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Freeport divestment through IPO only benefits wealthy businessmen

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Freeport’s underground mine. – Dok. PTFI

Jayapura, Jubi – A statement by the former Indonesian Minister of Energy and Mineral Resources Sudirman Said to suggest IPO mechanism to be used in divestment scheme of PT Freeport Indonesia (PTFI) is not right conduct.

A researcher from Alpha Research Database and author of ‘Freeport: Bisnis Orang Kuat Vs Kedaulatan Negara’ Ferdy Hasiman said IPO mechanism has never recommended by Law No.4/2009 on Mineral and Coal.

“If Freeport shares released through IPO mechanism in the capital market, it can only benefit rich businessmen, while the capital market players are only 0.6% of the Indonesian population. And also, many investors who buy shares in the capital market are foreign investors. That’s why if a crisis hits Indonesia, there might be a massive capital outflow,” said Ferdy.

Furthermore, he continued that through IPO mechanism, Freeport shares would be a target of local wealthy businessmen and politicians. For instance, he said, the release of Garuda Indonesia shares. In this case, former Treasurer of Democrat Party M. Nazarudin bought 400 million shares or equal with IDR 300 billion through his five companies, while a prominent businessman bought 351.6 million shares (10% of GIA shares) after gaining a loan from Credit Suisse.

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“This fact showed that the divestment option through IPO for PTFI is not a smart solution, but an instant one,” said Ferdy.

Moreover, when he was a minister, Sudirman Said seemed not able to provide a better solution compared to his predecessors in divesting mine shares. Therefore, Freeport IPO would be a mining landfill of some politicians and business groups for corruption and collusion practices. Besides this, Sudirman also responded to the contract extension and the construction of smelter.

Regarding Freeport’s contract extension to 2041, this is a business decision. Without this, Freeport would not invest in the underground mine which valued up to US$17 billion and the construction of smelter would not be started.

“So, the political reasoning would never able to understand why the government should extend the contract until 2041. The corporate mechanism taken by the government to take over Freeport shares is the most elegant move” said Ferdy.

“Sudirman might try asking the investors who want to build a copper smelter of US$2.3 billion values if their permit is not going to extend? How could they think reversely: build the smelter then extend the contract later. No wonder if negotiation related to its divestment with Freeport were not working,” explained Ferdy.

The Government of Indonesia through its holding company Inalum now officially holds 51.23% of Freeport shares at the end of the last year. The government then issued a Special Mining Business License (IUPK) with some notes that the Freeport’s contract would extend up to 2041, it’s obliged to build a copper smelter and the government guarantee the certainty of fiscal and investment for Freeport.

The government’s decision to extend the contract until 2041 might consider right because Inalum still requires Freeport to manage the high-tech and sophisticated infrastructure of the underground mine. The block caving method used in Grasberg’s underground mine for some mining geologists is indeed high risk and require considerable investment funds.

Many world-class geologists even said that the underground mine operation in Grasberg could not stop. If it does, it might raise the ground voltage that possibly causes the tunnel to collapse. That’s why Freeport has to build thousands of kilometres underground tunnels. If the underground mine not operates, it might cause a massive loss of up to US$5-10 billion. (NAD)

Reporter: Victor Mambor

Editor: Pipit Maizier

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Analysis

Who actually benefits from the Trans Papua Highway?

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President Widodo’s entourage visiting Trans Papua Highway construction (Biro Pers)

Papua, JubiIndonesian Institute of Science (LIPI) researcher Cahyo Pamungkas says that the Trans Papua Highway has yet to bring any benefits to the Papuan people.

“The benefits for indigenous people can’t be seen yet. So people ask who exactly is the road for? Because the there is still illegal logging in the central highlands, the highlands are being destroyed, it’s easier for outsiders to exploit natural resources”, said Pamungkas at a press conference on the conflict in Nduga regency at the Jakarta Legal Aid Foundation (LBH) offices in Jakarta on Thursday July 18.

Pamungkas explained that instead of benefiting ordinary Papuans, the Trans Papua Highway threatens their economic wellbeing.

“Pig livestock from Toraja comes into Wamena. So the Wamena’s people’s pigs don’t sell. This threatens their economy. It is increasingly easy for outsiders to come to Wamena, so Wamena people see the road as a threat to their future”, explained Pamungkas.

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Pamungkas said that the Trans Papua Highway project only connects regencies or cities and the benefits of this are not felt by the Papuan people. Meanwhile roads between villages and districts which are in fact what is actually needed are not being built.

