Indonesia Case Study on Freeport Copper Mine Project

Posted: August 27th, 2021

Indonesia Case Study on Freeport Copper Mine Project

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Indonesia Case Study on Freeport Copper Mine Project

            Indonesia case study on Freeport, copper mine project, offers students with an understanding of how large and complex management project necessitates the applications of multi-dimensional principles of industrial ecology.The large-scale project requires enhanced focus on addressing social pressing conflicts that surround both licensed and artisanal mining activities in West Papua, Indonesia. Therefore, students have to understand that such projects require consulting engineers who can investigate and address challenges that involves stakeholders’ bargain with the government on a proper policy that encourages licensed mining activity while discouraging illegal mining.

Situation Assessment

            With Indonesia’s endowment in terms of large reserves of coal and minerals like copper, gold, molybdenum, the country’s GDP has significantly improved due to successive mining activities (Resosudarmo & Resosudarmo, 2009). Unfortunately, mining seems the cause of many conflicts that stem directly from the Indonesian government’s uncertainties that governs policy and regulations regarding land use and property rights. Moreover, the current factual assessment entails illegal artisanal mining activity that has interfered with the legal operations of Freeport McMoran Copper & Gold, Inc (FCX) (Resosudarmo & Resosudarmo, 2009). Although FCX is regarded as the second-largest copper producer globally, the company has recorded massive production shortfalls in recent years because it shifted its mining activity from open pit to underground. In this type of mining, most local people have experienced lay-offs since they do not have the industrial expertise and experiences associated with underground mining (Resosudarmo & Resosudarmo, 2009). Subsequently, there have been a series of union strikes surrounding the company’s incapacity to resolve the local people’s pressing social problems (Resosudarmo & Resosudarmo, 2009). In the end, the value of the company’s licensed stock has fluctuated consistently with signals of lower figures. 

           Indonesia’s case study on copper and gold mining faces many challenges, namely artisanal mining activity and the government’s uncertain reforms and policy on land use and property rights. Precisely, the challenge in the Indonesian decentralized structure of government has created pores in the country’s regulatory property rights and land use (Resosudarmo & Resosudarmo, 2009). In turn, it has fueled social tensions arising between the intervention of both military and police in artisanal mining activity. As a result, regulation oversight wars arising from the two government agencies have continued to worsen the local people’s livelihoods because a majority of the people experience police brutality when they engage in artisanal mining (Resosudarmo & Resosudarmo, 2009). Besides, artisanal mining activity, which entirely happens across Heavy Equipment Access Tunnels (HEAT), has further deteriorated the state of the country’s rehabilitation and conservation reform across Lorentz World Heritage Center (Perlez & Bonner, 2005). Consequently, illegal mining, which occurs on a small-scale, has continuously exploited the waters, lands, and natural riches in West Papua District, leading to environmental degradation and massive pollution.

In eventuality, the consulting engineers need to consult with both the relevant Indonesian authorities about property rights regulatory policy, which would enable the company to have actionable rights on its licensed mining activity. Such a measure would make the local people engaged with FCX’s mining operation through employment and, therefore, cease undertaking illegal mining (Perlez & Bonner, 2005). Equally, the engineers should increase their production volumes of copper by advising the company to initiate training programs on imparting the locals with knowledge and expertise in underground mining. Therefore, this strategy would help the company discourage the locals from engaging in artisanal mining that has occasionally created a wide rift in social conflicts between the police and the military (Perlez & Bonner, 2005). Finally, consulting engineers need to engage with the environmentalists on enhancing the conservation of Lorentz World Heritage and rehabilitation mechanisms on the degraded ground surfaces by open-pit mining (Perlez & Bonner, 2005). Thus, their actions would help minimize environmental degradation and pollution and associated human rights movements, leading to improved livelihoods for the local people. 

Discussion on the ESEM Principles of Industrial Ecology

            The management and governance of extensive, complex industrial necessitate the employment of multi-dimensional dialogue between the Indonesian government agencies like the military and police—the multi-dimensional dialogue aimed at streamlining the political instability surrounding the mining activities’ operationalization Papua. Therefore, the local community and the company would benefit from the application of this principle as it seeks to improve the working dynamics of FCX, Inc., coupled with the general welfares of the local people. More so, there is a need to integrate advanced technology to supplement the company’s production volumes. Therefore, there is a need touse large sag mill plants that would process more than 250,000 tons from the 700,000 tons of transported copper from Grasberg mines (Freeport McMoran Copper & Gold, n.d). The application of this technology principle is relevant, stirring high production volumes that would further cause the company to employ more workers to the mines. As a result, there would be an increased contribution to the country’s GDP due to social amenities and incomes. Furthermore, the management of FCX Company should integrate both the principles of transparent governance and adaptive management processes via constant learning of the failed strategies. Adaptive management causes the company’s top leadership to learn about the root cause analysis of operational mining activity’s environmental and social impacts. Hence, through open and transparent governance, the company can advance partnerships with both the Indonesian government to plan strategically for improving the rehabilitation and conservation process of the Grasberg environment.

Lessons Learned among Engineering Students

            Engineering students need to learn about the pressing challenges that would occlude the company’s management from accomplishing its long-term mining and investment project in Grasberg mines. They need to understand the root cause analysis of such problems, ranging from executive management’s failure to advance transparent governance to the country’s political feuds surrounding the mining activities. With such comprehension of the pressing issues, the engineering students can now learn how to effectively apply the most relevant industrial ecology principles to resolve problems. For example, students need to learn how to apply advanced technology to promote increased production volumes effectively. This is in a bid to make Freeport McMoran Copper & Gold, Inc (FCX) record high sales revenue that would possibly translate to high GDP contributions to the Indonesian government (Freeport McMoran Copper & Gold, n.d). Similarly, engineering students need to comprehend how integrating the adaptive management process would revolutionize environmental rehabilitation and conservatory reforms. As a student, there is a need to apply the ESEM expects emergence principle that ensures reduced instances of human rightmovements being perpetrated by both the police and military violations. Therefore, students learn that protection of artisanal miningby the police and military is responsible for creating social conflicts. Finally, engineering studentsshouldconcentrate on integrating the adaptive management process to reinforce the proceeds of long-term investment.

References

Freeport McMoran Copper & Gold. (n.d.). PT Freeport, Indonesia. [Arizona State University – Fultons School of Engineering PowerPoint Slides]. Slideshare.

Perlez, J., & Bonner, R. (2005, December 27). “Below a mountain of wealth, a river of waste.” The New York Times. Retrieved from https://www.nytimes.com/2005/12/27/world/asia/below-a-mountain-of-wealth-a-river-of-waste.html

Resosudarmo, B., & Resosudarmo, A. I. (2009). “Socioeconomic conflicts in Indonesia’s mining industry.” Exploiting Natural Resources: Growth, Instability, and Conflict in Middle East and Asia, 1(1), 1-22.