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.