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istory is often forgotten when people discuss the fate of US-based Freeport McMoran'€™s copper, gold and silver mining operation in Papua. People tend to use the current situation to judge what happened in the late 1960s.

People critical of Freeport are quick to point out that the company has plundered Indonesia'€™s mining wealth in Papua since 1967 (or 1973, when its mines began production). They forget, however, to mention the situation at the time when Freeport entered Papua.

We need to consider at least three things about the situation when Freeport was given its mining contract of work (CoW) from the government of then newly-installed president Soeharto.

The first thing is that Indonesia was in a dire economic situation following the fall of strongman Sukarno, who brought Indonesia to its knees at the end of his two-decade-long rule.

In that context, Soeharto drafted a foreign-direct-investment law to attract badly needed investment.  Freeport was the first foreign player to commit to large-scale investment in Indonesia, and the CoW it signed was the first of its kind.

The second thing that needs to be understood is that the Ertsberg mining reserve is located in a remote area of Papua, at a height of around 4,000 meters above sea level, and that 48 years ago, there was no infrastructure at all in the area now known as Mimika regency.

Freeport had to create everything from scratch, building ports and opening an 80-kilometer access road to the Ertsberg mining reserves through challenging terrain. This needed huge initial investment.

Not only that, we have also to recognize that Freeport was a pioneering mining company that rediscovered Erstberg after it was forgotten for a long time after being reported by Jean-Jacques Dozy, who found and named it Ertsberg while he was part of the Colijn expedition to Papua'€™s Carstenz Glacier in 1936.

After hearing of Dozy'€™s report, Freeport launched an expedition, led by Forbes Wilson and Del Flint, to Ertsberg in 1960, when the area was still under the control of the Netherlands. Three years later, the Netherlands handed over Papua to the UN, which later passed it over to Indonesia.

The third and most important thing to remember is that Freeport entered the CoW with the Indonesian government two years before the UN-sponsored Act of Free Choice in Papua in 1969, which confirmed Indonesia'€™s control over Papua.

Imagine if it were not Freeport, not a US mining company that had been given the license to mine in Papua, would the US have supported the Act of Free Choice in Papua? The Act of Free Choice gave Indonesia legitimate control over the area.

As such, granting Freeport the CoW to mine copper, gold and silver in Papua served Indonesia'€™s geopolitical aims of that time.

The same geopolitical argument is still valid now, at a time when independence aspirations still run high among Papuans.

That'€™s why President Joko '€œJokowi'€ Widodo is careful in handling Freeport'€™s case, amid loud calls from some quarters '€” including from his own inner circle '€” to nationalize Freeport.

What Freeport is now asking from Jokowi'€™s administration is certainty regarding its operation after its second CoW expires in 2021.

According to Freeport Indonesia president director Maroef Sjamsoeddin, if the government does not provide certainty for the firm'€™s operation beyond 2021, it will likely lay off 70 percent of its 30,000-plus workforce in 2017, when its mining operation at the Grasberg open-pit mining site is set to end.

If the Grasberg mine ceases operation in 2017, Freeport'€™s production will fall 70 percent from its current production level of 240,000 tons of ore per day.

The implication would be huge, especially for Mimika regency and Papua province in general, because Freeport'€™s operation currently contributes 91 percent to Mimika'€™s gross regional product and 37.5 percent to Papua'€™s.

To avert such an alarming situation, Freeport needs to invest a large sum of money into its underground mining operation. To do that, it needs a license from the government and certainty over its operation beyond 2021.

Freeport has invested US$4 billion in its DOZ and Big Gossan underground mines, with mining tunnels now spanning 500 kilometers underground. Beyond 2017, all Freeport mining operations will be underground.

Freeport plans to mine three more underground sites, namely Deep MLZ, Grasberg Underground and Kucing Liar. To develop them to their full potential, it needs to invest another $15 billion and $2.3 billion.

It is a huge investment for any Indonesian entity. Therefore, nationalizing Freeport'€™s assets is not an option now. What the government needs to do is to maximize the benefits from Freeport.

After renegotiation of the second CoW, the government now gets around 60 percent of all revenue from Freeport'€™s Papua operation, including from royalties and various taxes. If that'€™s not enough, the government can sit down and negotiate further with Freeport for a larger share of the income.

But the government cannot hold Freeport hostage. Certainty over Freeport'€™s operation beyond 2021 is badly needed to ensure continuity of operation and economic multiplier effects for local people in Papua.
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The writer, the executive director of The Jakarta Post, visited Freeport'€™s mining operation in Mimika regency in Papua over the weekend. The visit was at the invitation of PT Freeport Indonesia.