freeport-mcmoran copper & gold inc
TRANSCRIPT
THESTRENGTHOF OUR
COMMITMENT
FREEPORT-McMoRan COPPER & GOLD INC.2003 WORKING TOWARD SUSTAINABLE DEVELOPMENT REPORT
FREEPORT-McMoRan COPPER & GOLD INC.1615 POYDRAS STREETNEW ORLEANS, LOUISIANA 70112 WWW.FCX.COM
39966_FM_COV.QXD 3/11/04 5:41 PM Page 1
On the Cover: THE FACES OF THE PROGRAMS that lie at the heart of our commitment to ensure a healthy environment and strongcommunities in our area of operation in Papua, Indonesia.
Top from left : PAPUAN EMPLOYEE DEVELOPMENT, agro-forestry business development, and provision of healthcare.
Bottom from left : COMMUNITY sports programs, education and infrastructure.
Back Cover Top: NATIVE SPECIES of grasses, shrubs and trees revegetate large sections of the AjkwaDeposition Area, offering a thriving ecosystem for birds and other animals . Other portions of the tailingssediment deposition area are being actively reclaimed with trees and cash crops.
Back Cover Bottom: THE MODIFIED AJKWA DEPOSITION AREA is the engineered, managed system for deposition and control of thetailings sediment from the mining operations. Reclamation programs in soils containing tailings, including the Maurujaya ReclamationCenter, have demonstrated success in growing dozens of plants and cash crops, and supporting aquaculture and livestock projects.
2003 Working Toward Sustainable Development 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
Indonesia
Papua,Indonesia
Papua
GrasbergMineComplex
Jakarta
Jayapura
Tembagapura
Timika
Arafura Sea
Indian Ocean
Kuala Kencana
39966_FM_COV.QXD 3/11/04 5:42 PM Page 2
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
PT FREEPORT INDONESIA
I. ECONOMIC IMPACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
II. SOCIAL CHANGE AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Social and Cultural Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Building Mutually Beneficial Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Human Rights Commitments and Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
HANDS-ON COMMITMENT: FREEPORT’S COMMUNITY LIAISON OFFICE (CLO) . . . . . . . . . . .8Freeport Partnership Fund for Community Development . . . . . . . . . . . . . . . . . . . . .10
THE ARROW POINTS UPWARD FOR PAPUAN EMPLOYEE DEVELOPMENT . . . . . . . 12Provision of Medical Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Training, Education and Papuan Development . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
AMUNGME GOLD: BOUTIQUE COFFEE BUSINESS BLENDS TRADITIONAL WAYS, MODERN TASTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Business Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Land Rights Recognition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Social and Human Rights Performance Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22Provision of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22August 31, 2002 Incident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Political Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Making Business Ethics a Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
III. ENVIRONMENTAL MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Environmental Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27Environmental Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27ISO 14001 Environmental Management System . . . . . . . . . . . . . . . . . . . . . . . . . . .28Tailings Management Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Reclamation and Revegetation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30Overburden and Acid Rock Drainage Management . . . . . . . . . . . . . . . . . . . . . . . . .33Long-Term Environmental Monitoring Program . . . . . . . . . . . . . . . . . . . . . . . . . . . .34Waste Management and Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34Biodiversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
ATLANTIC COPPER, S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
FREEPORT-McMoRan COPPER & GOLD INC. 1
TABLE OF CONTENTS
2 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
FINANCIAL BENEFITSTO INDONESIA
TAXES, ROYALTIES, FEES& OTHER PAYMENTS
TOTAL DIRECT & INDIRECT BENEFITS*
US $ 329,000,000
US $3,000,000,000
2003 1992-2003
US $ 2,347,000,000
US $30,000,000,000
Figure 1. The financial benefits to the people and Government of Indonesiain the illustration above are shown for 2003 and cumulative amounts forthe years 1992-2003.
Institute For Economics and Social Research, Faculty of Economics,University of Indonesia, 2003 Study (multiplier effect of PT FreeportIndonesia contributions)
DIRECT BENEFITS to the local
community include provision of
medical infrastructure. The 75-
bed Mimika Community Hospital
was built with funds from the
Freeport Partnership Fund for
Community Development.
*
INTRODUCTION
The world needs the metals we produce for
expanding economies and developing nations. The
copper concentrate from our mining complex in
Papua, Indonesia, and the copper products from our
wholly owned smelter in Spain and our 25-percent-
owned smelter in Indonesia are essential for
communications, electronics and industr y. Yet the
modern world also aspires to a sustainable society
where economic, social and environmental issues
are balanced to meet the needs of the present
without impairing the ability of future generations to
meet their own needs.
