'Government should stop Freeport mining'

'Government should stop Freeport mining'

JAKARTA (JP): The government should stop PT Freeport Indonesia
mining copper and gold in Irian Jaya because it only benefits the
American company, a noted political analyst said yesterday.

Amien Rais, also the chairman of the Islamic organization
Muhammadiyah, said the government should review all the mining
contracts awarded to foreign companies.

He said Freeport's mining activities in Irian Jaya breached
article 33 of the Indonesian Constitution, which stipulates that
the earth, water and all other natural resources shall be used
for the greatest welfare of the people.

"Freeport's mining activities have mostly benefited foreign
investors," Amien told thousands of people at the anniversary
celebration of the Aisyiyah organization in Solo, Central Java,
Thursday evening.

He said that since Freeport started mining in Irian Jaya 25
years ago, it had produced 1.65 million tons of gold worth Rp 470
trillion (US$202.59 billion). "This is not to mention the
production of silver and copper," he said, adding that it had
produced 3.25 million tons of silver.

"Of the total mining output, Indonesia has received only 10
percent," he added, referring to the government's 10 percent
stake in PT Freeport.

Amien warned that the big mistake with the Freeport mining
concession was about to be repeated in East Kalimantan.

PT Freeport Indonesia, which is 80 percent owned by Freeport-
McMoran Copper and Gold of the U.S., and 10 percent each by the
Indonesian government and PT Indocopper Investama, has operated
in Irian Jaya since 1973 under the first generation of mining
contracts.

"Frankly speaking, when I read newspaper stories that the
government wanted to give the two Canadian firms, Bre-X Minerals
and Barrick Gold Corp., a 90 percent controlling stake in the
Busang gold concessions in East Kalimantan, my sense of justice
was revolted," he said.

He said it was very strange that the government seemed content
to own a mere 10 percent of the huge gold deposits in Busang.

The 10 percent stake was nothing compared to the social costs
and environmental destruction caused by mining, he said.

"If we do not have the funds and technology to tap the natural
resources why don't we leave those resources underground until we
are capable of developing them," he said

"What's the point of us pressing the Canadian firms to solve
their conflict quickly so that they can start working immediately
to deplete our resources. We should keep them for our
grandchildren in the 21st century," he said.

Amien called on the government to review all mining contracts
awarded to foreign companies or at least the new government after
March, 1998 should do it. "Let's abide by our own constitution to
ensure that our children and grandchildren can still benefit from
our natural resources in future," he said.

Bakrie's shares

The Kontan business weekly tabloid reported yesterday that PT
Bakrie Brothers, was about to sell its 10 percent stake (held in
the name of its subsidiary, PT Indocopper Investama) in PT
Freeport Indonesia to the government.

However, Aburizal Bakrie, the chairman of the Bakrie Group,
denied yesterday afternoon that it was about to sell its stake in
Freeport.

"Until now, we have no any plan to sell our shares in Freeport
Indonesia," Aburizal said in a statement, adding that Bakrie
still held 51 percent of PT Indocopper.

He said the Indonesian government and PT Indocopper now each
held only 9.36 percent of Freeport Indonesia since they did not
increase their equity capital when Freeport-McMoran recently
increased its share capital and issued new shares.

Kontan related Bakrie's expected Freeport share sale to the
manner in which Bakrie had bought the shares.

Bakrie, through PT Bakrie Investindo, bought a 10 percent
stake in Freeport in January 1992 for US$213 million. The
Indonesian government had earlier bought 10 percent of Freeport.

According to the tabloid, Bakrie paid for the shares with a
foreign syndicated loan which had been guaranteed by Freeport
itself. Bakrie later transferred the shares to PT Indocopper
Investama, another Bakrie Group subsidiary.

The Freeport divestment was made as a condition to have its
mining contract renewed after it found about 1.1 billion more
tons of copper ore reserves in Irian Jaya. The contract was
renewed on Dec. 30, 1991.

In December 1992, Freeport bought 49 percent of Indocopper's
shares for $212 million, which was almost the same amount that
Bakrie had paid Freeport for its 10 percent stake in the American
company. (har/bnt/vin)