Freeport McMoRan NYSE:FCX has yet again suspended operations at the World's largest gold and copper mine in eastern Indonesia due to rioting among its employees.

Some 8,000 unionized employees walked off their jobs for four months last year demanding pay hikes. They ended their strike in December after getting a 37 percent raise and improved benefits.

Company spokesman Ramdani Sirait says it suspended operations on Thursday because some workers who took part in a strike have been committing acts of violence and intimidation against supervisors and workers who didn't strike. Reports from the region say that the violence has esculated in recent weeks and some scenes have looked like riots in the workers village.

But union official Juli Parorongan says both sides are to blame for violence that has left several workers injured.

Sirait said on Sunday that the company was working with local authorities and union officials to resolve the issue. However as we discussed in 2011 there are cultural and political factors at work here way beyond the companys control.

Economist Shayne Heffernan does not see an easy fix for mining in Irian Jaya due to a growing seperatist movement and the mining industries close ties to Jakarta.

Some History of Irian Jaya

The population of the region was estimated to be 3,593,803 in 2010. The interior is predominantly populated by ethnic Papuans and coastal towns are inhabited by descendants of intermarriages between Papuans, Melanesians, and other Indonesian ethnic groups. Migrants from the rest of Indonesia also tend to inhabit the coastal regions. The two largest cities in the territory are Sorong in the northwest of the Bird's Head Peninsula and Jayapura in the northeast. Both cities have a population of approximately 200,000.

The region is home to around 312 different tribes, including some uncontacted peoples. The Dani, from the Baliem Valley, are one of the most populous tribes of the region. The Manikom and Hatam inhabit the Anggi Lakes area, and the Kanum and Marind are from near Merauke. The semi-nomadic Asmat inhabit the mangrove and tidal river areas near Agats and are renowned for their woodcarving. Other tribes include the Amungme, Bauzi, Biak (Byak), Korowai, Lani, Mee, Mek, Sawi, and Yali. Estimates of the number of distinct languages spoken in the region range from 200 to 700.

The incorporation of Papua into Indonesia in 1969 is the source of conflict that is now surfacing because it was not done fairly and created a separatist movement. That separatist movement is known as the Free Papua Movement. This group formed initially in 1965 during a transitory period where the Netherlands and Australia held joint custody of the island but recommended to the U.N. and lobbied to the U.S. to allow Papua (The Western half of the island; the other half was still an Australian possession until 1975.) to act in self-determination. The U.N. decided on an Act of Free Choice to let a council of elders from Papua (read: a fraction of the population that was threatened by the Indonesian State) decide if they wanted to join Indonesia or become their own country.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.