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12 August, 2005ICEM News release No. 56/1998
What exactly were the links between Indonesia's recently ousted dictator Soeharto and the world's biggest mining company, Rio Tinto?
Australia's main business newspaper, the Financial Review, examines that question in some depth today.
"Will the hunt for former President Soeharto's ill-gotten billions, now rapidly gathering pace in Jakarta, cause trouble for Australian companies that had invested large sums in Indonesia?" the Financial Review wonders. "That question is being asked with increasing frequency around the stockmarket this week, and the company that's mentioned most often in connection with it is ASX[Australian Stock Exchange]-listed mining giant Rio Tinto plc."
Indonesia's Grasberg mine is the main focus of the Financial Review article. Grasberg is owned by US-based Freeport-McMoran Copper and Gold Inc, of which Rio Tinto in turn owns 33 percent. The Financial Review notes that Rio Tinto "bought into Freeport-McMoran and Grasberg in 1995 for US$1.3 billion." Much of that price was, the Australian newspaper argues, "based on the assumption of winning approval to expand the size of the Grasberg mine." Rio Tinto also "has a 40 per cent direct stake in any expansion of the Grasberg mine."
Last December, in one of his "last major industrial policy decisions", Soeharto "authorised the $1 billion expansion of the Grasberg mine throughput from around 130,000 tonnes per day to more than 200,000 tonnes per day."
The Soeharto family themselves had also bought into Grasberg. The Financial Review examines complex business deals which meant that "in essence, Freeport-McMoran financed the Soeharto family into the Grasberg mine."
Hence, perhaps, the expansion permit. Hence too another of Soeharto's decrees. Last August, he exempted PT Freeport Indonesia - the local company that operates Grasberg - from paying Indonesian company tax.
"Freeport Indonesia," the Financial Review reports, "was the only foreign-controlled company to be granted the tax exemption, worth tens of millions [of dollars] annually."
Meanwhile, the status of the expansion permit for Grasberg has come under scrutiny in Jakarta. Though signed by Soeharto, the permit may never have been ratified by the Indonesian parliament.
"Around the stockmarket," the Financial Review concludes, "fear that the Grasberg expansion permit will be rescinded or delayed because of the expected Soeharto asset hunt is being blamed for some of the recent weakness in Rio Tinto and Freeport share prices."
Rio Tinto's Indonesian operations have been highlighted recently by a broadly-based global campaign against the company's environmental damage and violations of human rights. In particular, Rio Tinto's attacks on trade union rights in many parts of the world have made it a priority target for networking by the 20-million-strong International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM).
Australia's main business newspaper, the Financial Review, examines that question in some depth today.
"Will the hunt for former President Soeharto's ill-gotten billions, now rapidly gathering pace in Jakarta, cause trouble for Australian companies that had invested large sums in Indonesia?" the Financial Review wonders. "That question is being asked with increasing frequency around the stockmarket this week, and the company that's mentioned most often in connection with it is ASX[Australian Stock Exchange]-listed mining giant Rio Tinto plc."
Indonesia's Grasberg mine is the main focus of the Financial Review article. Grasberg is owned by US-based Freeport-McMoran Copper and Gold Inc, of which Rio Tinto in turn owns 33 percent. The Financial Review notes that Rio Tinto "bought into Freeport-McMoran and Grasberg in 1995 for US$1.3 billion." Much of that price was, the Australian newspaper argues, "based on the assumption of winning approval to expand the size of the Grasberg mine." Rio Tinto also "has a 40 per cent direct stake in any expansion of the Grasberg mine."
Last December, in one of his "last major industrial policy decisions", Soeharto "authorised the $1 billion expansion of the Grasberg mine throughput from around 130,000 tonnes per day to more than 200,000 tonnes per day."
The Soeharto family themselves had also bought into Grasberg. The Financial Review examines complex business deals which meant that "in essence, Freeport-McMoran financed the Soeharto family into the Grasberg mine."
Hence, perhaps, the expansion permit. Hence too another of Soeharto's decrees. Last August, he exempted PT Freeport Indonesia - the local company that operates Grasberg - from paying Indonesian company tax.
"Freeport Indonesia," the Financial Review reports, "was the only foreign-controlled company to be granted the tax exemption, worth tens of millions [of dollars] annually."
Meanwhile, the status of the expansion permit for Grasberg has come under scrutiny in Jakarta. Though signed by Soeharto, the permit may never have been ratified by the Indonesian parliament.
"Around the stockmarket," the Financial Review concludes, "fear that the Grasberg expansion permit will be rescinded or delayed because of the expected Soeharto asset hunt is being blamed for some of the recent weakness in Rio Tinto and Freeport share prices."
Rio Tinto's Indonesian operations have been highlighted recently by a broadly-based global campaign against the company's environmental damage and violations of human rights. In particular, Rio Tinto's attacks on trade union rights in many parts of the world have made it a priority target for networking by the 20-million-strong International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM).