Govt has yet to approve Freeport expansion plan

JAKARTA (JP): Rozik B. Soetjipto, director general of mining at the Ministry of Mines and Energy, said on Monday that the government had not yet approved copper and gold mining company PT Freeport Indonesia's plan to increase its ore output to 300,000 tons of ore per day.

Rozik said that the company had applied to the ministry early in 1996 for a permit to increase its production, but the ministry has thus far only issued a provisional permit to allow the company to conduct a regional environmental impact analysis and a feasibility study for the expansion.

A regional environmental impact analysis and a feasibility study are needed before a mining company can apply for a production expansion permit.

Rozik said that the company had obtained the environmental impact analysis certificate from the office of State Minister for Environment. His office has not yet issued a permit for the production plan because the feasibility study has not been completed, he added.

"We have not yet issued the (definitive) permit," Rozik said on the sidelines of the ceremony to sign oil and gas contracts held at the headquarters of state oil and gas company Pertamina.

Rozik made the statement to counter Freeport vice president for public affairs Yuli Ismartono's earlier claim that the government had given permit to Freeport to gradually increase its output to 300,000 tons of ore per day.

Yuli said that with the environmental impact analysis certificate in hand, Freeport could begin to increase its production.

According to Yuli, Freeport currently produces about 200,000 tons of ore per day at its huge mine fields in the Grasberg area of Irian Jaya.

The company plans to increase its ore output to 240,000 tons per day by the end of the year.

Freeport is 81.28 percent owned by United States mining company Freeport McMoRan Copper & Gold, 9.36 percent by the Indonesian government and 9.36 percent by PT Indocopper Investama Corporation. Indocopper is 50.48 percent owned by Nusamba Mineral Industries, 49 percent by Freeport McMoRan and 0.52 percent by members of the public.

Freeport has been at the center of a heated debate since American scholar Jeffrey A. Winters alleged corruption in the renewal of its contract in 1991, and implicated Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita in the scandal.

Ginandjar and Freeport McMoRan's chairman James R. Moffet have denied the allegations.

Rozik confirmed that Freeport had received the environmental impact analysis certificate, but, he said, the company had yet to finalize a feasibility study for expansion by March 1999 -- the deadline set by the ministry.

"Based on the feasibility study, Minister of Mines and Energy Kuntoro Mangkusubroto will decide whether or not to approve the expansion," Rozik said.

Kuntoro had earlier said that he would not easily give mining companies such as Freeport, who operate in remote areas, permits to increase production, given their pivotal role in the development of remote areas.

He said that he preferred putting limits on their output, to make their operations in the areas last longer. The longer the companies operate, the greater the impact of modernization on the people living in the remote areas, Kuntoro said.

"Freeport has long asked for a permit to increase its output, but I was always reluctant to give them the permit," said Kuntoro, who served as director general of mining from 1993 to mid-1997.

The Asian Wall Street Journal, in its Sept. 30 edition, noted that Freeport had received approval for the expansion from former president Soeharto months before the Ministry of Environment had issued the regional environmental impact analysis certificate.

"When Freeport wanted to more than double its Grasberg output last year, Mr. Moffet took the case directly to Soeharto."

"The president scrawled his approval of the controversial expansion in the margins of Mr. Moffet's personal letter to him -- many months before the required environmental reviews had even begun," the paper said.

Moffet is known to be a close friend of Soeharto. (jsk)