Freeport mine insurance cancelled

By Jeremy Oxley Giant US insurance company, Overseas Private Investment Corporation (OPIC), has dealt the owners of the Freeport mine in West Papua, Freeport MacMoRan, a stinging blow by cancelling its US$100 million insurance coverage. The insurance company has claimed that massive river pollution and rampant rainforest destruction caused by the operations of Freeport mine, situated on Grasberg Mountain in the upper reaches of the Ajikwa river, would leave it liable to claims from indigenous peoples for damage to the surrounding areas. OPIC also claims that there is increasing instability in the area due to the enormous open craters dug into the Grasberg Mountain during the mine operations. The Freeport mine releases an estimated 100,000 tonnes of tailings per day into the Ajikwa river from its gold copper operations. The tailings, mixed with cyanide residue which is used to extract the copper, wash through the lower valleys of the river system which are inhabited by several West Papua tribes. Freeport MacMoRan has few environmental controls in place to extract the deadly cyanide residue or to control the output of the tailings which are causing widespread pollution and destroying marine and plant life. OPIC's decision to cancel the insurance leaves Freeport MacMoRan with a severely damaged public image. It also, in effect, announces to the world that mining operations of this type cause severe environmental damage. Sources have said that Freeport MacMoRan, worried that it would suffer a similar fate as BHP at Ok Tedi, was in fact seeking to increase its level of insurance before OPIC pulled out. Now it will be difficult for the company to find any viable insurance company to cover its mining operations in West Papua. The insurance cancellation is a direct blow to the viability of the Freeport MacMoRan operations in West Papua. It also paves the way for further action against foreign mining companies which have demolished the environment in remote areas, ignoring environmental laws or pretending they were beyond reach of the possible repercussions. The OPIC decision underlines that indigenous owners are becoming increasingly mobilised and will seek damages if irresponsible foreign companies cause destruction. The Free Papua Movement (OPM), which has been viciously attacked by Indonesian armed forces in recent months over its opposition to the mine, has strengthened its opposition following OPIC's decision. OPM is now in a position to substantiate its claims against the Freeport MacMoRan gold copper mine and get world attention similar to that of OK Tedi.