“Yet roads like this (between villages and districts) are very important, for example simply to sell vegetables produced by farmers in markets”, said Pamungkas.

According to Pamungkas, the Trans Papua Highway actually facilitates the exploitation of natural resources which can be seen from large number of trees being felled and gold mining.

“Moreover when LIPI researched development on this road, we found many logging camps for logging in the direction of the Papua Lorentz National Park, which should a protected area”, explained Pamungkas.

Pamungkas is of the view that the government should immediately hold a dialogue with Papuan social leaders with the assistance of appropriate mediators.

“Because the most important thing at the moment is liberating the Papuan people from the memory of suffering which has built up over time. Particularly the acts of violence by security forces which has resulted in trauma for the residents of Nduga regency, Papua province”, he explained.

Local people’s rights

Expressing a similar view to Pamungkas, Amnesty International Indonesia researcher Aviva Nababan believes that the Trans Papua Highway does not provide any clear benefits. He also questions the government’s planning process for the road.

“Looking at it again from the process. Did the government design its function by thinking about the rights of the people the road impacts on? Did they really follow the principles of involving local communities? If not, this needs to be fixed. We think it shouldn’t be seen from the perspective of western Indonesia. There’s a road, lovely. There’s a road, great”, said Nababan at Jakarta LBH on Friday July 19.

Nababan warned that Indonesia has a commitment to fulfill the Sustainable Development Goals (SDGs) meaning that it must involve local communities in all development planning.

He also asked the government to respect the rights of indigenous Papuans. Because according to Amensty’s research, there have been alleged human rights (HAM) violations which have made Nduga residence traumatised and afraid of the security forces.

“When there are problems of HAM violations related to law enforcement in Papua, the tendency is that the cases are rarely investigated. Let alone followed up, or satisfactory accountability”, he explained. (*)

 

Source: indoleft.org

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Analysis

Do you know how vital Papua is for the environment?

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By Benjamin Ware

DO you know how vital Papua is for the environment? This province in Eastern Indonesia is home to the last big area of intact forest in the country, and one of the world’s most biodiverse. It is also the poorest part of Indonesia – nearly 30% of people here live in poverty.

Growing palm oil can be a way out of this poverty trap, but it also brings with it the risk of deforestation. In 2018 Greenpeace exposed large-scale deforestation in Papua linked to palm oil business Gama, which was then suspended from our supply chain.

That same year, Nestlé suspended 10 companies for violating our Responsible Sourcing Standard. Three for illegal deforestation in Papua, and one for the same offense in neighboring West Papua. This shows the seriousness of deforestation as a local issue.

What happens after we suspend a company from our supply chain?

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Some companies continue with ‘business as usual’, while others sell off their remaining forested lands. Others, like Gama, act to halt deforestation and commit to ‘No Deforestation, No Peat and No Exploitation’ (NDPE) – the basis of responsible palm oil production and a requirement of our Responsible Sourcing Standard.

responsible sourcing papua

At Nestlé, we want to support companies like Gama to produce sustainable palm oil. Indeed, efforts are ongoing to develop standard re-entry criteria that suppliers found guilty of illegal deforestation must meet, before buying companies let them back into their supply chains.

Verifying supplier claims

We wanted to see Gama’s commitment to responsible production first hand, which is why Nestlé visited Papua in early 2019 with the NGO Aidenvironment Asia and one of our suppliers.

On the ground, we saw how Gama is implementing its new NDPE commitment, which involves working with Aidenvironment Asia on a remediation strategy for their lands in Papua and other parts of Indonesia.

action aid

Their work involves replanting ‘riparian zones’ (transitional zones between land and water) and deforested areas unplanted with palm oil, developing conservation plans for forested lands in Gama’s ‘land bank’, and generating compensation plans for lands cleared and planted.

Using concession maps from the supplier, Nestlé was able to monitor Gama’s sites via Starling. Since September 2018, this satellite-based system allows us to monitor our entire global palm oil supply chain for evidence of deforestation.

Satisfied with what we saw, we allowed Gama back into our supply chain on the condition that it does not clear any more forest or peatland (Aidenvironment will monitor this, and Nestlé also using Starling). Gama must also implement recovery and compensation plans that take account of local community needs.

Safeguarding people and planet

To some people, our move to allow Gama back into our supply chain before it completes its remediation plans might seem hasty. But we took this decision with one of our key Responsible Sourcing objectives in mind – what is best for people and planet.

papua forests

In Papua, proper planning to support conservation and sustainable economic development is vital. Local communities want Gama to develop their lands. If Gama does not do so, it runs the risk of losing the lands, which another, less scrupulous company could then clear.

