Govt has yet to approve Freeport expansion plan

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)