Freeport not worried about future despite instability
Freeport not worried about future despite instability
JAKARTA (JP): Copper and gold producer PT Freeport Indonesia,
a subsidiary of New Orleans-based Freeport McMoRan Copper and
Gold, said yesterday it was not worried about the future of its
operations in the country despite recent political changes.
Company president Adrianto Machribie said the firm's success
was not due to ties to former president Soeharto, and thus his
May resignation would not affect Freeport's position.
"We are operating on our contract of work which is based on
the existing rules and regulations. We are not bending the rules
and we are not trying to exploit them," Adrianto told a packed
media conference.
He said the company was confident the government would honor
existing contracts of works.
Freeport, one of the country's largest taxpayers for years,
has long been dogged by allegations of collusion due its alleged
close connections to Soeharto's administration.
The company, which has been active in Irian Jaya since the
1960s, operates the world's largest copper and gold deposit mine
in mineral-rich Irian Jaya. It has proven and probable reserves
of 2.17 billion tons of copper, gold and silver ore in and around
its Grasberg contract area.
Freeport is 81.28 percent owned by McMoRan, 9.36 percent by
the Indonesian government and another 9.36 percent by PT
Indocopper Investama Corporation.
Indocopper is 49 percent owned by McMoRan, 50.48 percent by PT
Nusamba Minerals Industri and 0.52 percent by the public.
Nusamba Minerals is owned by PT Nusantara Ampera Bhakti
(Nusamba), controlled by Soeharto-led foundations and Soeharto's
longtime crony Mohamad "Bob" Hasan.
Nusamba bought its stake in Indocopper from the Bakrie
Brothers group in 1996 with a bank loan guaranteed by Freeport.
The deal further fueled speculation about Freeport-Soeharto
connections. Company spokesperson Yuli Ismartono argued
yesterday: "It is a business deal that is commonly practiced
around the world under which the loan is repaid out of the
dividend stream."
Adrianto acknowledged that Freeport enjoyed good connections
with Soeharto's administration but claimed the company never
committed unsavory business practices such as collusion and
bribery to ensure smooth running of its operations.
He said Freeport, through its U.S. parent company, was obliged
to abide by transparency guarantees such as the Foreign Practices
Act and regulations of the New York Stock Exchange.
Freeport has also been criticized for years by international
and Indonesian groups over allegations of mistreatment of
indigenous peoples around its work site and widespread damage to
the environment.
Several tribes and their members have attempted to file
lawsuits in U.S. courts on charges including "ecoterrorism" and
"cultural genocide".
Adrianto also said that Freeport's operations in Irian Jaya
were unaffected by recent political unrest in the province.
A small group of separatists held demonstrations in Irian Jaya
demanding the province's independence, beating one police officer
to death last week. Police opened fire to break up a crowd that
had raised a rebel flag on the island, leaving several students
injured.
"Certainly we are concerned about it, but we're still
operating normally," Adrianto said.
Freeport executive vice president Stephen M. Jones said
Freeport expected a throughput of a little over 200,000 metric
tons of ore daily this year compared to 129,000 tons daily in
1997.
He said a fourth, newly-built concentrator was currently at
the commissioning stage, and the company expected ore processing
to reach between 230,000 tons and 240,000 tons daily by the
fourth quarter of this year.
Despite the increase in output, Jones said he anticipated a
drop in 1998 profits due to a fall in commodity prices from 1997.
"The prices for our commodities are significantly depressed
right now ... At current prices we would be less profitable in
1998 than in 1997," he said. (jsk)