Expats gunned down near Grasberg

An ambush along a road near Freeport-McMoRan Copper & Gold‘s (FCX-N) Grasberg mine in Indonesia’s Papua province has left three dead.

A band of about 15 people armed with M-16 automatic weapons and a rocket launcher attacked a convoy of mini-vans and SUVs carrying mostly international school teachers and their families.

Taking a day off from working at the Tembaga Pura International School, a facility provided for expats working at Grasberg, the group had just begun travelling along the main road that connects the mining town of Tembagapura in the highlands to Timika in the lowlands, 100 miles to the south.

The assault left two American expatriate teachers and one Indonesian dead, and 10 injured, including eight American expatriates.

Police identified the deceased as Ted Burcon, Rickey Spear and Bambang Riwanto. The two schoolteachers were employees of International School Systems, and some of the injured are employees of KPI, an Indonesian logistics contractor.

The injured, which included a 6-year-old American girl, were evacuated to Jakarta or Townsville, in Australia’s Queensland State, for treatment. At last report, none was in critical condition. The survivors’ identities have not been released.

The violence appears to relate to a long-simmering separatist movement in Papua province (formerly Irian Jaya) which seeks to break away from Jakarta’s 40-year rule. Among separatist groups such as the Free Papua Movement, the Grasberg mine has been viewed as benefiting outsiders to the financial and environmental detriment of indigenous Papuans. However, the Free Papua Movement has denied responsibility for the killings.

The government of Indonesia says it “condemns the barbaric shooting by an armed separatist group” and that it is “determined to apprehend the perpetrators of this heinous act of terror and to bring them to justice.”

Soon after the attack, some 250 Indonesian army troops engaged in active pursuit of the armed band in the surrounding jungle, killing one member.

Freeport says mining and related operations at Grasberg were not affected by the shooting, and that security has been beefed up.

During a conference call, Freeport Chairman James Moffett said that he wanted to “highlight that our biggest concern was to reassure that our people at our mine site are safe and our communities are safe. This thing happened in a very remote part of the road…so it was not in an area that endangered any of our workforce, other than the fact that these schoolteachers were in the wrong place at the wrong time.”

The company also reports that aggregate production of copper and gold for the third quarter through Sept. 1 was 170,000 tons copper and 635,000 oz. gold, with its subsidiary PT-Freeport Indonesia’s share being 142,500 tons copper and 519,000 oz. These production figures should enable Freeport to achieve its third-quarter sales projections of 210,000 tons copper and 800,000 oz. gold.

However, this stark reminder of Indonesia’s high political risk has certainly affected shareholders’ evaluation of Freeport: shares sank more than 10% to US$14.70 on the first day of trading following the attack.

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