September 2, 1996

"A fossil of the sixties": Mine expert attacks environmental audit of one of world's biggest mines

The Freeport/RTZ Grasberg copper-gold mine in West Papua (Indonesia) is one of the biggest in the world.

Last year, the US agency OPIC withdrew political risk insurance from the mine, on environmental grounds.

In the face of such criticisms the company commissioned an environmental audit from the well-known mining consultants, Dames and Moore. While criticising Freeport/RTZ for some of its operations, Dames and Moore nonetheless considered that a strong effort was being made to rectify the problems. In response to the Dames and Moore audit, and suffering from heavy political pressure from Freeport, OPIC has temporarily resumed political risk insurance.

Now, however, a leading European geologist, with direct experience in the region of the mine, and acknowledged as a world expert on the impacts of copper mining, has issued a damning indictment of the Dames and Moore report.

According to this expert:

• the Dames and Moore report is "quite superficial" and hedged about with qualifying phrases which "can justify almost any mode of operation". the impacts of the huge amounts of rock waste from the mine have not been properly calculated
• the highly toxic effects of copper in the marine environment have been virtually ignored
• the site used for disposal of the wastes and the construction of levees to contain further tailings (mill wastes) are inadequate.
• the dangers of acid rock drainage (ARD) are not properly addressed - yet these constitute a "chemical reactor" which it will be extremely difficult to control.
• the mine's mode of operation is a "fossil of the 1960's", because the company has not improved its environmental practices so that its practices in 'developing' countries match those insisted on in 'developed' countries.

In releasing this expert's critique, a number of organisations concerned about the Freeport/RTZ mine are calling for the immediate initiation of a fully independent Environmental Impact Assessment, before any further expansion of the mine's operations, They include: West Papua Forum, World Development Movement, Tapol (Indonesia Human Rights Campaign), Minewatch, Partizans, Survival International.

The expert's report

1. Introduction

A copy of the Executive Summary of the Dames & Moore environmental audit report on Freeport was received in early July from a British NGO. The author of this paper was asked to briefly review the audit and make comments on the environmental impact of the Freeport operation at Ertsberg/Grasberg in general.

Although described by its authors as an Executive Summary, the 42-pages document now reviewed is actually entitled "PTFI Environmental Audit Report, and to the author's knowledge, no other version is being made available for public comment. The report is quite superficial. Important data on ore reserves, production and volumes of residues generated are missing. Only scant analytical data on water and sediment quality are given and important information e.g. on the potential mobilization of copper from tailings and waste rock deposited in the lowlands is not included.

Following a short description of the mining project, selected aspects of Freeport's operations at Grasberg and Ertsberg are analyzed in the order in which they appear in the audit report.

2. Waste rock and tailings disposal by the Grasberg mine

The most critical environmental impact of Freeport's operations is the discharge of waste rock, overburden and tailings into the head waters of the Otomona-Ajkwa river system. The basis of any evaluation of this impact is the calculation of the volume of rock material to be disposed of, and the mode of disposal. Detailed information on both issues is not included in the Dames & Moore report.

The Grasberg deposit holds reserves of about 1006 Mt of ore at 1.22 wt. % Cu, 1,51 g/t gold, and 3.28 g/t silver (Mining Annual Review 1995), and mine life is now put at 45 years (1990 -2035). Presently, 125,000 tons/day or 45 Mt/a (million tons/year) of ore at a cut-off grade of 0.85% Copper are processed and subsequently discharged as mill tailings. The mill is to be expanded to a capacity of 190,000 tons/day; construction is expected to begin later this year (Mining Journal June 14, 1996).

According to a March 1992 article in the Mining Magazine, the stripping ratio (the relation between waste rock/overburden and ore) at the Grasberg deposit is 4.5:1, i.e. in order to extract one ton of ore, 4.5 tons of waste rock have to be removed. Therefore, 562,500 tons of waste rock per day or about 200 Mt/a have to be disposed of (at an ore production rate of 125,000 tons/day). However, the stripping ratio of 4.5:1 probably refers to pre-ore stripping and may eventually fall to 3.0:1. The Dames & Moore report states that a total of 3,200 Mt of overburden and waste rock are to be removed from the Grasberg open pit.

Overburden and waste rock go over the west side of the pit, into the upper Wanagon valley. The Dames & Moore audit fails to report on the stability and character of the waste dump. The description, and conclusions, given below are based on a visitor's observations (an American economic geologist) in late 1994.

