Freeport and insurance risks

Freeport and insurance risks

I feel compelled as chief executive officer of Freeport- McMoRan Copper & Gold Inc., a publicly-traded company headquartered in New Orleans, to respond to your recent article (The Jakarta Post, Nov. 3, 1995). The disagreement with the Overseas Private Investment Corporation (OPIC) is a simple business dispute which involves US$100 million of over $1 billion of our comprehensive worldwide insurance program. This policy covers political risks, such as war and breach of contract. It is not financially significant to us but we are determined to enforce our contractual rights and set the matter straight. We believe OPIC has no lawful basis for seeking termination of this policy. The matter will be resolved in arbitration which was filed for on Oct. 30, 1995. I am somewhat constrained in my comments because we are in arbitration to resolve our differences with OPIC; but I can make the following statements.

The allegations, attributed to "observers" in the article published from the wire service, which state that we are having a negative impact on the environment, is totally misleading. We are currently fully permitted under Indonesian law and have built this mine to internationally accepted environmental standards. The issue between OPIC and our company is related strictly to a disagreement as to whether they can cancel our policy for cause. This will be resolved by arbitration. We will wait and see what the arbitrator decides. We will not try to win the arbitration in the press as it appears some who have released this information to the press want to do. It is not businesslike, nor is it legally advisable.

Let me categorically state that the human rights issues are not part of this controversy with OPIC. These human rights issues involve the Indonesian government and separatists who have been active in Irian Jaya since the island was split into two countries many years ago. Many of the alleged human rights violations have taken place in the dense forest of Irian Jaya, some as far away as 90 kilometers from the border of our job site. The human rights issues have been thoroughly examined by the National Commission on Human Rights, and they have pointed out that Freeport has made a major contribution to improving the quality of life to the people of Irian Jaya.

Freeport has provided economic development in the area with jobs, medical care, education facilities and hope for a group of people who were living in a stone age society before Freeport arrived to develop this mineral resource. Freeport is proud of the $3 billion it has spent in Irian Jaya. It has all been well- planned with the best in-house expertise and international consultants available in the mining industry. Hundreds of people from commercial banks, the investment community and government officials frequent our mine and all who see this project believe it is a model for sustainable economic development.

We regret that a business debate with OPIC, a for-profit United States quasi-government insurance company that provides political risk insurance, has gotten into the public arena. The management of Freeport, on behalf of its public shareholders, supports human rights in all countries. We believe our projects are built with superior environmental management to avoid negative impact on the environment in all countries in which we operate. We are proud of our company's work and record in Indonesia.

JAMES R. MOFFETT

PT Freeport Indonesia

Jakarta