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Indonesia miners fight for a bigger slice of pie

17 november 2011, 10:22
After more than a decade of hard work and long hours driving a truck through the mountains of Indonesia's remote Papua province for US mining giant Freeport McMoRan, Nus Magay refuses to work for anything less than a hefty raise, AFP reports.

Since mid-September the 35-year-old has taken part in an angry strike -- which last month turned deadly after clashes with police -- together with about one-third of Freeport's 23,000 workers.

"I'm angry. I work so hard but I never got a pay increase or a promotion in all these years," Magay told AFP, while seated on a tattered rug in the otherwise bare living room of his modest wooden house.

Magay and his colleagues, mostly native Papuans, have watched Freeport's US owners reap the riches of the Grasberg mine, one of the largest retrievable gold and copper reserves in the world. Last year Freeport reported sales revenues of more than $5 billion from Grasberg.

Now, the workers are demanding a bigger slice of what they see as their pie.

"Aren't we working for a world-class mining company? Why are we paid so little -- much less than Freeport workers in other countries?" Magay asked.

The miners claim they are the poorest-paid among Freeport's employees worldwide, including those in Africa and South America.

Some complain that they do the hardest physical work at Grasberg for a basic salary of around $400 a month. But after regular bonuses, Magay said he receives close to $900 a month.

That is well above Indonesia's monthly per capita income of about $350, but the striking miners complain it is not enough to live on in the remote, pricey mining compound in the Mimika district 4,000 kilometres (2,500 miles) from the central government in Jakarta.

Because of poor infrastructure in Papua province the prices for goods consumed by a slowly modernising region are often much higher than in other parts of the country, according to executive director of Indonesia's Human Rights Working Group Rafendi Djamin.

"Papuans can still get their traditional staples, like sweet potatoes, very cheaply. But they are starting to consume rice and alcohol like the rest of Indonesia, and that can be very expensive," Djamin said.

"You can live a much better life in Jakarta on a smaller income because you have cheap options."

The workers say that even though they are paid above the average wage, their jobs in the mines and on narrow roads high in the foggy mountains are dangerous and warrant higher pay.

"After paying for food and other household expenses, I have nothing left. I can't afford to go to the hospital," Magay said, complaining of gout and rubbing balm on his knees and elbows.

"Sitting in a truck all day in the cold only makes the gout worse," he said, referring to the low temperatures that persist in the mountains year-round.

The workers originally demanded the minimum wage of $1.50 an hour be raised twenty-fold to $30 an hour. Later, they said they would settle for $7.50, and then $4. They rejected Freeport's most recent offer of a 35% increase.

"We are only asking Freeport to be fair," Magay said.

The company insists it is being fair.

"Our proposal is fair and generous and we and our local management team are committed to maintaining a working environment that is attractive to our employees," Freeport McMoRan chairman James R. Moffat said in a statement.

Striking workers, angered at colleagues who have refused to stop work and at contract workers brought in by Freeport, have been blockading the Grasberg complex for weeks.

The protest turned ugly when eight people were killed last month in several car ambushes and clashes with police.

The company reported that the work stoppage, coupled with another eight-day strike in July, slashed third-quarter copper and gold production, with losses worth around $400 million on the current market.

Freeport Indonesia called force majeure on October 22, announcing it could not fulfil its contractual obligations, triggering a spike in global copper prices.

Since making the announcement, the company has lost $19 million a day, Freeport senior administration officer Sinta Sirait said.

The company's losses are also losses for the government, which collected $1.4 billion in taxes and royalties in the first half of the year, and dividends on its 9.36 percent stake in the company.

"The amount the government has lost in royalty payments from Freeport has reached $8 million since we called force majeure a couple of weeks ago," Sirait said.

-- Where is the money? --

Much of the money Freeport pays to the government is meant to return to Papua province, where the company says it contributes 68 percent of the provincial budget.

But the workers say the money is not trickling down to the majority of the 3.6 million population.

Basic services like public schools and community health centres are few and far between and come with their own bureaucratic problems, they complain.

Widespread corruption is another problem across Indonesia, where public funds often end up lining official pockets.

Etinus Tabuni, a Freeport forklift driver who lives with his wife and five children, said he could only afford to send one of his children to school.

"I can't afford the fees. It costs around two million rupiah ($224) to register, and then it's around 100,000 rupiah a month," he said.

Indonesian public schools should be free, but many illegally impose their own fees and make parents pay for books and uniforms, barring children whose parents do not pay up.

Freeport has built a school for Indonesian children near the mine, but Tabuni said it had a capacity for only 600 and was now full.

Henri Myrttinen from Germany-based NGO Watch Indonesia said it was impossible to track the funds that go from Freeport to Papua via government coffers.

"In theory, 80 percent of mining proceeds are supposed to go back to the provincial level," Myrttinen said.

"But there is an immense degree of intransparency there at all levels, starting with the payments from Freeport to various levels of the Indonesian state structure," he said.

Last month, national police chief Timur Pradopo admitted that officers in the Papua police force received what he called "pocket money" from Freeport.

Following the revelation, Freeport's US headquarters admitted to paying $14 million dollars last year for "government-provided security" in Papua.

The workers have vowed to stay on strike until at least November 15, and have threatened to extend the action for another month if an agreement is not reached.

"If the union says go back to work, I will. If it says we should stay on strike, then I will stay on strike," said Tabuni, the forklift operator.

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