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PT Freeport Indonesia

https://www.youtube.com/watch?v=WbroONfeyt0

Intro video

www.fcx.com

Freeport Indonesia Copper Mine Project Large-Complex Industrial Ecology Case Study

This case study demonstrates how the principles of industrial ecology can effectively be applied to a large, complex mining project.

This case study demonstrates how to integrate industrial ecology thinking and principles, which are primarily environmental, into complex analyses and projects that necessarily involve social, economic, technological, policy, and other dimensions.

Industrial ecology tends to assume that the only ethical issues facing the analyst are environmental; this case study shows how other aspects including corruption and political challenges can be resolved provided the trust of all stakeholders is constantly worked upon.

 

Grasberg (90.64%)

Reserves

Cu 34.1 billion lbs

Au 35.5 million ozs

Sales

Cu 1.2 billion lbs

Au 1.7 million ozs

Major Mine Operations & Development Projects

All major assets majority-controlled and operated

Reserves

Cu 27.7 billion lbs

Mo 2.1 billion lbs

Sales

Cu 1.0 billion lbs

Mo 60 million lbs

North America1

Note: FCX consolidated reserves and annual sales; reserves as of December 31, 2009. Sales figures are based on 2010e.

1 Cu operations: Morenci (85%), Sierrita (100%), Bagdad (100%), Tyrone (100%), Safford (100%), and Miami (100%); Primary Mo: Henderson (100%)

2 Cu operations: Candelaria/Ojos del Salado (80%), Cerro Verde (53.6%) and El Abra (51%)

Geographically Diverse

Copper

Reserves 34.0 billion lbs

Sales 1.3 billion lbs

South America2

Copper

Copper/Gold/Silver

Molybdenum

Cobalt

Freeport McMoRan Copper & Gold, Inc (FCX) Stock Chart

World’s Leading Copper Producers

(000 t)

Top 10 Copper Producers (2008E)

____________________

Source: Brook Hunt 4Q08 Report. Rankings based on net equity ownership.

PT Freeport Indonesia (PTFI)

Mining started in 1972 – produce concentrate sent worldwide to smelters

Contract of Work can be renewed until 2041

2009 production= 1.4 billion pounds copper & 2.5 million ounces gold

Taxes, royalties and dividends = $1.4 billion in 2009

PTFI contribution to GDP:

96% regency

40% province

1.3% country

FCX owns 48.74% and GOI owns 51%

Largest private-sector community development program in SEA

($55 million in 2018)

227,000 (direct & indirect jobs)

Papua, Indonesia

Papua

PT Freeport Indonesia

Melting equatorial Glaciers

Highest peak between Andes and Himalayas

Sea Level to 5,000m

13 feet of rain per year

High seismic zone

Remote location

Complex ecology, politics and cultural heritage – ESEM Multi-Dimensional Dialogue Principle

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PT Freeport Indonesia – Historical Setting

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2

3

2

Amungme and Kamoro Tribes

Kamoro Coastal People

Kamoro -- Lowlands

Amungme -- Highlands

Amungme

Amungme and Kamoro Local People

Community Development Program -- 1% program

Mimika Sports Facilities and obligations

Public Health (sanitation, poor drinking water quality, Malaria, Dengue Fever, TB, HIV/Aids)

Employment

Human Rights

Unions, strikes and work stoppages

Illegal small scale mining

Small and Medium business development program

Note – transition from open pit to underground mining is causing a significant decrease in funding to social programs

Lorentz Park Location – East of Mine

Country: Indonesia

Province: Irian Jaya/ Papua

District:

Meraoke

Jayawijaya

Puncakjaya

Paniai

Mimika

Includes the glaciers and Punjak Jaya

Ecoregion and Protected Areas of Irian Jaya

The ecological zones in the Lorentz carry over into the contract of work area so many endangered and threatened species exist in the mine COW and project area

Lorenz World Heritage Site

The existence of the snow mountain in Lorentz

firstly notified by Jan Carstenz, in 1623.

