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WALHI report on Freeport-Rio Tinto

May 2006 - Executive Summary

This report presents a new and independent picture of the environmental impacts of the Freeport mine, a Freeport McMoRan and Rio Tinto joint venture, which although one of the largest mines in the world, operates under a shroud of secrecy in remote Papua province.

This report documents severe environmental damage and breaches of law, based on a number of unreleased company and government monitoring reports, including an Environmental Risk Assessment (ERA) commissioned by Freeport-Rio Tinto and presented to the Indonesian government, but not made available to the public. The following issues are examined, concluding with recommendations for action:

Legal breaches

A key finding of this report is that Freeport-Rio Tinto has failed to comply with government orders to amend its dangerous waste management practices despite years of official findings that the company is in breach of environmental regulations. The law is not enforced by the Ministry of Environment due to the joint venture's pervasive financial and political influence, to the degree that a Freeport-Rio Tinto proposal for circumventing water quality standards seems to be under consideration.

The government has stated that Freeport-Rio Tinto:

• Has been negligent in waste rock management, responsible for repeated slips at the Lake Wanagon waste rock dump culminating in a fatal accident and uncontrolled release of toxic waste (in year 2000).
• Should build a tailings containment dam which complies with the legal engineering standard for dams instead of the current inadequate levee system (in year 2001).
• Relies on legally invalid permission from a local official to use the highlands river system to transport tailings. The company has been asked to build a tailings pipeline to the lowlands (in years 2001, 2006). - Is polluting the river system and estuarine environment in breach of regulatory water quality standards (in years 2004, 2006).
• Is discharging Acid Rock Drainage without a hazardous waste licence, at levels breaching industrial effluent standards, and has failed to establish mandated monitoring points (in year 2006).

• The Lower Ajkwa River contains 28 to 42 micrograms per liter ( g/L) dissolved copper, which is up to double the Indonesian legal fresh water limit of 20 g/L, and many times higher than the applicable Australian fresh water guideline of 5.5 g/L. Further downstream, dissolved copper in the freshwater upper Ajkwa Estuary also breaches the legal limit, with levels around 22 -- 25 g/L, and ranging as high as 60 g/L.
• In the salt water conditions of the lower Ajkwa Estuary, the Indonesian and ASEAN standards which apply are 8 g/L dissolved copper, and Australian guidelines are 1.3 g/L. Freeport-Rio Tinto's pollution breaches the legal limit in this location as well, as dissolved copper averages 16 g/L and ranges as high as 36 g/L.
• The legal limit for total suspended solids (TSS) in fresh water is 50 mg/L.

Copper wastage and pollution

The vast Grasberg deposit ensures a long mine life, so it is most profitable for Freeport to process a huge amount of ore each day, wasting around 14% of the copper in the ore, which remains in tailings disposed of into the river. For the same reason, a large amount of copper-bearing rock has been excavated then dumped instead of processed, because the joint venture chose to pursue higher grade ore as quickly as possible.

Over three billion tons of tailings and up to three or four billion tons of waste rock will be generated throughout the life of PTFI's operations until closure around the year 2040. In total, Freeport-Rio Tinto wastes 53,000 tons of copper annually, released as Acid Rock Drainage (ARD) leachate and tailings into the river. This rate of heavy metal pollution is more than a million times worse than achievable with standard mining industry pollution prevention practices. The wasted copper costs the Papuan provincial government substantial income from lost royalties and creates serious environmental damage in groundwater and in the rivers and estuary downstream.

Acid Rock Drainage

The copper deposits mined by Freeport-Rio Tinto comprise metal sulfides, which when dug up, crushed and exposed to air and water, become unstable, creating a serious environmental problem called Acid Rock Drainage. Almost all waste rock produced from the Grasberg pit from the 1980s up till 2003, amounting to roughly 1,300 million tons, was potentially acid forming. This waste rock has been dumped at several sites around the Grasberg mine, and is producing strongly acidic ARD with an average pH = 3. The copper content of this rock averages 4500 grams per tonne (g/t), and experiments suggest that around 80% of this copper is likely to leach out within several years. Evidence suggests ARD pollution with levels of around 800 mg/L copper is entering groundwater in the mountains.

A risk of ARD exists in the lowlands tailings deposition area because Freeport-Rio Tinto has adopted an unsafe ratio of acid neutralising capacity to maximum potential acidity of only 1.3: 1, lower than mining industry best practice. Acid producing sulfide particles tend to be deposited separately from lighter acid neutralising limestone particles, which can lead to localised acid rock drainage conditions in the ADA.