The Wanagon waste dump is a failing (erodible) .structure similar to the waste dump operated at the Ok Tedi mine in the highlands of Papua New Guinea. Given the steep slope of the dump and high rainfall at the site (estimated at 4,000-6,000 mm/year), a significant proportion of the waste will be washed down southwards to the Aghawagon River and Lake Wanagon. Due to abrasion during aluviatile transport, the waste rock material becomes finer and mixes itself with the tailings downstream. It is unclear whether Lake Wanagon acts as an effective sediment trap and what its storage capacity is.

The de-watered tailings slurry is directly discharged into the Aghawagon river which joins with the Otomona River downstream. Presumably, all of the tailings material is fine enough to be transported as wash load down to the lowlands. Although the Dames & Moore report only refers to tailings deposition in the lowlands and delta, there certainly is a significant amount of waste rock in the mining residues transported as suspended load.

3. Review of the Dames & Moore Environmental Audit

section 4. 0 Legislative and regulatory framework

P.T. Freeport operates under a Contract of Work (CoW) with the Government of Indonesia. The CoW system, now in its fifth generation, has three important features, which are (quotation from a seminar paper on "International mining investment and regulation" held by the Centre for Petroleum & Mineral Law & Policy, Dundee GB, in September 1995):

• Status of Law: A CoW supersedes all other government regulations and is immune from the effects of any subsequent changes in legislation.
• Land Rights: A CoW takes precedence over any existing land rights. Procedures for compensation and resettlement of local landowners are relatively uncomplicated.
• Duration: A CoW can last up to thirty years with the possibility of extensions. As these legal features also have implications for the environmental management of Freeport's operation, they should have been discussed in the audit report.

section 6. 0 Tailings Management

The statement that tailings derived from the Grasberg mine contain no toxic chemicals and are low in trace metals like arsenic, cadmium and mercury may be correct but is of little use -tailings and eroded waste rock do contain copper at highly elevated concentrations, and copper is both geochemically mobile and highly toxic to aquatic organisms.

The conversion of the Otomona-Ajkwa freshwater resource, which had been used for washing, bathing, river transport, fishing and - possibly - drinking water supply for the local indigenous people, into a slurry channel carrying several thousand milligrams per litre of suspended solids, is much more than "unsightly and unwelcome" and aesthetically disturbing!

The discussion of alternative methods of tailings disposal is illuminating. The construction of a lowlands tailings storage of a calculated required dimension of 36 km2 was rejected because of the associated environmental risks - yet the company is now building a poorly engineered 130 km2 storage facility on the "foundation" of a catastrophic flow event of the Ajkwa, which flooded 30 km2 in the Timika area in 1990. The company is currently constructing two levees about 3 km apart along the lower Ajkwa (about 40 km length) to prevent further lateral over bank flow. The audit report quotes sediment transport studies which indicate that most of the mining residues will deposit in the artificial floodplain. Given the dynamic flow characteristics of the Otomona-Ajkwa river system (very high transport capacity at high river stages) and the fact that most tailings (Ok Tedi mine: 78%) presumably are finer than 100 um, this is doubtful. ln any case, storage within the levee containment will mainly be temporary because erosion of the deposits will begin as soon as the suspended load of the Ajkwa decreases (when mining ceases).

On the other hand, a surface of up to 130 km2 between the levees may finally be covered with metal sulphide-rich sediments, exposed to weathering, i.e. oxidation. The audit report fails to comment on the potential danger of copper leaching from these deposits, although it is known to occur under similar climatic conditions in the Fly River floodplain which is impacted by mine-derived sediments from the Ok Tedi project. Even if dense vegetation cover establishes itself on the Grasberg tailing sediments, copper may continue to be mobilized since dissolved organic substances (humic and fulvic acids produced by rotting vegetation) bring copper into solution.

