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)