Papua police chief Boy Rafli Amar said about 1,300 people have been prevented from leaving the villages of Kimberly and Banti in the past two days by a group that includes about 25 armed men.
Indonesia restricts foreign journalists from reporting in the provinces of Papua and West Papua and the police account of events is unlikely to be the complete picture.
Amar said the gunmen are an "armed criminal group," a description Indonesian police often use when referring to armed Papuan separatists.
Three days of clashes between Indonesian police and gunmen last month near the giant Grasberg mine killed one officer and wounded six others.
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The mine owned by Phoenix, Arizona-based Freeport-McMoRan Copper & Gold Inc is a source of tension in the region due to environmental damage and indigenous Papuans' resentment at profits from local resources being sent abroad.
A low-level insurgency for independence has simmered in Papua since it was transferred from Dutch to Indonesian rule in 1963.
Sebby Sambon, a spokesman for a Papuan separatist group known as TPN, denied villagers were being prevented from leaving. He said the separatists are freedom fighters.
Amar said police supported by the army were trying to open communication with the gunmen using the local government as an intermediary.