Free Trash of Freeport

Karl FitzgeraldCommentaryLeave a Comment


Renegade Economists Podcast 108

As broadcast on 30/09/09.
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Free Trash of Freeport: We finish off our climate friendly policy overview, then interview Nick Chesterfield (Manukoreri) and Nicholas Taylor (Outcrop) to discuss the immense wealth and destruction flowing from West Papua’s $40bn Freeport mine. Photo – Freeport’s tailings, thanks SkyTruth.

Key Articles:
Red River: The blacklisting of Rio Tinto:
Will Australia Allow Another Balibo at Freeport

Show Notes
Carbon Trading Controversies – speculative middlemen aka the bankers bonanza implicit in Australia’s Emissions Trading System

Contraction & Convergence – Aubrey Meyer. Also his book

Carbon Tax – James Hanson (NASA) supports

Tax Upstream

We propose to tax fuels as far upstream as practicable, i.e., at the point where possession of the carbon-bearing fuel passes from the “producer” (e.g., coal mine; oil wellhead or tanker; gas wellhead) to the immediate next entity in the supply chain (e.g., coal shipper or utility; oil refiner or importer; natural gas pipeline). Presumably, each such transfer will be codified in a contract, or at least a bill of lading, specifying the attributes of the fuel.

This will minimize the number of points in the economy at which the tax would be levied. It will also simplify tax treatment of potential downstream carbon control technologies such as CCS (coal capture and sequestration), as discussed below.

Carbon Variability Requires Taxing by Btu, not by Fuel Weight or Volume
The tax rates will be stated in dollars per million Btu of heat content for each fuel. A more familiar approach based on physical
quantities of fuel isn’t tenable, due to wide natural variations in carbon content within each fuel type. These variations are most stark for coal. A ton of lignite typically contains around 40% less carbon than a typical ton of bituminous coal, for example. To tax the two respective tons at the same dollar rate would be grossly unfair since combustion of the lignite ton releases 40% less carbon into the atmosphere than for the bituminous ton.

Freeport, West Papua
Caroline Lucas (MEP – Greens) West Papua speech – October 17th 2008
Just as they have never received a penny of the massive profits turned over by Freeport, whose Indonesian subsidiary last year paid the Indonesian government over 1.8 billion dollars in tax.

Genocide by Demographics
According to Dr Elmslie, highland Papuans who allegedly have gonorrhoea are being treated in UN-funded family planning clinics — but not for gonorrhoea. They are being injected instead with long-term contraceptive drugs. As Dr Elmslie notes, this goes some way to explaining why the 1.67 percent population growth rate for Melanesian Papuans in West Papua is so much lower in than over the 2.6 percent population growth rate for Melanesian Papuans over the border in Papua New Guinea (PNG). (Meanwhile, the growth rate for the non-Papuan population in West Papua is 10.5 percent.)


Songs for West Papua – Kelly Newton-Wordsworth
War is not over – Kelly Newton-Wordsworth

Freeport McMoran Copper & Gold annual report
Royalties totaled $113 million ($0.10 per pound of copper) in 2008, compared with $133 million
($0.12 per pound of copper) in 2007. The reduction in royalties for 2008 primarily reflects lower copper prices and lower gold sales volumes.
Implying the fixed, nominal amount of royalty payments, rather than as a percentage. This hurts both West Papuans and Indonesians in that as the value of the resource increases, the company gets to pocket the increased value rather than the people (who created the gold?).
Freeport Mine
… an industry giant. Estimates suggest that the mine has both the third largest reserves of copper, and the second largest reserves of gold, in the world.

Freeport, which is responsible for about 2/3 of Indonesia’s annual production of gold, is regularly amongst the largest corporate taxpayers in the country.

Risky Business: The Grasberg Gold Mine
Indonesia, The TNI and the USA.
Paying for Protection (linking Freeport to state sponsored security)

Will Australia allow another Balibo at Freeport?
– Nick Chesterfield
..with the shooting death of Melbourne man Drew Grant at the massive and controversial Freeport mine in Timika, West Papua, a powerful spotlight has been shone on an otherwise ignored struggle that has claimed an estimated 564,126 people as of late 2008, according to analysis of demographic discrepancies by Sydney University.

Freeport pays TNI over US$5 million per year to guard the mine

Australian Federal Police officers have been in Timika assisting the Indonesian investigation. From the outset the official investigation has been far from transparent, raising significant questions.  Evidence was tampered with, and bullets in Mr Grant’s body were removed before the pathologist was able to conduct the autopsy, whilst in the custody of Australian Embassy officials.   Were these officers involved in an attempt to hide the identity of the real culprits, and if not, what have they done to ensure transparency?

The Indonesian Defence minister conceded the Free Papua Movement is unlikely to be responsible, indicating both the military and the police are responsible, and even went as far as suggesting that Australia itself was behind the attacks.  “What I think is don’t let Freeport be closed, because it involves global competition over natural resources there are a number of countries that have an interest in destabilising Freeport,” Sudarsono said.  He said foreign NGOs and governments had a history of backing groups that “agitate” in Papua.  Asked which countries he was referring to, Sudarsono said: “Apparently many neighbouring countries to the south.”

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