EMPOWERING THE PAPUAN COMMUNITY Through Corporate Social Responsibility (CSR) from the Wabu Block

The Wabu Block is a gold mine located in Intan Jaya Regency, Papua Province. In the Work Contract between PT. Freeport McMoRan and the Indonesian government, it is clearly stated that the Wabu Block is within the Freeport concession area. In October 2015, in accordance with the Work Contract, PT. Freeport Indonesia is required to divest 10% of its total shares. In addition to the divestment, PT. Freeport Indonesia also is to reduce its total concession area from 212,950 hectares to 90,650 hectares. The Wabu Block is one of the areas removed from the concession of PT. Freeport Indonesia.

EMPOWERING THE PAPUAN COMMUNITY Through Corporate Social Responsibility CSR from the Wabu Block

Based on Law no. 3 of 2020 concerning Mineral and Coal, there are severals chemes that need to be considered in the transfer of mining areas from foreigners to the Indonesian government.According to information from mining observer Ferdy Hasiman (Kompas,23/9/2021), land transfer from foreign companies should be prioritized and given to the Indonesian government. The process of transferring mining areas must also be carried out through an auction process. According to Ferdy, main priority is given to state owned enterprises in the mining sector, then if SOEs are not interested the second priority is to give it to local enterprises, both regency and provincial. That is if both parties previously do not want the last mining area to be auctioned off to a private company. For the record, the auction process must be carried out in a transparent manner.

The Wabu Block is a mining area in Papua with great potentials. According to information from the director of PT.Freeport Indonesia, although mining activities have been carried out for decades, the Wabu Block still has a potential gold reserve of 4.3 millionores (Tribunnews, 3/7/2015). Meanwhile,according to data from the Ministry of Energy and Mineral Resources(Tempo, 24/9/2022), the Wabu Block still potentially holds 117.26 tons of gold ore.In more detail, 117.26 tons of gold ore has an average gold grade of 2.16 grams per ton, and a silver grade of 1.76 grams perton. If converted into rupiah, assuming a price of $1,750 per troy ounce, Indonesia will gain a profit of $14 billion, or Rp.300 trillion. When compared with the Grasberg open pit mine, it has produced 46 million ounces of gold during 1990-2019 (Energy World, 27/01/2020).

The huge potential stored in the Wabu Block needs to be distributed evenly. The new management of the Wabu Block needs to pay attention to at least four stakeholders. First is the central government, second is the local government,third is the private sector, and last is the community. As stated in Law No. 3 of 2020, the main priority of the new administrator of the Wabu Block is the central government. Management of the Wabu Block by the central government can bean additional source of income for the Indonesian State Budget in the following year. However, local governments also need to pay more attention to the Wabu Block. If properly managed, the Wabu Block can be a source of additional Regional Income (PAD) for the Papuan Regional Revenue and Expenditure Budget (APBD) the following year. Meanwhile, the private sector should be the last party to manage the Wabu Block. The majority of state revenues from private companies come from taxes, but the amount of taxes is not too large when compared to revenues through direct mining activities.

The stakeholder that should not be forgotten is the community. As a group of individuals who grew up in the area,it would be strange if the community did not directly benefit from the Wabu Block. The scheme that can be done to empower the community is through Corporate Social Responsibility (CSR). State owned enterprises (BUMN), Regional owned enterprises (BUMD), and private companies need to allocate a few percentage of their total budget to empower the surrounding community.The context of this empowerment can vary, such as building community road access, providing education or repairingschools, holding programs to improve the community’s economy, and so on. If the company managing the Wabu Block carries out CSR properly and correctly,then the benefits will not only be gained by the Wabu Block administrator, but also by the surrounding community.

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