Copper mining in the late 1980s was dominated by the FreeportMcMoRan Copper and Gold Company, a United States firm, which, through its joint venture subsidiary Freeport Indonesia, had operated the Ertsberg Mountain mine in the Jayawijaya Mountains of Irian Jaya Province since the early 1970s. The mined ore was milled and then sent 115 kilometers by pipeline to Freeport's Amamapare port. The mine produced 32 million tons before becoming depleted. To expand its operations, in 1989 Freeport Indonesia was granted an exploration license by the Indonesian government that added 2.5 million hectares to its original 10,000-hectare concession. A major new discovery on Grasberg Mountain, three kilometers north of the Ertsberg Mountain site, was expected to come under production in 1990 and to produce around 270,000 tons annually by the end of 1992. It was projected to become the world's largest open-cast mine, and at one of the lowest costs in the world. Total proven and probable reserves of copper, centered in the Ertsberg and Grasberg areas of Irian Jaya, were 15 billion tons. In a related joint venture, Freeport Indonesia, Nippon Mining (Japan), Metallgesselschaft (Germany), and a private Indonesian investor had plans to start construction of a 150,000-ton annual production capacity, US$600 million copper smelter in Gresik, Jawa Timur Province. Given its 10 percent ownership of Freeport Indonesia, the Indonesia government had high profits at stake.

Data as of November 1992