Freeport told to donate 20% of shares for locals

Freeport told to donate 20% of shares for locals

JAKARTA (JP): Outgoing Irian Jaya Governor Rear Adm. Freddy
Numberi petitioned mining-giant PT Freeport Indonesia on Friday
to donate 20 percent of its shares and profits to the regional
administration in Irian Jaya to support the community where the
company exploits the natural resources.

The current contract stipulates that approximately 20 percent
of the company's operation be owned by the Indonesia government
and another Indonesia company.

Freddy, who also holds the post as State Minister for
Administrative Reforms, said that some of the profits should be
channeled directly to the surrounding community.

"The local government never got anything from the deal,"
Freddy told reporters on Friday.

PT Freeport Indonesia is 81.28 percent owned by United States
mining company Freeport McMoran Copper & Gold. The Indonesian
government holds a 9.36 percent interest in the company along and
PT Indocopper Investama Corporation owns an equal interest.

Indocopper is 50.48 percent owned by Nusamba Mineral
Industries, which is linked to former president Soeharto.
Freeport McMoran holds a 49 percent stake in Indocopper and the
investing public holds 0.52 percent.

Freeport has been criticized by many parties believing its
mining activities in the Grasberg area of Irian Jaya have
adversely affected the environment.

State Minister of Environment Sonny Keraf last month said his
office would audit, and perhaps redo, the environmental impact
analysis (Amdal) of PT Freeport Indonesia as the existing report
contains several irregularities.

Sonny did not elaborate on the alleged irregularities in the
report but remarked that they included inconsistencies in reports
on the company's environmental management and environmental work
plan. He further remarked that the tailings disposal system was
inadequate.

Some have openly questioned the validity of the environmental
audit results of American auditor Montgomery Watson, who lauded
Freeport's environmental protection as exemplary.

Two commissions at the House of Representatives also have
recommended a review of the contract of work held by PT Freeport
Indonesia.

During a meeting with former U.S. Secretary of State Henry
Kissinger, who is a member of the company's board of directors,
President Abdurrahman Wahid on Monday pledged to honor the
government's contract with the company.

Nevertheless, he asked Freeport to be more mindful and
concerned with developing the community where it conducts its
activities.

Speaking during a luncheon with the Indonesian Australian
Business Council here, Freddy also dismissed the idea of
annulling the Freeport contract.

He conceded that he had received numerous reports of
detrimental effects of Freeports' activities but asserted that
the government will honor its contract.

"I see it as a legal problem so we'd better settle the problem
in court not by revoking the agreement,' he said of the
allegations of environmental destruction by the company.

Freddy said he had also sent an official letter to the World
Wildlife Fund for Nature asking for assistance in dealing with
the environmental issues.

Freddy, who will officially relinquish his gubernatorial post
on March 20, said it was crucial for the government to honor the
contract.

"It is the right of the company to do business here, we have
to respect that," he remarked.

Nevertheless there should be several changes in the agreement
which would allow the people of Irian Jaya a stake in the
business. Such changes will be necessary to implement regional
autonomy likely to be enacted in the near future.

"There were some small mistakes made in the past that we have
to revise," he said while pointing to the fact that the company
was not obligated to deal with the local administration.

Freddy further remarked that the public should view the
presence of the company objectively.

"The company does bring some advantages for us, like job
opportunities and other profits," he contended. (dja)