Monday 28th May, 2018

Grasberg facing tailings battle

Grasberg copper mine. Photo: Freeport-McMoRan
Grasberg copper mine. Photo: Freeport-McMoRan

The disposal of copper tailings into Papuan rivers by partners Rio Tinto and Freeport-McMoRan has again come under fire, with the Indonesian Government reportedly demanding the controversial practice be all-but stopped.

Freeport-McMoRan chief executive officer Richard Adkerson told investors this week the Indonesian Government is asking for unreasonable amendments to the tailings policy at its massive Grasberg copper mine in Indonesia’s Papua province.

“We had an agreement with the government that over the life of the mine, we would retain 50% of the tailings on land,” Adkerson was quoted by Reuters.

“They’re now saying it should be 95%, which just cannot be done … it is not achievable … it cannot be done within 6 months, 24 months, 5 years. This is so far out of bounds it cannot be done.”

Adkerson described the demands as “disappointing” and “shocking,” but said his company would work with the government to find a viable solution.

“We continue to engage in negotiations with the Indonesian government to restore long-term stability for our Grasberg operations and look forward to reaching a mutually positive resolution,” he said in his first-quarter statement on April 24.

Rio Tinto is partnered with Freeport-McMoRan on the project, with agreements in place to receive 40% of copper production per year, once the mine is above a certain threshold until 2021, at which point that threshold will be removed.

Rio has come under fire in the past for Grasberg’s dumping of tailings into Papua’s rivers. In 2008 the Norwegian sovereign wealth fund dumped its ownership stake in Rio over the project.

Rio could be set to sell its stake in Grasberg, however, with the Indonesian Government reportedly looking to buy at least 51% of the mine.

Adkerson reportedly indicated this week to reporters that such a transaction could take place soon.

“The negotiations between our current partner and our future partner … those negotiations have started. You have a parent, a willing seller … the president of Indonesia remains focused on seeing this deal through. That was expressed to me by government officials.”