 Syndicate 2:

The Freeport Mine, Irian Jaya, Indonesia:  Abiyan Satrio/29118155

 Andrew Cokro P./29118014
“Tailings & Failings” – Stakeholder Analysis  Clarashinta/29118126
 Fela Putri R./29118090
 1
Business Strategy

Partnership with local government
to support their actions
• New Investment Law
• National permit
Joint venture with Mitsubishi and
Fluor Daniel to expand and create
new smelter
Sell 11.4% of it Stocks to RTZ
$750 Million
Investment
Become Largest in the world
 Business Strategy
Diversification and
Create Access Exploration Maximize Performance

Roads through New Towns 25,000 tons ore Allow 160,000 tons/day,
the jungle Tunnel 300 million copper
From sea level Tramways 139,000 ounces of gold 250,000 tons/day
to Mill
Seaport
+
1.9 million ounces of silver
Produced
6, 000 feet
Airport $300,000,000
Hotel Annual revenue
At the end of 1988

Ertsberg to Grasberg
Feasibility study
  Fulfill all their financial obligation to the Government of Indonesia.
Giving direct and indirect Financial Benefit for the nation.
Ethical doing  Develop environmental management team

Impact for the  Having supports from the government.

company  Receive constructive comments from environmental forums and
social audit.
  Low percentage of local people employed, social and cultural
fragmentation
 Provocative alliance between the company and Indonesian army,
Unethical causing deaths and injured.
 Waste into local rivers and associated risks to the environment,
health, and safety.
 Every contract excluded local people

 MIGA, the World Bank’s political risk insurance agency and OPIC
came under pressure to cancel its policy.
Impact for the  Environmental and human rights problem cause the company
company difficulties to do expansion.
 Create Image and credibility problems
 High liability and remediation costs. Trigger a conflict with
shareholders.
 Actions to support philanthropy,
Actions to ensure the company
participate in community service,
operates honourably and ethically
and better quality of life

Fullfill their financial obligations Village Based economic

and work under the law development.
Souce: Freeport official websites

CORPORATE
SOCIAL
RESPONSIBILITY

Actions to enhance employee well-

Actions to protect and sustain the
being and make the company a
environment
great place to work

Improve relationship with local Develop environment management

community to create better working team
environment
 Garbage collection, water recycling,
TAILINGS MANAGEMENT reclaiming dumps, building sewage
treatment facilities

ENVIRONMENTAL
SUSTAINABILITY
STRATEGY

Developing recycling systems,

Laboratory analyses of water and
Experimenting with reclamation of
plants
tailings, growing plants
 1
Stakeholders
Owners Employees Governments Customer
Freeport McMoran Indonesian Suharto (President) Government
PT Indocopper Expatriate National Army
Investima
RTZ
Mitsubishi
Fluordaniels
MIGA
OPIC
Community Competitors Social Activists Groups
Local Tribes: Global competition Wahli
Amungme and Kamoro Environmental NGO
Environments International Rivers Network
Ajkwa river America and Australia NGO
 2
Stakeholder’s Stake
Stakeholders Legitimate Power Urgency
Owners High High High
Owner has legitimate to change their internal Owner has power to take over the business Owner has urgency to get the profit of the
policy company
Customers - High High
Customer has power to shift their business to other Customer has priority to be served by the
company company
Employees - Medium Medium
Employee has power to do labor strike find the way to make a good relationship
with their employees
Governments High Medium Medium
Governments has legitimate about policy or Government as property/land owner has power for Government policy will affect the company
rules. PTFI sustainability. PTFI must find the way how
to deal with it.
Community/Local Tribes - Low Medium
Local People has low power against PTFI It will affect the company. So, it will be
better to find the way how to avoid the
chaos like demonstration before it’s
happens
Competitor - Low Low
PTFI is the only biggest company In Indonesia that
mining the gold, silver .etc.
Social Activist - Medium Medium
the power to gather the community against PTFI Company should find the way to
accommodate environmental problem
 3
Opportunities and Challenges
Stakeholders Opportunities Challenges
Owners Get Investment to develop PTFI Business Increasing demand but limited
resources
Business receive critics
Customers Signing contract from major customer Customer
Profit from the customer
Employees Loyalty Unsafe working environment
Performance Labor strike
Skill
Community Support Maintaining relationship with local
Image and Credibility
Social activist Image and Credibility Cannot be totally environmental
friendly business
Governments Give the support and permission from Changing regulation
government
Joint venture
 4
Responsibilities

Stakeholders Economic Legal Ethical Philanthropic

Owners X X
Customers X
Employees X X
Community X X
Social activist X X
Governments X X
 4
Responsibilities
1. Owner
Economic : Investment for sustainability of the company and maximize the profit
Legal : Arrange the policy for internal between company and shareholder/owner

2. Customers
Economic : Serve the customer and maintain the relationship with the customer

3. Employees
Economic : Pay their salary based on government regulation
Ethical : Reasonable Working Hour, comfortable working place and appreciate for
their good working performance

4. Community
Ethical : Keep the environmental safe for local people
Philanthropic : Develop local community

5. Government
Economic : Pay Tax and royalty for the government
Legal : Obey every government policy

6. Social Activist
Ethical : Make a good relation with local people
Philanthropic : Keep the surrounding environment such as river clean from pollution
 5
Strategy
Stakeholder’s potential for threat to Organization

High Low
Owners Customer
Government
Employees
High

Strategy: Strategy:
Stakeholder’s Maximize profit, production Giving Compensation to Employees
potential for R&D New Policy, permit, etc.
Cooperation with Community Social Activist
Organization Competitor
Low

Strategy: Strategy:
Collaborate Good Image and credibility
Included Locals in decision making Negotiation
Transparency R&D for environmental management