Freeport tries to clear name in insurance row
Freeport tries to clear name in insurance row
NEW YORK (Reuter): Freeport-McMoRan Copper and Gold Inc. has
moved to clear its name following a move by the company's insurer
to cancel cover for the company's PT Freeport Indonesia mining
operations because of environmental concerns.
The dispute over whether the Overseas Private Investment Corp.
(OPIC) can cancel the policy has already been submitted to
arbitration through the American Arbitration Associations.
But Freeport, angered by OPIC's claims over its environmental
record in Indonesia, is keen to clear its name.
Richard Adkerson, Freeport's chief financial officer, said
OPIC's move was abrupt and highly unusual, and prompted by
environmentalist pressure on OPIC.
"About two months ago we received the first indication from
OPIC, and they suggested we should withdraw the policy, otherwise
they would cancel it on the basis of increased size of
operation," Adkerson said.
Freeport Indonesia, one of the world's largest copper and gold
projects, plans to produce 453,600 tons of copper in concentrates
this year and 1.25 million ounces of gold.
Henry Miller of OPIC said in a letter to Freeport that since
the project was opened, output has doubled to create more
tailings, or mining waste, than OPIC anticipated.
"Freeport McMoRan's expansion of the PT Freeport Indonesia
project has caused substantial adverse environmental impacts
which compel OPIC to deny all further coverage of this project,"
Miller wrote.
Miller said the "massive deposition of tailings in the Ajkwa
river and the sheet flow of tailings" has "degraded a large area
of lowland rainforest."
"The project has created and continues to pose unreasonable or
major environmental, health or safety hazards with respect to the
rivers that are being impacted by the tailings, the surrounding
terrestrial ecosystem, and the local inhabitants," Miller wrote.
Unfounded
Adkerson said OPIC's concerns are unfounded. "They could not
provide support for them. We are in full compliance with all
requirements of the Indonesia government. We have never been
sanctioned for environmental issues," Adkerson said.
"We have a government agency responding to environmental
groups who no longer have a sympathetic ear in Congress to
achieve their agenda," Adkerson said.
Adkerson acknowledged that the mine had an impact on the
environment. "But the damage is virtually non-existent over
time," he said.
Freeport paid OPIC an annual premium of over US$1.0 million to
cover against war, insurrection or in case the Indonesian
government reneged on a contract.
Adkerson said the policy, which in recent years has been of
"questionable value", is still valid, and OPIC has no right to
cancel it.
OPIC spokeswoman Allison May Rosen said the agency would make
no public comment about the insurance termination.
"I can confirm that OPIC has terminated the $100 million
political risk insurance on Oct. 31," Rosen said.
Rosen declined to comment on Freeport's allegation that the
agency had caved in to environmentalists.