A Dutch scientific team lead by Dr. H. A. Lorentz first known to explore the inland areas in 1909.

Established as Nature Monument in 1919 by DCG.

Established as a Strict Nature Reserve in 1978 by GI with an area of 2,150,000 hectares.

In 1991, listed as highest priority for conservation.

Declared as a National Park in 1997 with total area of 2,505,600 hectares.

Listed as a World Heritage Site in December 1999 with an area of 2,350,000 hectares.

Lorentz Biodiversity

Lorentz Biodiversity and Cultural Setting

Anton Colijn, Frits Wissel and Jean Jacques Dozy during the Carstensz expedition (1936)

Many mountain climbers come today and adversely affect the mine

Jean Jacques Dozy wrote a geological article on the Ertsberg Deposit and Forbes Wilson found article some 30 years later

Challenging Topography

0

1000

2000

3000

4000

500

1500

2500

3500

4500

ELEVATION (m)

DISTANCE (km)

20

40

60

80

100

0

4585

MILL COMPLEX

AMAMAPARE PORT

TEMBAGAPURA

TIMIKA

Nival

Zone

Alpine

Zone

Sub

Alpine

Zone

Montane Zone

Lowland Zone

Sea

GRASBERG

Grasberg Mine

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Freeport Mining and Milling Operations

Grasburg Mine

Acid Rock Drainage

Inside COW

Outside COW

Overburden Failure to contain (Wanagon 2003 failure)

Regional Hydrology impacts

Underground Mines –

Wet muck and cave-ins

Behind schedule/Production shortfall… may never catch up to open pit era production levels

Transition from Open Pit era to Underground

Requires more employees

Indonesia has lack of underground miners and experience

Revegetation of Grasberg Overburden & control ARD starting (not waiting until end of mine life)

Mine Operation and Environmental

PTFI is the Largest User of Caterpillar Equipment in the world

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Grasberg and Underground Mines

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Tram and Mill

Ore and people tram – 3,000 ft elevation

Critical link from mill to mine to move people and materials

Earthquake this year 2019 in mill area required evacuation of all employees

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HEAT Road (Heavy Equipment Access Trail)

HEAT road was blamed for melting the glaciers

Geological expression “Elephant Country” and people thought mine was affecting elephants

Safety

Earthquakes and seismic events

Flooding events

Landslides (some block main road for days)

Bus and transport accidents

Wet Muck underground

Energizing high voltage equipment

Dangerous work and living conditions (operation and support areas have multiple fatalities every year)

Mill Operations

Mine moves about 700,000 tones per day

Mill processes 250,000 tones per day

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Sag Mills – Crush the Ore

Almost the largest sag mills in the world to crush the ore ESEM technological fix principle

Tembagapura (Copper Town)

About 18,000 people live here. Main living area for highlands. Mostly single men. Hospital, School, Recreation Center Barricks, Houses, Churches and Mosque. Every flat piece of ground is used.

Main Lifeline Road Highlands to Lowlands

Hannekam tunnel collapse (occurred in 2008)

Zaaghkam tunnel collapse

Maintenance on tunnel takes them down from time to time

By-pass or widening tunnels have been considered

Major expense to grade and improve road

Tiga Desa (Three Village) Development Program

schools and housing

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Kuala Kencana – Dedicated by former President Suharto

Lowland City to support future highland mining operations all across Papua

Airport

Air Transport

737’s move workforce back and forth. Risk of losing a plane full of people

Freeport use to own and run airplanes, helicopters and fix wing planes but now contract all out to other companies

Environmental

Laboratory

Environmental Laboratory in Timika Lowlands

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Tailings Management Case Study

Tailings Monitoring and Reclamation

Deposition Area- Reclamation and revegetation program

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Levees designed to fail to east away from Town of Timika

