Indonesia Human Rights Committee,
Box 68-419,
Auckland
12 September, 2008
Media Release: Divestment Urged on CFIs
The Indonesia Human Rights Committee has written to five of the Crown Financial Institutes (CFIs) and to the Minister of
Finance calling on each of them to follow the example of the Norway Government Pension Fund and divest from Freeport
McMoran Inc and Rio Tinto Corporation. Norway has taken this step after an intense and detailed assessment of the
evidence of ‘severe environmental damage’ caused by the operations of the open cast Freeport McMoran gold and copper
mine in West Papua.
The Norwegian Government has just announced its decision to divest from the Anglo-Australian Rio Tinto Corporation which
is a 40% joint venture partner in the operations of the controversial mine. This follows Norway’s June 2006 decision to
divest from the US company Freeport McMoran Inc.
‘We applaud the Norwegian Government and its Ethical Council for their careful assessment of the destructive
environmental impacts of the mine on the alpine and rainforest environment of West Papua,’ said Maire Leadbeater
speaking for the Indonesia Human Rights Committee. ‘Norway is playing a leading role internationally in promoting
responsible investing and it is time New Zealand, a much closer neighbour of West Papua, followed suit.’
Collectively the five CFIs have over $64 million rnziinvested in Rio Tinto and Freeport McMoran. The breakdown is as
follows:
Earthquake Commission $12,547,497.93, Public Trust $691,000, Government Superannuation Fund Authority $6,955,617.55, ACC
$18,373,726.01 and New Zealand Superannuation Fund $25,446,653.00 according to figures obtained under the Official
Information Act and from the Equity Portfolio of the NZ Super Fund.
‘Freeport McMoran is being referred to as the ‘world’s worst eye-sore’. For the West Papuan people the mine has also
brought militarisation, grave human rights abuses, and the loss of traditional land, livelihood and spiritual
wellbeing. Most New Zealanders are appalled when they learn that their tax dollars go to support this iniquity.’
Letter follows.
Indonesia Human Rights Committee,
Box 68-419,
Auckland
11 September, 2008.
The Managers,
Accident Compensation Corporation,
PO Box 242,
Wellington.
Earthquake Commission,
PO Box 790,
Wellington.
Public Trust,
PO Box 5067,
Wellington.
Government Superannuation Fund Authority,
PO Box 3390,
Wellington, 6015.
New Zealand Superannuation Fund,
PO Box 106-607,
Auckland.
Hon Dr M Cullen,
Minister of Finance,
Parliament Buildings,
Wellington
Dear Managers and Dr Cullen,
The Indonesia Human Rights Committee calls on the following Crown Financial Institutes: the Earthquake Commission, the
Public Trust, the ACC, the Government Superannuation Fund Authority and the New Zealand Superannuation Fund to divest
their shareholdings in both Freeport McMoran Inc and Rio Tinto Corporation.
Just this week the Norwegian Government Pension Fund, one of Rio Tinto’s largest shareholders, announced the sale of its
US $890 million holding in Rio Tinto Corporation. The Norwegian Government made this decision because it considers that
Rio Tinto cannot evade responsibility for the severe environmental damage at the Freeport McMoran mine in West Papua,
since it is a joint venture partner in the enterprise. The environmental damage is held to be irreversible and to have
harmful impacts on the ecology far away from the mine location.
The Freeport McMoran gold and copper mine in the Timika area of West Papua conducts a mining operation which has caused
unparalleled environmental destruction to a pristine alpine rainforest environment. If operations continue at the
current rate its area will eventually cover 230 square kilometres and the excavations will be twice as great as those
undertaken to build the Panama Canal. Each day the mine dumps 230,000 tonnes of tailings or silty sludge into the
local river system.
It should be noted that:
* Freeport has not made available any external environmental audit of its operations since 1994, when the Overseas
Private Investment Corporation cancelled the company’s political risk insurance.
* The riverine system of mine waste tailings disposal is now banned in most parts of the world because the sediments
containing heavy metals cause ecological devastation. The World Bank will no longer fund mining projects that use this
system of disposal.
* Millions of tonnes of waste rock are piled up in the high alpine valleys and leaching unstable metal sulphides or
Acid Rock Drainage.
* The mine has led to the displacement of thousands of indigenous Papuans and destroyed their traditional subsistence
forest-based way of life based on fishing and hunting. In the local regency more than half the people live below the
poverty line, lacking access to health care, adequate food and clothing.
* The mine has created a boom town complete with the social costs of a rapid influx of migrant labour: prostitution,
alcohol abuse, violence and a soaring incidence of HIV/AIDs.
* Freeport continues to pay the Indonesian military to provide security for the mine, despite the fact that the military
has been responsible for grave human rights abuses in the mine area, including torture, illegal detentions,
disappearances and extrajudicial killings.
*The respected Indonesian environmental organisation WALHI (Friends of the Earth) states that the toxic tailings waste
has all but destroyed freshwater aquatic life. This ecological destruction now extends out into the mangroves of the
Ajkwa estuary and a plume of dissolved copper from Freeport's tailings extends 5 to 10 km offshore. The pollution also
threatens the World Heritage listed Lorenz National Park considered to be a conservation jewel.
We believe that investing in Freeport McMoran or Rio Tinto should be considered as a breach of the Crown Financial
Institution (CFI) mandate to ‘avoid prejudice to New Zealand’s reputation as a responsible member of the world
community’. More importantly these investments make New Zealand complicit in one of the most environmentally
destructive and socially devastating enterprises in the world. This is at odds with all ethical investing principles.
We therefore urge the CFIs to follow the example of Norwegian Government Pension Fund and divest all shareholding in Rio
Tinto Corporation UK, Rio Tinto Corporation Australia and Freeport McMoran Copper and Gold Inc.
ends