Freeport loses insurance

Freeport loses insurance

WASHINGTON (AFP): A federal agency has canceled US$100 million
in political risk insurance for a gold mining project in
Indonesia operated by the U.S-based Freeport McMoran Copper and
Gold Corp, The New York Times said yesterday.

The decision by the Overseas Private Investment Corporation
(OPIC) responded to environmental problems with the project,
sources who have been following the issue told the daily.

The cancellation of the insurance, meant to compensate a
company if it loses assets because of terrorism, sabotage, a coup
or other political volatility, was effective midnight Tuesday,
the daily said.

An OPIC spokeswoman refused to provide the daily with the
reasons behind the cancellation, while a spokesman for New
Orleans-based Freeport said his company was disturbed by the
move.

"We believe OPIC lacks a legal basis for canceling the
coverage," said Gregg Probst.

"Therefore," he added, "we believe the coverage remains in
effect, and we will operate on that basis pending a resolution of
the dispute, which has been submitted to arbitration, as provided
by our contract with OPIC."

The cancellation, which was rumored for nearly two weeks, came
despite intense lobbying efforts by Freeport officials, including
former secretary of state Henry Kissinger, who sits on Freeport's
board.

The issue was also discussed by President Bill Clinton and
Indonesian President Soeharto, when they met last week at the
White House, following the United Nations' 50th anniversary
celebration.

A Jakarta court on Monday rejected a suit filed by a leading
environmental group against the Indonesian mining ministry over
its approval of a mine extension built by Freeport's subsidiary
PT Freeport Indonesia.

Walhi has repeatedly accused Freeport, which operates a huge
gold and copper ore mining concession of 2.6 million hectares
(6.42 million acres) in Indonesia's easternmost province of Irian
Jaya, of polluting local rivers and of damaging the local Amungwe
and Komoro cultures.

The company has also been under public scrutiny following
reported killings in and around its area of operations.

Last year, the Australian Council of Overseas Aid alleged that
Freeport security guards had been involved with the military in
the torture and killing of 37 local people.