosphorus grenades were used by the Indonesian army 
  • But the military denies the allegations, labelling the reports as propaganda 
  • Claims come after the deaths of construction workers who were attacked while building a road in remote Nduga

Photos published by The Saturday Paper on Saturday show a man with a gaping wound to his leg and severe burns.
The report included claims the wounds may have been inflicted by white phosphorous, a chemical incendiary that cannot be extinguished and causes horrific injuries.
In a statement provided to the ABC by Papua Military Command spokesman Colonel Mumahammad Aidi, Indonesia dismissed the reports as "propaganda" and "fake news".
The statement said white phosphorous bombs "cannot be carried by a personnel-carrier sized helicopter" and must be fired from "tens or hundreds of kilometres away, or dropped from the air by a bomber".
It said the Indonesian Military (TNI) does not operate fighter aircraft, let alone bombers.
"If the TNI was using phosphorous bombs, the Nduga District would have been wiped out. All human beings and animals there would have been wiped out," the statement said.
This cheap propaganda has been deliberately produced by the KKSB [Armed Civilian Group] as a deliberate disguise, to occupy the public with hoaxes and propaganda, so people will forget about the fact that this group [has killed] 28 civilians."
White phosphorus is used in grenades, mortar shells, and artillery shells to mark targets, provide smokescreens, and as an incendiary, according to a fact sheet from the Federation of American Scientists (FAS).
Incendiary weapons, including white phosphorus, are prohibited for use against civilian populations under Protocol III of the Convention on Certain Conventional Weapons.
In recent weeks, Indonesian soldiers have been hunting separatist rebels accused of killing at least 17 construction workers, who were attacked while building a road through the remote region of Nduga.
The Indonesian military said the operation was merely aimed at recovering the bodies of the slain workers.
Papuan Governor Lukas Enembe has called for an end to the operation, saying "this is enough".
"I, as the Governor of Papua, am asking President Jokowi [Joko Widodo] to withdraw all the troops in Nduga," he said.
Indonesia's police chief in Papua, Inspector General Martuani Sormin, told the ABC: "The TNI and police does not use phosphorus bombs or any sort of [dropped] bombs."
"Australia has a motive to make a bad impression [of Indonesia] before the international community," he said. 
When asked if the security operation would be suspended during Christmas, as requested by Papuan leaders, he responded:
"No-one can stop the duty of the police and TNI to guard and secure the country, including in Mbua and Nduga."
In an emailed statement, a spokesman for the Department of Foreign Affairs and Trade said the Government is aware of continuing reports of violence in Nduga, including "unverified allegations concerning the use of 'phosphorous projectiles'."
"The Australian Government condemns all violence in Papua, affecting civilians and authorities alike," the spokesman said.
"We continue to monitor the situation, including through our diplomatic missions in Indonesia."

2) Indonesia denies use of chemical weapons in Papua

Dian Septiari The Jakarta Post
Jakarta   /   Sun, December 23, 2018   /   05:01 pm
The government has denied a report in The Saturday Paper, an Australian weekly, about the alleged use of chemical weapons in a military operation in Nduga, Papua, calling it “totally baseless, nonfactual and gravely misleading”.
The story was published in the middle of rising tensions between the local administration and central government in the aftermath of attacks by separatists that led to the death of 19 PT Istaka Karya construction workers and one soldier earlier this month. 

It features a picture—supposedly taken between Dec. 4 and Dec. 15--of a villager wounded from what some claim was white phosphorus used by the Indonesian Military (TNI) in retaliation for the attacks.

“The troops were going in, heavily armed and with full air support, to teach the West Papuans a lesson. They were going in to kill,” wrote John Martinkus and Mark Davis in The Saturday Paper. They wrote at least seven civilians had died in the operation.

In its response, the Foreign Ministry said that, as a member of the Organisation for the Prohibition of Chemical Weapons (OPCW), Indonesia did not have any chemical agents listed in Schedule 1 of the Chemical Weapons Convention.

Schedule 1 substances are chemicals that can be used as chemical weapons and which have “little or no use for purposes not prohibited” under the convention, such as mustard and nerve agents. These substances may be produced for research, but production of more than 100 grams per year must be declared to the OPCW.

Chemicals that can be used as weapons or in the manufacture of weapons but have legitimate applications as well are listed in Schedule 2 (small-scale applications) and Schedule 3 (large-scale applications).
“Indonesia also imports, uses and stores Schedules 2 and 3 chemical agents for strictly peaceful purposes in supporting national industry, confirmed by no less than 19 OPCW inspections since 2004,” the Foreign Ministry said in a statement on Saturday evening.

The involvement of a military component in the operation, particularly rotary-wing aircraft, the statement continues, was "strictly as an assistance to [the] law enforcement apparatus, and not a military deployment per se in an otherwise internal security [operation]".