Tailings Environmental and Social

Riverine Tailings is controversial (used only by 3 mines in world)

Failure to contain within approved levees

ARD potential

Need for pyrite pipeline and storage area is coming soon

Increased metals in estuary

Increased sedimentation and loss of benthic community

and fisheries in estuary

Reclamation obligations

Illegal Miners downstream using mercury, corruption

and other dangers (wild west mentality)

Opportunity to use tailings in construction of roads

and other infrastructure (and potential liability)

ESEM Continuous Learning Principle and Adaptive Management

Adaptive Management Process

PT Freeport Indonesia

Tailings disposal in river with levees

Near town of Timika

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Local People Panning for Gold in Tailings River

Infrastructure Projects

Governor Suebu (on right) signing MOU with PTFI on using Tailings throughout the Province of Papua for infrastructure projects.

The Governor wants to rename PTFI tailings and call them “beginnings.”

Before

After

Tailings Bridges and Roads

Highlands and Lowlands Reclamation

Mile 21 Reclamation Center

Deposition Area- Reclamation and revegetation program

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Rimba Papau Hotel, Timika

Light Industrial Park

Freeport established a light industrial park in lowlands with support facilities for mine

Freeport uses more Caterpillar equipment than any other mine in the world.

Caterpillar has a large warehouse facility and carry all the spare parts for the Mine which off loads millions cost for the operation

Protests/RoadBlocks

Security

Human Rights violations (checkered history)

Crime

Concentrate pipeline and storage

Fuel pipeline and storage

Abuse by public security (Military/Police) of company assets

Sabotage

Terrorism or separatism assault

Artisanal Mining organized and conflict between military and police

ESEM Transparent Governance Principle

ESEM Expect Emergence Principle

Human Rights and Military

Portsite Operation Coal Power Plant -- Concentrate

Other Environmental Challenges

Port (Coal Power plant emissions & fly ash disposal)

Hydroelectric project has been studied to replace coal plant

Fuel Storage Tanks

2.5M gallons at Portsite

4.5M gallons at Mile 50

3M gallons at Mill

3M gallons at Surface Mine

8 Sewage Treatment Plants/Medical Waste Incinerators

Environmental Laboratory

Large Reclamation Projects

Exploration Projects

Engagement of Stakeholders – employees, NGOs, local people, other mining companies, media, universities, military, politicians ESEM Multicultural Dialogue Principle

External Initiatives

International Council on Mining and Metals (ICMM)

FCX Founding Member

10 Principles for Sustainable Development

Voluntary Principles on Security and Human Rights

FCX Was Original Signatory

Global Reporting Initiative (GRI) – Promotes Transparency Through Public Reporting on Financial Performance

Started reporting in 2005

Extractive Industries Transparency Initiative (EITI) – Promotes Transparency Regarding Payments to Governments

Corporate Governance Policies – Freeport has in Place Policies Committed to the Environment, Environmental Auditing, Corporate Health and Safety, Community, Human Rights and Principles of Business Conduct

Sustainable Development Implementation

Policies Aligned with ICMM Principles

FCX Policies

PTFI site policies

(Ethics, Health & Safety, Community, Environment, Human rights, Supply Chain, other)

Risks & Opportunities

Identification

SD Risk Register

Action Plans

Identification of material risks = development of FCX performance goals

Management Systems & Approaches

FCX and site level SOPs

5-year Plans

Monitoring and evaluation systems

Action plans often feed into development or improvement of management systems

Public Reporting (externally verified annually)

GRI

WTSD

Achievement against FCX Performance Goals reported in GRI and WTSD

A World of Commitments

External Reporting to Stakeholders

Corporate Policy Commitments

Challenges

Transition from open pit to underground – ESEM Long Term Investment Principle

Corruption

Military and human rights

Local cultures and heritage

Environmental impacts

Sharing and distribution of benefits

Sharing of decision making

Transparency -- Esem Transparent Governance Principle

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