Engineering inadequacies

Erosion from dumped waste rock pollutes mountain waters, and instability in waste rock dumps has led to several accidents, one fatal. Stability of waste rock dumps is a long-term concern. Sites of significance to the Amungme people have been destroyed, such as Lake Wanagon which has now completely disappeared under the Wanagon Basin waste rock dump. Likewise, a series of beautiful pink, orange and red lakes have disappeared and the Carstensz meadow area is dominated by another waste rock dump which will eventually tower up to 270 meters high, covering 1.35 km2.

The ADA levees, which will reach an eventual height of 20 m in some sections, are prone to erosion and slippage, and fall short of industry best practice for tailing containment. The ADA is both a porous and open-ended system: tailings water enters the local groundwater aquifer, adjacent rivers and Kwamki Lakes; and tailings particles are carried through the ADA into the Ajkwa Estuary and the Arafura Sea.

Vegetation smothering

Tailings deposition smothers healthy plant communities by blocking the diffusion of oxygen into the root zone of plants, causing them to die. This process is already complete through much of the ADA, leaving dead trees and sago palms standing in recently affected areas. There is a risk to populations of locally threatened wildlife species that require the diversity of this natural jungle ecosystem to survive. Besides its conservation value, the biodiverse lowland river, rainforest and wetland area destroyed by tailings deposition was a vital hunting, fishing and gardening area for the Kamoro traditional landowners.

Tailings toxicity and aquatic impacts

Freshwater aquatic life has been largely destroyed through pollution and habitat destruction in the watercourses which receive tailings. The suspended solids from tailings (TSS) are directly harmful to fish gills, eggs, and organisms which are photosynthetic, predatory or filter feeding. Copper inhibits respiration in fish gills. Bioavailability and toxicity investigations have shown that much of the dissolved copper in river water affected by Freeport-Rio Tinto's operations is indeed bioavailable and present at toxic levels.

Dissolved copper at the range of concentrations found in the lower Ajkwa River is of chronic toxicity to most (30% to 75%) fresh water organisms.

Actual toxicology testing by CSIRO and Freeport's analysts shows tailings water and sediment are toxic to shrimp larvae (Caridina sp), adult river prawn (Macrobrachium rosenbergii), minnow larvae (Cyprinodon variegatus and Pimephales promelas), river algae (Chlorella), rainbowfish embryos and larvae (Melanotaenia spledida), and invertebrate animals Gammarus and Nassarius sp.

Heavy metals in plants and wildlife

Levels of toxic heavy metals selenium (Se), lead (Pb), arsenic (As), zinc (Zn), manganese (Mn) and copper (Cu) are significantly elevated in Freeport's tailings compared to natural jungle soil. The concentrations of several of those metals in the tailings exceed US EPA and Australian sediment guidelines, and scientific phytotoxicity thresholds, indicating that toxic effects on plant growth are expected. Controlled tests and field sampling show that plants grown in tailings accumulate these heavy metals in their tissues, posing risks to wildlife that feed on them. At risk through exposure to metals from tailings in the food chain are:

• kingfishers and other fish-eating birds
• brush turkey, fantail and other birds that eat invertebrates in foliage or soil
• cassowaries and other large fruit-eating birds

• mammals such as flying fox or similar-sized animals that feed wholly or partially on fruit
• mammals such as bats which feed on invertebrates in foliage
• mammals such as cuscus which feed on vegetation
• large mammalian omnivores such as pigs.

The Ajkwa Estuary is important environmentally and to local people because it contains terrestrial and aquatic environments with superb habitat diversity, including 25 - 30m high mangrove forests, swamp forests and sago wetlands. The Kamoro people have a significant cultural and nutritional dependence on molluscs from the estuarine area, which are now difficult to find and apparently affected by copper toxicity, and on sago palms, which are already being smothered over a wide area.

Freeport-Rio Tinto's riverine tailings disposal will destroy between 21 - 63 km2 of mangrove forests due to sedimentation. Estuary channels are already clogging with tailings, rapidly becoming more narrow and shallow.

Turbidity in the estuary massively exceeds Australian standards for tropical estuaries, impairing aquatic photosynthesis.

Contamination of estuary food chain

Metals from tailings are contaminating the Ajkwa Estuary food chain. Areas which have received Freeport's tailings have significantly higher concentrations of toxic metals copper, arsenic, manganese, lead, silver, and zinc than nearby unaffected reference estuaries. Wildlife in the mangrove area is exposed through eating plants and invertebrates, which take up heavy metals from tailings sediment, particularly copper. Fish caught in the Ajkwa Estuary have higher minimum levels of copper in flesh than fish from nearby reference sites, and non-mobile aquatic animals living in the Ajkwa Estuary are contaminated with copper in their bodies at levels 100 times higher than normal, up to an extraordinary level of one gram per kilo. The ERA study predicts that small birds and mammals which feed exclusively on estuarine invertebrates may suffer reproductive impairment and reduced fitness, and larger predators (such as raptors) in turn will have less food available as these small birds and mammals become less abundant in the Ajkwa Estuary area.

