'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)