Freeport to establish trust for indigenous communities

JAKARTA (JP): Freeport-McMorRan Copper & Gold Inc. (FCX) has agreed to establish a trust to benefit the Amungme and Kamoro communities, the original tribal inhabitants of the Grasberg mine project area in Irian Jaya, the company said on Tuesday.

An agreement for the establishment of the trust was signed by representatives of FCX, its mining affiliate PT Freeport Indonesia (PT FI) and the indigenous communities in New Orleans, U.S.A., on Sept. 3, Sidharta Moersjid, senior manager of PT FI's corporate communications department, said.

"Under the agreement PT FI will pay US$500,000 per year into the Trust and will initially inject $2.5 million, representing funding for 1996 through 2000," he said.

Sidharta explained that the agreement, first outlined in 1996, fulfills a commitment by PT FI for voluntary recognition of the holders of the traditional land rights (hak ulayat) in the mining area and for the expanded scope of the mining operations.

The Amungme and Kamoro tribal leaders expressed a desire for an equity ownership in PT FI's operations in Irian Jaya and intend to use a portion of the funds to buy shares of FCX in the public markets to be owned and held by the Trust.

"This agreement is the result of several years of dialogue between PT FI and the local community as we continue to work together in a spirit of mutual respect and understanding," James R. Moffett, chief commissioner of PT FI, said.

"We used to be on the outside, but now we stand together. We have a stake in this mining operation and we will work hard so that we can share in its success," said Thom Beanal, one of the local community representatives.

Welly Mandowen, an Irian development advisor participating in the process, said, "It's my hope that this agreement will serve as a model for other companies operating in Irian Jaya and throughout Indonesia to build a strong relationship with their local stakeholders."

The agreement is additional to earlier agreements between PT FI and the local communities, including the Freeport Fund for Irian Jaya development and existing land use recognition programs through which about $20 million in annual development funding is provided to communities in the mining area. (hhr)