Ecological disruption

Freeport states that "The estuary downstream of our tailings deposition area is a functioning, bio-diverse ecosystem with abundant species of fish and shrimp." However, the presence of mobile species such as fish and shrimp in the Ajkwa Estuary is not proof that the estuary is healthy, nor that it is safe in the future. Dissolved copper is present in mangrove waters at levels which are of chronic toxicity to 30% - 90% of saltwater organisms. There are currently around 35% fewer species of fish, shellfish, crabs and polychaetes present in Ajkwa Estuary compared to the reference sites. The ERA predicts that up to 68% of aquatic species are at risk in the upper estuary.

The outer Ajkwa estuary, which includes the nearshore Arafura Sea, has between 40% to 70% fewer families of bottom-dwelling animals, and their biomass per area is half that of nearby reference estuaries. Besides these figures, calculation of technical indices of biodiversity confirms that there has been significant disruption to the ecology of the Ajkwa Estuary.

Impacts in Lorenz National Park

The World Heritage-listed Lorentz National Park wraps around the Freeport concession area, its area having been reduced to accommodate the mine. The Lorentz World Heritage Area is one of Indonesia's conservation jewels. The alpine portion of the World Heritage site is affected by polluted groundwater from Freeport-Rio Tinto's acid and copper producing waste rock dumps. Meanwhile, the coastal portion of the World Heritage site is affected by deposition of tailings. Around 250 million tons of tailings will be carried out of the Ajkwa Estuary and into the offshore Arafura Sea, and measurements show a plume of dissolved copper from Freeport's tailings already reaching 5 to 10 km offshore. Tailings are carried by the monsoon current along the coastline, and may come to form up to 20% of the future sedimentation in Lorenz National Park mangrove areas.

The ERA found that mangroves and bottom-dwelling organisms in Lorenz National Park have elevated copper levels, with tailings the likely source, since upstream sites within the Park are unaffected.

Regeneration in the Ajkwa Deposition Area

Mine tailings, which will eventually comprise most of the 230 km2 ADA area, at depths of up to 17 meters, lack organic carbon and other key nutrients, and have very poor water holding capacity. Tests have shown pure tailings cannot support adequate germination or growth of most native or garden plants without intensive fertilisers, compost and/or the import of topsoil. Company efforts to rehabilitate a small and relatively shallow area of tailings have involved unsustainably high inputs and elaborate irrigation systems.

The large ADA area which has experienced dieback from tailings will not return to its original species composition after tailings deposition ceases. Native species which regenerate in tailings are neither especially useful to local communities nor representative of the diverse species which comprised the native jungle and riverine rainforest destroyed within the ADA.

Transparency

Freeport-Rio Tinto operates without transparency or sufficient regulatory oversight. There is no information and public discussion of the current management and future for the mine, including alternatives for waste management, and mine closure planning. Despite legal requirement for public access to environmental information, the company has not made key documents public, including the ERA, nor has it made public any independent external audits since 1999, breaching its environmental permitting requirements. The ERA underestimates key environmental risks, does not look at options for reducing waste disposal impacts, and the independence of the ERA peer reviewers is questionable.

WALHI recommends the government:

• Immediately enforce national environmental law. This should be done by halting Freeport-Rio Tinto operations until breaches are remedied, and prosecuting legal breaches which continue today despite warnings in the early 2000s. In particular: * Dissolved copper and suspended solids (TSS) entering the Ajkwa Estuary must not breach water quality limits for class II of the Water Quality Regulations (2001).
• Acid Rock Drainage must be immediately prevented from entering into surface and ground waters at levels which breach water quality limits for heavy metals and acidity class II of the Water Quality Regulations (2001).
• Undertake its own thorough and regular sampling, instead of relying on company reports, and make all environmental information public according to the Environment Law (1997).
• Re-examine tax and royalty arrangements to improve benefits for affected communities, Papua province, and compensate for environmental damage created so far.
• Establish an Independent Panel to define several scenarios for the future of the Freeport mine, including closure date, processing, and waste management, then to commission a detailed, independent, social and technical review of these scenarios. The review should be used as the basis of an informed discussion by local people and other stakeholders on the future of the mine.

Torry Kuswardono
Mining and Energy Campaigner
Phone:+62-(0)21-791 93 363
Fax:+62-(0)21-794 1673
Email: torry@walhi.or.id