The government said the report had “eclipsed the real issue at hand”, which was the mass killing of 19 construction workers on Dec. 2 by the West Papua Liberation Army (TPNPB).

The attacks and the military operation that followed have resulted in high tension in the region, where Papua Governor Lukas Enembe called on President Joko “Jokowi” Widodo to withdraw the troops from Nduga regency, so that the people could celebrate Christmas in peace.

“The presence of Indonesian Army and police personnel in Nduga caused trauma to the community, resulting in them fleeing to the forest,” he said on Thursday, as reported by

In response, the Home Ministry said Lukas’ statement violated the Constitution and the Regional Administration Law.

Home Ministry spokesperson Bahtiar Baharudin said Lukas had made a “far-fetched and provocative” argument, and reminded him that, as a governor, he was the representative of the central government in the region and should support the National Police and the TNI in carrying out law enforcement efforts “and guarding every inch of [the country] against armed separatists who committed crimes against humanity.”

He added that, under the Regional Administration Law, Lukas could be dismissed if he was proven to have violated his oath as governor and disobeyed the Constitution and state law. 
Earlier, the TNI denied reports that they had used explosives in their hunt for rebels in the area.
Rev. Benny Giay, chairman of the Kemah Injili Church Sinode of Papua, confirmed that five civilians — two in Mbua and three in Yigi — had been killed when security personnel were attempting to retrieve the bodies of the construction workers.
"I'm pretty sure that [explosives] were involved. There were seven [explosions] in Yigi and five on Mount Kabo," he told The Jakarta Post last week.
The government also denied the allegation of the death of the civilians. (evi)

3) World’s biggest gold mine nationalized in Indonesia

US mining giant Freeport finally reaches terms on the state-forced divestment of the Grasberg mine, a $3.8 billion deal President Joko Widodo characterized as an 'historic moment'

It’s done. After two years of often fraught negotiations – and a last-minute environmental hiccup – the government and US mineral giant Freeport McMoRan Copper & Gold (FCX) have finally concluded an agreement effectively nationalizing Indonesia’s most prized mining asset in the mountains of easternmost Papua.
Issuing subsidiary PT Freeport Indonesia (PTFI) with a special mining permit (IUPK) to replace the firm’s current contract of work was the last step towards state-owned PT Indonesia Asahan Aluminium (Inalum) taking a 51.2% controlling interest in the Grasberg, one of the world’s most profitable gold and copper mines.

Following a well-beaten path, FCX chairman Richard Adkerson flew in from his Phoenix, Arizona, headquarters to sign off on the country’s most-watched business deal, an “historic moment” as President Joko Widodo called it, which at one point seemed destined for the arbitration court.

“Control” has always been the operative word because that’s what it means for Indonesians who believe, rightly or wrongly, Freeport always had its way with president Suharto’s New Order regime and was trying to do the same in the new post-1998 democratic era.
Haunted by its close association with Indonesia’s authoritarian past, the firm earned the title of Corporate Enemy No 1 to a point where it could do nothing right, even when its combative chairman, Jim-Bob Moffett, stepped aside three years ago.

Constantly under the critical scrutiny of human rights and environmental activists and an irrationally hostile media, some of Freeport’s Indonesian employees were even ostracized by their closest friends. It also became a target for vested interests and corrupt officials.
As much as it became an annoying distraction, Widodo was determined to deliver the Grasberg before next April’s presidential elections with rival candidate Prabowo Subianto reviving his bombastic message that Indonesia has become a slave to foreign interests.
In Indonesia’s efforts over the past decade to take ownership of all of its major mining and oil and gas assets, the goal has always been about sovereignty and national pride. Little has been said about the cost and the loss of revenues over the short and medium term.
It has now been 82 years since Dutch geologist Jean Jacques Dozy stumbled on the original Ertsberg deposit, a black promontory with tell-tale greenish coloring, while climbing Mt Carstensz, the country’s highest peak in Papua’s Central Highlands.
But it wasn’t until 1960 that Freeport geologist Forbes Wilson found Dozy’s report in a dusty Dutch archive and convinced his employers to mount an expedition into Papua’s jungled interior to confirm the rocky outcrop was in fact a huge copper deposit, lying in the shadow of a rare equatorial glacier.
Seven years later, much to Suharto’s gratitude, the then New Orleans-based company became Indonesia’s first big foreign investor, eventually exhausting the Ertsberg and then discovering the nearby Grasberg as it was preparing to pull out in 1988.