At the same time, conservation is vital. Locals we met also want to conserve their local forest, which is central to their culture. Indonesia’s government thinks similarly – it wants to develop the region whilst conserving 90% of its forest cover under the Papua Province Vision.

The situation is complex, and the need to balance conservation and development objectives is not unique to Indonesia. In South America, West Africa and beyond, we face similar challenges.

Nonetheless, if you take one message from this blog – this is it. We can only preserve forests by supporting those companies that embrace forest conservation as part of a sustainable economic development plan.

By excluding those companies that are found guilty of deforestation, but work hard thereafter to do the right thing, we risk endangering the magnificent forests that remain. (*)

The author is Global Head of Responsible Sourcing

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Environment

Activists protest the conservation award to Governor Mandacan

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West Papua Governor Dominggus Mandacan received the International Conservation awards from Conservation International-Jubi/IST

Manokwari, Jubi – The award of Global Conservation Hero to the West Papua Governor Dominggus Mandacan by Conservation International in Los Angeles to appreciate the efforts of Provincial Government of West Papua in protecting and implementing sustainable development has drawn a protest from local conservationist and environmental activists.

The activists argue that the government has not been eligible to receive the award because of no integrated database record the forest, ocean and indigenous resources to use as a barometer of the success of the conservation or sustainable development program in West Papua Province.

Although the ICBE Forum 2018 resulted in an agreement named “Manokwari Declaration” that has 14 commitments, in reality, it does not reach people on the ground.

Yohanis Akwan, the Coordinator of Pantau Gambut Papua in Manokwari, states the Global Conservation Award to Governor Dominggus Mandacan was so premature and allegedly full of interests. Since the declaration of West Papua Province as the conservation-based province by the former Governor Abraham Oktavianus Atururi in 2015, no real effort yet been realised by the provincial government to protect the natural resources of Papua Barat.

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Further, Akwan suggests that the award should present to people living in remote or coastal areas who are faithful protecting the forest and the sea with their local wisdom and traditional values. Also, he said West Papua Province even does not have a peatland map that can be used to review relevant permits, while the peatland is an indicator of the conservation-based province. He also asses that there are more unfinished plan to be done by Papua Barat concerning to conservation-based province. That is a reality.

“Unfortunately, the United States, Conservation International is too quick to present this award to the governor, while the forest and natural resources in this province continue to be in hand of giant investors. This award should not present to the government official, but villagers who traditionally protect their natural resources from time to time,” Akwan told Jubi in Manokwari.

Moreover, he points out a problem recently faced by Manowakri residents, namely a seasonal food disaster during rain as a result of a forest clearing in Wosi-Rendani area for human settlement and mismanagement of spatial plan for housings.

“Last Monday, dozens of houses in Petrus Kafiar Village of Manokwari Timur District were flooded. People forced to evacuate, while the government acts to pay attention from the international community,” said Akwan.

The head of the Provincial Public Relations and Protocol of West Papua Yohanes Nauw on behalf of the Governor Dominggus Mandacan says in the press conference that the award presented in a gala dinner organised by Conservation International in Los Angeles, the United States on Saturday (8/6/2019).

The head of provincial parliament has reportedly joined the governor because the parliament contributed to authorise the special regulation on Sustainable Development that represents the principles of environmentally friendly development.

“Through the special regulation, West Papua has been named as ‘conservation-based province’ in which 70% of its forest area and ecosystem will be protected and managed sustainably. This regulation also called the Manokwari Declaration,” explained Nauw.

Meanwhile, the Head of the Provincial Research and Development Agency of West Papua Government as a specialised agency who launched the agenda, Prof. Charlie D Heatubun, said that Governor Dominggus Mandacan has involved promoting the adoption of the regulation on Sustainable Development.

“This award is also to appreciate the leadership and commitment of the governor in promoting the enactment of the special regulation and reviewing other policies such as the Provincial Spatial Plan, the Provincial Medium-Term Development Plan, protected areas expansion and the preparation of the Provincial Master Plan and the Roadmap of Green and Blue Economic Development,” he said.

Furthermore, Heatubun said the visit of Papua Barat officials to Los Angeles, the United States, was to respond to the official invitation of the President of Conservation International. The event also attended by some CEOs of large companies who interested in investing in Papua Barat such as Mars, Unilever, and the Governor of California and Los Angeles Mayor. (*)

Reporter: Hans Kapisa
Editor: Pipit Maizier

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