Minister backs audit on Freeport

Minister backs audit on Freeport

JAKARTA (JP): A just-released audit commending the
environmental management of mining giant PT Freeport Indonesia
received the backing of State Minister of Environment Sarwono
Kusumaatmadja yesterday despite the fact it has yet to be
verified by a government study.

During a media briefing to announce the results of the
environmental audit, Sarwono said the verification team "would
not encounter any trouble" and that "it was just a formality."

According to the minister of environment's decree No. 42/1994,
environmental audits must be studied and verified by the
government.

The audit was conducted by Dames and Moore, a worldwide
environmental consultancy established nearly 60 years ago.
Freeport commissioned it in September to study the technical
environmental issues of the company's activities in Irian Jaya.

Freeport operates one of the biggest copper and gold mines in
the world in Timika, Irian Jaya.

Asked why he was so confident with the audit, Sarwono pointed
to Dames and Moore's credibility and reputation.

"It would be foolish for them to tinker around with it," he
said.

When pressed if the government would conduct its own audit on
Freeport's environmental program, Sarwono asked -- given Dames
and Moore's elaborate and proficient work -- "why should we do
more?"

Dames and Moore's project sponsor, Ros Kelly, said that until
recently Freeport did not give high priority to environmental
management. It was more reactive than proactive, said Kelly, a
former Australian environment minister.

This initial slowness, according to the audit, "led to
negative perceptions of PT Freeport Indonesia on the part of the
public and government regulators."

This has changed, Kelly insisted, claiming that Freeport is
now moving towards implementing "a best practice in environmental
management".

"It has a way to go but now has the management leadership and
commitment to succeed," she added.

The audit also determined that Freeport "in all material
respects" is complying with government regulations, she said.

Tailings

The most controversial issue addressed by the audit is the
disposal of tailings, a process considered to have the most
impact on the environment.

The Indonesian Forum for Environment (Walhi) has accused
Freeport of dumping toxic tailings into the nearby Ajkwa River.

The audit stated that while the tailings in the river are an
"unsightly and unwelcome sight, particularly to the indigenous
highlands people," they were found to be nontoxic.

To remedy the long-term negative effects that might occur from
tailing disposal, Freeport is currently building a tailing
storage area using two levees known as the Ajkwa deposition area.

PT Freeport Indonesia's director, Paul Murphy, said the
capital expense for the project is US$25 million, with an
estimated maintenance cost of $12 million a year. The
construction of the disposal area is expected to be completed in
December.

Regarding natural resource conservation and recovery, the
audit found the mine's cutoff grade of 0.85 percent copper in the
sediment high by world standards.

Nevertheless, Kelly explained that the audit team could accept
Freeport's rationale for setting such a high cutoff rate and
added that it will be decreased to 0.6 percent by 2002.

Dames and Moore conclude that the retreat of the Puncak Jaya
glaciers is "consistent with the effects of global warming and is
not related to PT Freeport Indonesia's activities."

It went on to say that a risk of significant loss of
biodiversity was not found by the audit team.

In the area of waste management, the audit found that Freeport
has only concertedly addressed this concern in the past two
years. While endorsing the company's initiatives, the audit also
recommended that potential liabilities from past activities be
addressed.

The audit further recommends Freeport prepare a mine closure
plan.

Paul Murphy expressed confidence that the audit refutes much
of the misinformation circulating about Freeport.

When asked what groups like Walhi would think of the very
positive audit, Minister Sarwono responded that the report was
not meant "to shut anyone up".

"If they want to continue (criticizing) then go ahead," he
said, adding the audit is aimed at "convincing everyone that
Freeport is an environmentally conscious company".

A second audit on the social impacts of PT Freeport, being
conducted by Labat and Anderson, is due to be released next
month. (mds)