Exposing the One Percent: Freeport McMoRan Exploits Workers and the Environment

by Project Censored
Published: Updated:

By Peter Phillips and Kimberly Soeiro

As the Occupy Movement emerges across the US and around the world, a prime example of greed and exploitation is occurring with very little coverage in the global corporate media. Members of the global top one percent are killing striking workers and using raw military power to protect their billions of dollors of annual profits. And the highest levels of US Government encourage and protect the exploiters.

Freeport McMoRan (FCX) is the world’s largest extractor of copper and gold and controls huge deposits in Papua, Indonesia. The Gasberg Mine in Papua employs some 8,000 workers at wages of $1.50 to $3.00 an hour. The workers have been on stike since September of 2011 for an increase in wages. In an attempt to block busloads of replacement workers, several strikers have been killed and several wounded by security forces financed by Freeport. Freeport has offered a 22% increase in wages, but strikers say that is not enough and are demanding an increase to the international standard of $17 – $43 an hour. The dispute over pay has also drawn in local tribesmen, with their own grievances over land rights and pollution, armed with spears and arrows to join Freeport workers blocking the mine’s supply roads for food and fuel this week.
The Jakarta Globe reported October 28, 2011, that Indonesian security forces in West Papua, notably the police, continue to receive extensive direct payments of cash from Freeport McMoRan. National Police chief Timur Pradopo admitted on October 28 that officers had received close to $10 million annually from Freeport. Prominent Indonesian NGO Imparsial puts the annual figure at $14 million. Pradopa described the millions of dollars in additional payments made to the police by Freeport as “lunch money” (Jakarta Globe, 2011). The payments recall even larger payments made by Freeport to Indonesian military forces over the years which, once revealed, prompted a US Security and Exchange Commission investigation of Freeport and questions as to Freeport’s liability under the US law (the Foreign Corrupt Practices Act). Since 1991 Freeport has paid nearly $13 billion to the Indonesian government at a 1.5% royalty rate and remains one of Indonesia’s largest sources of income.
Reuters reported on October 25, “Miners have been striking at Grasberg, the world’s second-biggest copper mine, since mid-September, disrupting output and stopping shipments. Violence has escalated in recent weeks with sabotage to pipelines and deadly attacks on employees. Angry workers and people from seven local tribes are blocking the main road near an airport in Timika that links Freeport’s port to the Grasberg mine, and refused to shift after police gave them a deadline to move. “People fought back. The police gave several warning shots but they have left now,” said a striking worker, adding that there were no casualties reported. “The tribes have conducted war ceremonies. They are ready to die for this” (Reuters Africa, 2011).
Amnesty International has documented numerous cases where Indonesian police have used unnecessary force against the strikers and their supporters. It is stated in a recent report by West Papua Media that, “Indonesian security forces attacked a mass gathering in the Papua capital, Jayapura, and striking workers at the Freeport mine in the southern highlands. At least five people were killed and many more injured in the assaults, which show a renewed pattern of overt violence against peaceful dissent. A brutal and unjustified October 19 attack on thousands of Papuans exercising their rights to assembly and freedom of speech resulted in the death of at least three Papuan civilians, the beating of many, detention of hundreds and arrest of six, reportedly on treason charges. The Obama administration has largely ignored the egregious violation of human rights, instead advancing US-Indonesian military ties. US Secretary of Defense Leon Panetta, who arrived in Indonesia in the immediate wake of the Jayapura attack, avoided criticism of the assault and reaffirmed US support for Indonesia’s territorial integrity” (West Papua Media, 2011). Panetta also reportedly commended Indonesia’s handling of a weeks-long Freeport strike.
“The global dimension of the issues raised by the Freeport confrontation [is] highlighted by the fact that workers at the company’s Sociedad Minera Cerro Verde copper mine in Peru have been on strike since September 29. They are demanding pay rises of 11 percent, while the company has offered just 3 percent” (WSWS, 2011).
On November 7 The Jakarta Globe reported that, “Striking workers employed by Freeport-McMoRan Copper & Gold’s subsidiary in Papua have dropped their minimum wage increase demands from $7.50 to $4.00 an hour, the All Indonesian Workers Union said. Virgo Solos, an official from the union, known as the SPSI, told the Globe that they considered the demands, up from the current minimum wage of $1.50 an hour, to be “the best solution for all.” Virgo said Freeport management was currently offering $3.00 an hour (Jakarta Globe, 2011). Freeport-McMoRan’s Grasberg mine, according to WSWS.org, is the “. . . world’s largest and most profitable gold and copper mine. Buoyed by soaring commodity prices, the company’s first half-year profit jumped to almost $3 billion, nearly double the figure for the first six months of 2010” (WSWS, 2011).
US President Obama is planning an Indonesia visit in mid-November to strengthen relations with Jakarta as part of Washington’s escalating effort to combat Chinese influence in the Asia-Pacific region (WSWS, 2011).
Freeport operates in North and South America, Indosesia and Africa. In 2010, the company sold 3.9 billion pounds of copper, 1.9 million ounces of gold and 67 million pounds of molybdenum. Freeport McMoran has a over all revenue of $18.9 billion in 2010 and a net income of $4.2 billion. The Chairman of the Board is James R. Moffett owns over 4 million shares with a share value close to $42.00. Moffetts annual compensation from FCX was $30.57 million in 2010 according to the FCX annual meeting report in June of 2011. Richard C. Adkerson is President of the board of FCX and owns over 5.3 million shares. His total compensation in 2010 was also $30.57 million.

