Grasberg mine

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The Grasberg Mine complex from space.

Freeport's Contract of Work Area. deep purple in the river: tailings (2003)

The Grasberg mine is the largest gold mine in the world and the third largest copper mine in the world. It is located in the province of Papua in Indonesia near 4°03′10″S, 137°06′57″E, and is owned by the Freeport-McMoRan company based out of the United States. The cost of building a mine on a mountain was 3 billion United States dollars. In 2004, it was estimated to have reserves of 46 million ounces of gold.

Dutch geologist Jean-Jacquez Dozy visited Indonesia in 1936 to scale Jayawijaya Mountain glacier in the Irian Jaya province in western Papua. He made notes of a peculiar black rock with greenish coloring. In 1939, he filed a report about the Ertsberg (Dutch for "ore mountain"). However, the events of World War II caused the report to go unnoticed. Twenty years later, geologist Forbes Wilson, working for the Freeport mining company, read the report. He had been searching for nickel deposits, but forgot them as soon as he read the report. 50 years old at the time, Wilson quit smoking and exercised to prepare for a trip to explore the Ertsberg. The expedition, led by Forbes Wilson and Del Flint, discovered huge copper deposits at the Ertsberg in 1960.

With permission from the Indonesian government, the Ertsberg mine was built 4,500 meters (14,000 feet) above the sea level. It opened in 1973, and was expanded by Ertsberg East, which opened in 1981. Steep tramways were used to transport equipment and people. Ore is dropped 600 meters (2,000 feet) from the mine, then ground into a powder and mixed with water to form a slurry. The slurry is then pumped through pipes to the mine's port. After smelting, each ton of ore yields 317 kilograms of copper, 30 grams of gold and 30 grams of silver. The mine was attacked by the rebel group OPM in 1977. The group dynamited the main slurry pipe which caused tens of millions of damage, and attacked the mine facilities. The Indonesian military reacted harshly, killing at least 800 people^[1].

By the mid-1980s, the mine had been largely depleted. However, Freeport did not sell the mine for $75 million, as had been offered, instead searching for further deposits in the area. In 1988, Freeport identified reserves valued at $40 billion at Grasberg, just three kilometers (two miles) from the Ertsberg mine. The winding road to Grasberg was estimated to require $12 million to $15 million to be built. An Indonesian road-builder who contributed to Ertsberg road, took a bulldozer and drove it downhill sketching the path. The road cost just $2 million when completed.

The recent boom in copper prices (2005-2006) has increased the profitability of the mine. Predictions that fiber-optic technology would reduce copper demand and depress prices have proved to be false. Demand never declined. The huge consumption of copper for Asian electrical infrastructure has overwhelmed copper supply, leading to an increase in the price per pound from approximately $0.70 per pound to over $3.00 per pound in the spring and summer of 2006.

The mine's tailings, generated at a rate of 700,000 tons per day, are the subject of considerable environmental concern. The waste rock remains in the highlands, up to 900 feet deep and covering 3 square miles, but its runoff and the finer material gets washed into the headwaters of the Aikwa River and settles out all along the course of the river. Some 90 square miles of lowland areas along the river are extremely high in copper and sediment, and the fish have nearly disappeared from the river. In 1995, the Overseas Private Investment Corporation revoked Freeport's insurance policy for environmental violations of a sort that would not be allowed in the US - a first for the OPIC, resulting in a lawsuit by Freeport. Various proposals were put forth by environmental ministers Sonny Keraf and Nabiel Makarim beginning in 2000, but nothing has yet come of these.

The mine is located in close proximity to rare equatorial mountain glaciers that serve as indicators of climate change in the region. Removal of vegetation, steepening of slopes related to mining activities, earthquakes, and frequent heavy rainfall have resulted in deadly landslides in the mine workings. While landscape reclamation projects have begun at the mine, environmental groups and local citizens are concerned with the potential for copper contamination and acid rock drainage into surrounding river systems, land surfaces, and groundwater.