With Suharto’s downfall in 1998 came calls for the government to take a harder line with Freeport, something the firm failed to recognize until it initiated talks for a contract renewal — and discovered it had few friends left and a lot less influence in high places.
In the end, Inalum paid a bargain-basement US$3.8 billion to raise the government’s stake from 9.36% to 51.23% stake in a deal concluded last July, securing the money through a global bond issue after a consortium of 11 foreign banks backed out, reportedly because of an issue over guarantees.
Bankers believe Inalum had begun looking at a bond issue months beforehand, but president-director Budi Gunadi Sadikin explained the turn-around by noting that the syndicated loan was costlier and would have involved the payment of a principal installment.
While it may have a majority stake, just how much actual control Inalum will enjoy is still in question. The American parent will continue to run the mining operation itself, now in the throes of conversion from an open pit to a vast underground venture that will still be producing late into the century.
But little has been said about publicly about who will wield managerial control, once described by Adkerson as a deal-breaker because of concerns over potential breaches of the Foreign Corrupt Practices Act, which applies to all US firms abroad.
In what appears to be a favored outcome for Freeport’s parent, former PTFI executive director Tony Wenas becomes president-director at the head of a board which also comprises current members Achmad Ardianto and Robert Schroeder and PTFI’s chief operating officer Mark Johnson.
Two other Indonesians on the board are Orias Petrus Moedak, Inalum’s chief financial officer, and Jenpino Ngabdi, the well-regarded president director of state-owned Danareksa Securities, who is wired into the market network of investment and corporate bankers.
The new board of commissioners includes Adkerson, FCX chief financial officer Kathleen Quirk, ex-PTFI boss Adrianto Machribie, former Anti-Corruption Commission (KPK) vice-chairman Amien Sunaryadi, now also chairman of oil and gas regulator SKK Migas, and Hinsa Siburian, a retired general and former head of the Papua regional command.
Siburian, 59, is an interesting choice given his close relations with chief maritime minister and presidential adviser Luhut Panjaitan, who took a hard line towards Freeport and at one point told this correspondent: “Why don’t we just wait till 2021 and the mine will be ours.”
Both are Indonesian Special Forces (Kopassus) officers and both are native bataks from North Sumatra. Siburian started his military career as a sergeant, before being accepted for the armed forces academy and emerging top of his class in 1986.
Now that PTFI is under effective Indonesian control, it will likely come in for close scrutiny from the tough-minded State Audit Agency (BPK), which may look askance at the annual $23 million payment made last year to the police and military guarding the mine.
Security Exchange Commission (SEC) filings show the “supplemental income” covers infrastructure costs, food, fuel, travel, vehicle repairs, community programs and other incidentals like phone cards, but the BPK will point out it is not an expense incurred by other state enterprises.
Freeport has had an Indonesian president-director since 1973, but the position had been vacant since the eighth incumbent, retired air force chief Chappy Hakim, resigned in early 2017 after only three months in the job, unable to deal with conflicted loyalties.

Others have run into problems too. The sixth president-director, respected former public works minister Rozik Soetjipto, who held the position between 2012 and 2015, became increasingly irritated at having to report to Phoenix on even minor issues.
Moffett, for his part, was annoyed at Soetjipto for failing to defend Freeport against the government in the Indonesian media, although it would have been a losing battle given the uncompromising attitude of most Indonesian journalists.
As it was, Soetjipto’s successor, former National Intelligence Agency (BIN) deputy director Maroef Sjamsoeddin, lasted barely a year after he was hand-picked by Moffett in the belief he could make things happen in getting Freeport’s contract extended beyond 2021.
He resigned in January 2017 after clandestinely taping a conversation with parliament speaker Setya Novanto and oil kingpin Riza Chalid in which the pair used the President Widodo’s name to seek a payoff for the contract renewal.
The so-called “Papa Wants Shares” scandal died away, but while Chalid emerged unscathed, Novanto was subsequently sentenced to 15 years’ imprisonment last April for taking millions of dollars in kickbacks and bribes in the roll out of the Government’s electronic identity card program.
Marouf is the younger brother of ex-deputy defense minister Sjafrie Sjamsoeddin, a partner in long-time Suharto confidante Bob Hasan’s PT Harmoni Sinergi, a company which provides catering and security services at the Grasberg mine.
Inalum’s new management will likely want to review the contracts held by Harmoni Sinergi and other firms, some also owned by political heavy-hitters, who handle about 75% of the annual US$1.35 billion in supplies that come from domestic sources.
It will also have to accept ultimate responsibility for safe-guarding the Grasberg, where armored buses still transport Freeport workers to the high-altitude Tembagapura mining camp because of frequent sniper attacks by suspected Free Papua Movement rebels.
Then there are contentious environmental issues, including the Environment Ministry’s demands that Freeport change the way it has been managing its tailings, or rock waste – something the US owners have been heavily criticized for in the past and which will now become an Inalum problem.
Raised during the final phase of the talks, it proved to be a difficult sticking point, drawing the environment and energy and mineral resources ministries into a row that caught the attention of nationalist politicians and severely tested Widodo’s patience.
Environment Minister Siti Nurbaya Bakar is a member of the ninth-ranked National Democratic Party (Nasdem) of media tycoon Surya Paloh, whose rocky relationship with Widodo threatens to sow discord into his six-party ruling coalition ahead of the elections.
In the end, the US firm agreed to pay US$31.8 million for environmental damage incurred between 2008 and 2013, a long way from the extraordinary US$13 billion the BPK initially claimed the company owed in so-called “losses to the state.”
Under its new owners, Freeport Indonesia will have to come up with an extended roadmap to improve or change the management of an eventual three billion tonnes of riverine tailings across a lowland deposition area covering 230 square kilometers.
Keeping Freeport’s house in order will remain a challenge. Only recently, the president warned Papua Governor Lukas Enembe, another Paloh ally, about allowing private interests to secure back-door control of the 10% stake the province will have in the newly-restructured venture.
It was a telling reminder of the unhappy bees who missed out on getting a share in the deal of the century and continue to circle the honey pot. It may well be that the final chapters in the rich history of the Grasberg have yet to be written.