At Freepor t-McMoRan Copper & Gold Inc., we
share this aspiration because it is responsible
thinking as well as prudent business practice. We
are mining one of the world's largest mineral
deposits and our planning horizon is 30 to 40 years
into the future. Working toward sustainable
development through our operations and programs
helps ensure a healthy environment and
communities in our area of operation, which is vital
to our future success.
Like most industrial activities, our mining
operations impact the environment and nearby
communities. In order to work toward sustainability
in our operations, we are committed to minimizing,
mitigating and rehabilitating environmental impacts
and to maximizing positive economic and social
development results. This is a continuous ef for t
that seeks constant improvement, conducted in
par tnership with governments and local
communities where we operate.
Demonstrating the strength of our commitment,
we spent a total of $93 million on sustainable
development programs in the area of our mining
operations during 2003, including $52 million on
environmental management and $41 million on
social development. Our world-class mining
operations, long-lived ore reserves and strong
Contract of Work with the Indonesian government
ensure a long project life in Papua. However, the
social, cultural and environmental projects we
establish lay the groundwork for future generations
to benefit from economic activity not dependent on
mining.
It is this continuous ef for t to create sustainable
development that is described in this annual repor t.
PT FREEPORT INDONESIA
I. ECONOMIC IMPACTS
PT Freepor t Indonesia, our Indonesian mining
af filiate, provides substantial direct and indirect
economic benefits for the central, provincial and
local governments of Indonesia, and for the
economies of Papua and the nation as a whole.
Direct benefits are the traditional contribution of a
company to the Republic of Indonesia, and include
taxes and royalties. We are often the largest
taxpayer in Indonesia. In 2003, we paid $329
million in taxes and royalties, the highest amount in
our histor y. Since 1992, these direct benefits to
Indonesia have totaled $2.3 billion.
PT Freepor t Indonesia's indirect contributions to
Indonesia are much larger and include:
• Investment of more than $4.5 billion to build
company infrastructure in Papua, including
towns, electricity generation, seapor ts and
airpor ts, roads, bridges, tunnels, waste
disposal facilities, modern communications
systems, and many other types of fixed
infrastructure, most of which will rever t to the
Indonesian government at the end of our
contract term.
• Investment of over $300 million since 1992 in
social infrastructure directly benefiting the
people, such as schools, places of worship,
hospitals, of fices, recreational facilities and
small and medium sized businesses.
Economic Impacts FREEPORT-McMoRan COPPER & GOLD INC. 3
I. ECONOMIC IMPACTS
• Direct employment by PT Freepor t Indonesia of
over 7,800 people in 2003, 27% of whom are
Papuans. PT Freepor t Indonesia's payroll for its
own employees has totaled more than $800
million since 1992.
• Employment of contract employees ser ving PT
Freepor t Indonesia, which totaled 10,500
workers in 2003, meaning that the total of
those employed by or ser ving our operations in
Indonesia at the end of 2003 was 18,300
people.
• Purchase of almost $3 billion of domestically
sourced goods and ser vices since 1992.
Direct and indirect contributions produce a
"multiplier ef fect" in the Indonesian economy
spurring additional employment, wages, purchases
and economic activity. This ef fect is well-known to
economists. In 2003, we commissioned the
Institute For Economics and Social Research,
Faculty of Economics, University of Indonesia to
conduct an economic impact analysis on the
multiplier ef fect impact on Papua and Indonesia
from PT Freepor t Indonesia's operations since
1992. The university's economists found that PT
Freepor t Indonesia's total economic benefit to
Indonesia and Papua was $3 billion in 2003 alone
and $30 billion from 1992-2003, accounting for
almost 2% of the whole gross domestic product of
Indonesia, and more than 58% of the gross
domestic product of Papua.
In addition, since 1996, PT Freepor t Indonesia's
operations have committed one percent of
revenues for the benefit of the local community
through the Freepor t Par tnership Fund for
Community Development. This fund has helped
build schools, hospitals, places of worship, housing
and community facilities in our area of operations
in Papua. The fund also suppor ts a comprehensive
series of health and educational programs. In
addition to this fund, we suppor t training and small
business development initiatives so that Papuans
benefit from the economic development taking
place in the area. Contributions to the par tnership
fund, including Rio Tinto’s share as our joint
venture par tner, totaled approximately $22 million
in 2003, and the total contributions to the fund are
nearly $132 million since inception.
In its December 1, 2003 issue, BusinessWeek
magazine published the results of its sur vey
ranking America's most philanthropic companies
and listed Freeport-McMoRan Copper & Gold Inc. as
America's most philanthropic company in terms of cash
given as a percentage of revenues. This is largely due
to the Freeport Partnership Fund for Community
Development.