section 7. 0 Overburden management

The Dames & Moore audit reports that acid rock drainage (ARD) is already occurring from the main waste dump. ARD is caused by the bacterially mediated oxidation of sulphide ore minerals and subsequent generation of sulphuric acid; a process which only starts when there is little or no buffering by alkalinity- producing minerals, mainly carbonates. The reactions involved in sulphide oxidation are complex and, to some extent, auto that H+ and Fe3 + ions and the heat produced in the reactions facilitate various parts of the reaction cycle. At first sight, the development of ARD from the Grasberg dump is amazing because the copper-gold intrusive complex is hosted by carbonate rocks (New Guinea Limestone Group of Tertiary age, MacDonald & Arnold 1994). Due to the morphology of the ore body, the overburden and waste rock removed so far did not comprise carbonate rocks, which will be mined once the open pit gets deeper. The fact that ARD has already developed is alarming. A waste rock dump from which ARD is observed can be described as a chemical reactor - once the sulphide oxidation has started, it is extremely difficult to stop. The oxidation of sulphide minerals like pyrite (FeS2) and chalcopyrite (CuFeS2) continues as long as sufficient oxygen and water are available (supplied by air in porous rocks or by percolating rainwater). ARD may be controlled by - preventing the percolation/infiltration of water and oxygen by covp with a lined bottom, stable walls, graded surface, seepage collection dikes etc., but will not work well on a "wild" dump like Freeport's. Huge amounts of chemicals would be needed to control ARD in the dump and the steep, sliding dump faces and high precipitation complicate the situation further. A similar process of acid generation may occur in the lowlands storage facility, although admixture of carbonate-rich natural sediments from the Ajkwa catchment (hopefully) has a positive buffering effect. ARD from the tailings deposits in the floodplain of the Kawerong/Jaba rivers was observed downstream of the Panguna mine on Bougainville, Papua New Guinea (Salomons 1995).

The measures foreseen in the "Overburden Management Plan" e.g. placement of thick layers of non-acid producing waste over the pyritic material, presumably will have only marginal effects on ARD generation.

section 8.0 Resource conservation and recovery

The cut-off grade at Grasberg - i.e. the point below which ore is not considered economic to be milled - is 0. 85 wt. % copper, the highest of any copper mine in the world. This value is equivalent to the average ore grade of the Ok Tedi mine, which operates at a cut-off of 0.2% copper (admittedly, the stripping ratio of 1:1 is much better). Dumping of all ore which contains less then 0.85% copper at Grasberg drastically increases the environmental impact of the operation and is a waste of valuable resources which should be a concern to the Government of Indonesia. Grasberg's production costs are among the lowest in the world.

section 10.0 Environmental monitoring

The environmental monitoring and additional investigations of water and sediment chemistry, sediment transport, trace metal mobilization, and aquatic biology, which PTFI is currently maintaining, appear rudimentary compared to what other companies (e.g. Ok Tedi Mining Ltd.) are doing. PTFI is fulfilling its obligations under the agreements with the Indonesian Government authorities (KPL, Environmental Monitoring Plan) but makes little effort to address highly important issues like trace metal and turbidity pollution of the Arafura Sea. It is interesting to note that submarine tailings disposal was discarded because of environmental considerations - the Arafura Sea is shallow and there are coral reefs close to the shore. Bewilderingly, however, the continued massive discharge of tailings material carried in suspension into that same sea is apparently not considered a problem.

section 12.0 Rehabilitation

The audit gives some information on overburden reclamation. It is unclear to what deposits of overburden this refers to - the main waste rock and overburden dump with its steep and sliding surfaces certainly can only be revegetated and stabilized in small sections, but is this considered sufficient?

Due to the interruption of local surface drainage to the west of the newly constructed Ajkwa levee (in the lowlands), a stagnant water body has formed in which forest trees have drowned. Yet the audit report terms this the 'creation of an extensive lake and wetland system', even calling it a 'significant achievement'.

4. Concluding remarks on methodology and approach of the Dames & Moore report

The audit report frequently uses phrases like "(...) PTFl has adopted the most suitable option considering the circumstances that apply" (page 3). Under "given circumstances" and "economic constraints", any mode of operation may be justified - this is merely a political question. The important issue is the environmental impact on a fragile and valuable ecosystem in which tens of thousands of people are living, and whether it is deemed appropriate to eliminate and/or endanger part of this ecosystem in order to ensure the operation of one of the world's most profitable mining projects.

Today, most multinational companies apply similar or even identical environmental standards to their projects in developing countries as they do at home - the Freeport operation in these terms is a fossil of the 1960s.

5. References

Hettler, J. & Lehmann, B. (1995). Environmental impact of large-scale mining in Papua New Guinea: Mining residue disposal by the Ok Tedi copper-gold mine. Final report on a study funded by the United Nations Environment Programme. SPREP Reports and Studies Series No. 90, 1-71.

MacDonald, G.D. & Arnold, L.C. (1994). Geological and geochemical zoning of the Grasberg Igneous Complex, Irian Jaya (West Papua), Indonesia. J. Geochem. Expl. 50, 143-178.

Salomons, W. (1995). Environmental impact of metals derived from mining activities: Processes, predictions and prevention. J. Geochem. Expl. 52, 5-23.

Various articles from the Mining Journal, Mining Magazine and Mining Environmental Management

With best wishes,

Andy Whitmore Minewatch 54 Camberwell Road London SE5 0EN

Phone: +44 171 277 4852 Fax: +44 171 277 4853