4) Government hopes larger state revenues from Freeport

Jakarta (ANTARA News) - Finance Minister Sri Mulyani said the government hopes to earn larger state revenues from PT Freeport Indonesia after the takeover of the majority share the subsidiary of the U.S. mining giant Freeport McMoRan by the government.

The government, represented by holding of the state mining companies PT Inalum now owns 51.2 percent of Freeport Indonesia, which has large gold and copper mines in Grasberg, Papua.

The process of share divestment has been completed after Inalum fully paid the US$3.6 billion acquisition as announced by President Joko Widodo on Friday.

Inalum gave 10 percentage points of its shares to the Papua provincial government.

The Finance Minister said state revenues in taxes and non taxes would be larger regardless of changes in the prices of copper and gold.

Under the mineral and coal regulation, state revenues in taxes and non tax would larger, Sir Mulyani said here on Friday night.

"All revenues both in corporate income tax,individual income tax, value added tax, land and building tax, water and land tax, royalty, together would larger regardless of change in prices," she said.

The government adopts the nail down tax system with fixed percentage for all tax components in calculating state revenue from PT Freeport Indonesia.

"The components could be different . For each component in income tax , we use the present income tax. The corporate tax of 25 percent at present is smaller than 35 percent under the old contract of work , but the 25 percent tax is nailed won that any change in the income tax law the corporate tax would remain 25 percent,"she explained.

She said the new system gives certainty in their tax obligation, adding the same as in royalty.

"Under the scheme , there is certainty in the state revenues," she said.

Reporting by Calvin Basuki
Editing by Fardah Assegaf 
Editor: Heru Purwanto

5) Freeport set to have smelter operational in five years

Jakarta (ANTARA News) - President, Chief Executive of Freeport Mcmoran Richard Adkerson said the company is set to finish the construction of a copper smelter in Indonesia in the next five years.

"We will build smelter as expected by the President. We will start as soon as possible and to finish it in five years," Adkerson said here on Friday afternoon.

The U.S. mining giant, the parent company of PT Freeport Indonesia, has agreed to build a copper smelter with a processing capacity of 2-2.6 million tons of copper ore per year as part of the new contract of the company in Indonesia.

The smelter is to refine copper concentrate produced by PT Freeport Indonesia, which has large copper and gold mine in Grasberg Papua.

An Indonesian law regulation bans exports of unprocessed minerals that necessitates mining companies to process their mineral ore to be processed in the country.

The divestment process was completed on Friday increasing to 51.2 percent the share of the government represented by state-owned PT Inalum, the holding company for state-owned mining companies.

"The majority 51.2 percent of PT Freeport is now in the hands of PT Inalum and the price has been fully paid." President Joko Widodo (Jokowi) said when announcing the final phase of the divestment process on Friday.

Jokowi described that day a historic moment after PT Freeport operates in Indonesia as from 1973.

Inalum has already held 9.36 percent share of Freeport and it had to pay US$3.85 billion to raise the stake to 51.2 percent.

Adkerson said the cooperation would have positive impact on both Indonesia and Freeport.

"I thank the government of Indonesia and will seek to meet the request of the President and now we could resume business with legal and fiscal certainty until 2041," he said.

He said Freeport will start open mining and will invest US$20 billion in the Grasberg copper and gold mine until 2041, the end of Freeport contract in Papua.

The government granted 10 percentage point of Inalum`s share in PT Freeport Indonesia to Papua provincial administration.

Reporting by Bayu Prasetyo
Editing by Fardah Assegaf 
Editor: Heru Purwanto

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