In a transcript of Third Quarter statement for Freeport, Kathleen Quirk, CFO, Executive VP, (annual compensation $8.6 million) reported,

“During the third quarter of 2011, our production and sales of copper and gold were adversely affected by labor disruptions at PT Freeport Indonesia. The estimated impact on our third quarter 2011 production, including the 8-day strike in July 2011, and the ongoing strike that commenced on September 15 totaled approximately 70 million pounds of copper and 100,000 ounces of gold in the third quarter. Without these impacts, our third quarter 2011 sales from Grasberg would have exceeded our forecasted production and sales because of access to higher grade ore previously scheduled to be mined in future periods. We’ve also developed revised operating plans to produce and ship concentrates at modified levels with a reduced workforce and we sold concentrate from inventory during the third quarter, which partly mitigated the lower production levels” (Seeking Alpha, 2011).

Transcript of Third Quarter statement by Freeport President Richard Adkerson showed,

“As Kathleen said, both the work stoppage in early July and then the ongoing strike that started in mid-September reduced our third quarter copper production by 70 million pounds from what it otherwise would’ve been, and 100,000 ounces. So that is an adverse impact to us. It results in lower taxes and royalties to the government of Indonesia then there otherwise would’ve been because of that. And of course the workers who are on strike are not being paid. So all of us, all the stakeholders have a strong incentive to try to resolve this strike and we’re committed to trying to do that on a fair basis. But we did revise our operating plans. We — our management team on the ground at PT-FI, our Indonesian national staff people and contractors and some of the workers that are [indiscernible] on the union allowed us to operate on a reduced basis. Our mill has operated in recent days at 75% to 80% of capacity. We’re operating in the mine at a roughly 2/3 of our normal rates. Our underground operations have ramped up, and we’ve been able to ship concentrate inventory with some disruptions. …Our hope is, and what we’re certainly working towards, is to get this strike resolved on a mutually satisfactory basis with all parties, so that we can go back to totally normal operations. …In Indonesia, we have worked in good faith to reach a mutually satisfactory agreement with the union.

The strike really is — doesn’t have basis under Indonesian law. We’re working cooperatively with the government, which has designated our operations in Papua as a vital national object. So the government recognizes the importance of our operations to the community, to Papua, to the government itself. Our pay packages have been and continue to be at the top of workers for workers in Indonesia. We are offering a substantial increase to pay as we talk about the new 2-year contract. We see our offer as being fair and generous. We have worked in a government-designated process of having discussions, including participating with the union in a mediation process. …The government of Indonesia came up with conclusions and we accepted those conclusions. The union did not” (Seeking Alpha, 2011).
Freeport is connected to some of the most elite transnational capitalists in the world. 7.8% of Freeport’s stock is held by BlackRock, Inc., a major investment management firm based in New York. BlackRock’s assets under management total US $3.66 trillion across equity, fixed income, cash management, alternative investment, real estate and advisory strategies. BlackRock, Inc. (NYSE: BLK) independent directors include: Abdlatif Y. Al-Hamad, Director General/Chairman of the Board of Directors of the Arab Fund for Economic and Social Development, James E. Rohr, Chairman and Chief Executive Officer, The PNC Financial Services Group, Inc.. Sir Deryck Maughan Partner and Head of Financial Institutions Group, Kohlberg Kravis Roberts, John Varley
Former Chief Executive, Barclays PLC, David H. Komansky, Former Chairman and Chief Executive Officer, Merrill Lynch & Co., Inc., John Varley, Former Chief Executive, Barclays PLC, Thomas H. O’Brien, Former Chairman and Chief Executive Officer, The PNC Financial Services Group, Inc.
Freeport strikers have begun to win the support of the Occupy Movement. Occupy Phoenix activists marched to Freeport headquarters on October 31 in support of the strikes in Indonesia.
According to Marianne Kearney writing for The Age.com in 2006, “Freeport mine is polluting West Papua’s rivers and estuaries and a world heritage-protected national park, according to the company’s own environmental assessments and Indonesian Government standards.” Documents leaked to an environment group show that the world’s largest gold and copper mine has dumped a billion tons of mine waste, known as tailings, into surrounding rivers, polluting forests and river systems with heavy metals such as copper and arsenic, and endangering species such as the flying fox.
The environmental risk assessments were leaked to Indonesian environment group Wahli. “Freeport has known that their operation is endangering the environment but they don’t do anything,” Wahli spokesman Torry Kuswardono said.The environmental assessments show that the company’s tailings are polluting the world-heritage Lorentz National Park, which stretches from glacier-capped mountains to a tropical marine environment (The Age, 2006).
Multiple issues with international implications are demonstrated by the Freepost strike in Indonesia. The wealth inequality between the stock holders of Freeport and the wage workers in their mines is a example of how the top one percent of corporate capitalists of the world hold and control vast private resources to the detrement of working people everywhere. The Freeport case is also an demonstration of how holders of private capital bribe and manipulate access to minerial resources that were provided by nature that in reality belong to all living beings (Fair Share of the Common Heritage), yet are used to further concentrate wealth among the few creating massive environmental damage in the process. Freeport’s political clout—reaching all the way into the Whitehouse and the highest levels of power in Indonesia—uses the police power of the state to force workers into compliance. The one percent transnational corporate class utilizes the power of the military around the globe to protect their interests in the growth and free flow of capital to the detriment of a vast majority of the rest of us symbolized by the Occupied Movement’s mantra 99%.
Peter Phillips is a Professor of Sociology at Sonoma State University and President of Media Freedom Foundation/Project Censored.

Kimberly Soeiro is an undergraduate Sociology major and Research Associate at Sonoma State University. She has been working in multiple library settings since 2008. Her concentration continues to be research and information.

For a 2005 NY Times Article on Freeport’s Military Bribes and Environmental damage see: Below a Mountain of Waste, http://www.nytimes.com/2005/12/27/international/asia/27gold.html?pagewanted=1&ei=5070&en=0ee1bc8941899f9f&ex=1138078800