Digging the World’s Largest Gold Mine, What is Freeport?

Time: 2017-08-16
Digging the World’s Largest Gold Mine, What is Freeport?

Operated by Freeport, the Grasberg Mine in Papua is currently the world’s largest gold mine and the third largest copper mine.

But what is Freeport really? Who controls the company and where does it operate?

Freeport McMoRan was originally founded in 1912 and back then was named Texas Freeport Sulphur Company after its birthplace of Freeport, Texas. On its conception, Freeport concentrated on mining sulphur along the US Gulf Coast before it started diversifying by acquiring deposits of manganese in Cuba.

Eventually, Freeport began mining for nickel, potash, cobalt, kaolin, copper, molybdenum, and gold and renamed itself to Freeport Minerals Company in 1971 to reflect its growing mineral portfolio.

A decade later, Freeport merged with McMoRan Oil and Gas to become Freeport McMoRan. The second word’s unique capitalization comes from the founders’ last names: William Kennon McWilliams Jr., James Robert Moffett, and Byron McLean Rankin Jr.

Freeport’s current Board of Directors includes Gerald J. Ford, Richard C. Adkerson, Lydia H. Kennard, Andrew Langham, Jon C. Madonna, Courtney Mather, Dustan E. McCoy, and Frances Fragos Townsend. They are advised by James Robert Moffett, J. Bennett Johnston, Gabrielle K. McDonald, and J. Stapleton Roy who all sit in the Board of Advisors.

Currently, Freeport is operating mines in Arizona (US), New Mexico (US), Colorado (US), Chile, Peru, Spain, and Indonesia. In 2015, Freeport collected USD 15.877 billion in revenue but at the same time notched a net loss of USD 12.089 billion.

Two-thirds of its income comes from copper, 11% from petroleum, 10% from gold, 5% from molybdenum, and the remaining 7% from sales to energy company Phillips 66. Freeport employs about 34,500 people, including 12,400 in the US and 12,100 in Indonesia.

The Grasberg Mine in Papua is currently the world’s largest gold mine and the third largest copper mine. 90.64% of the mine’s operating company, Freeport Indonesia, is owned by Freeport while the remaining 9.36% is owned by the Indonesian government.

It is divided into two blocks: a 27,400-acre area where Freeport is allowed to conduct exploration, mining, and production activities (Block A), and a 413,000-acre area where only exploration activities are permitted (Block B).

In Papua, Freeport has been involved in multiple controversies over the years. In 2005, it was reported by the New York Times that Freeport gave money to Indonesian military and police officers almost USD 20 million from 1998 to 2004 to secure their properties in Papua. Freeport did not deny handing out the payments, but claimed the fund was meant for food, travel, housing, infrastructure, fuel, vehicle repairs, and allowances.

Meanwhile, an anonymous employee was reported to work on monitoring the emails and telephone conversations of environmental activists. This is crucial because according to a 1996 environmental audit endorsed by Freeport, more than 28 square kilometers of rainforest was “severely impacted” by the mine’s operations.

Furthermore, about 3.2 billion tons of waste rock will be dumped into the local rivers. These rocks generate acid and has consequently polluted a nearby lake. Over the past several years, workers have staged multiple strikes to demand higher pay, protest against a fatal accident, and other purposes.

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