I. ECONOMIC IMPACTS
4 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
1,800
PT Freeport Indonesia’s (PT- FI) 19 91 Contract of Work (COW)
Estimated Income Taxes and Royalties Under Other Countries’Regulations
1,20 0
60 0
30 0
F igu r e 2 . Roya l t y and Income-ba s ed Compar i s on F rom 1993 - 2 0 0 3 by Coun t r y
(IN MILLIONS OF DOLLARS)
IND
ON
ESIA
-PT-
FI’S
19
91 C
OW
AU
STR
ALI
A
PAPU
A N
EW G
UIN
EA
CAN
AD
A
SOU
TH A
FRIC
A
UN
ITED
STA
TES
PER
U
CH
ILE
900
1,50 0
Shown above (Figure 2) are income taxes and royalties under PT Freeport Indonesia’s1991 Contract of Work compared to the regulations of other countries.
PT FREEPORT INDONESIA'S suppor t of events like the
Kamoro Ar t and Culture Festival helps the local indigenous
communities preserve impor tant cultural traditions.
5
II. SOCIAL CHANGE AND DEVELOPMENT
SOCIAL AND CULTURAL COMMITMENTS
We are committed to building and maintaining
positive relationships with our Papuan neighbors, in
par ticular those closest to our area of operation.
We have adopted a Social, Employment and Human
Rights Policy, which is included in appendices to
this repor t. We are committed to providing
oppor tunities for social, educational and economic
development, including special ef for ts to train and
hire those indigenous to the area. We also strive to
learn more about the Papuan people, their histories
and changing circumstances, in order to build more
constructive relationships and better structure our
outreach ef for ts. Most impor tant is our
commitment to extend respect to indigenous
Papuans and their culture and consult with them on
issues impacting their communities.
We understand the need of the unique peoples
of Papua to preserve their cultural traditions and
are committed to helping them accomplish this
goal. We have long suppor ted the Asmat and
Kamoro Ar t and Cultural Festivals. In an ef for t to
improve our understanding as well as to aid cultural
preservation, we have sponsored social, ar tistic,
cultural, language and economic studies of the
Amungme and Kamoro peoples. These studies have
improved mutual communication and understanding
with our neighbors, and have also contributed
significantly to world knowledge of their unique
cultures. We have also sponsored two books about
the Kamoro and Amungme to help us and others
throughout the world understand and appreciate
their special cultures.
BUILDING MUTUALLY BENEFICIAL RELATIONSHIPS
In fur therance of our commitment to build and
maintain constructive and positive relationships
with our Papuan neighbors, we engage in continual
dialogue with local leaders. These dialogues have
led to impor tant agreements with the Amungme and
Kamoro peoples.
In a 2001 agreement, PT Freepor t Indonesia
established a trust fund of $2.5 million initially and
annual contributions thereafter at a current level of
$1 million annually for the Amungme and Kamoro,
enabling them to use some of these funds to
purchase shares in Freepor t-McMoRan Copper &
Gold Inc., thereby becoming shareholders in the
mine. This fund is in addition to the social
development fund (see Freepor t Par tnership Fund
for Community Development) established by
PT Freepor t Indonesia, which has received nearly
6 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
II. SOCIAL CHANGE AND DEVELOPMENT
$132 million from our operations since 1996 for
investments in projects selected by a board of local
stakeholders.
A memorandum of understanding consummated
in 2000 by Amungme and Kamoro local community
organizations and PT Freepor t Indonesia focuses on
socioeconomic resources, human rights, land and
environmental rights. This landmark agreement,
achieved after five years of negotiations, fosters
continuous dialogue to improve mutual
understanding and respect, to enable the local
people to achieve their aspirations and to continue
harmonious relationships. This continual dialogue
has led to other agreements and mutually beneficial
projects and has achieved a great deal in terms of
instilling a sense of par tnership and community
between us and our Papuan neighbors and aligning
our shared interests in a sustainable and more
promising future.
HUMAN RIGHTS COMMITMENTS AND INITIATIVES
Freepor t-McMoRan Copper & Gold Inc. and PT
Freepor t Indonesia have made strong, unequivocal
commitments to human rights. This commitment is
expressed in a company policy, formally adopted by
both the Board of Directors of Freepor t-McMoRan
Copper & Gold Inc. and the Board of
Commissioners of PT Freepor t Indonesia, to
conduct our operations in a manner consistent with
the Universal Declaration of Human Rights, to
educate our employees about human rights, and to
protect any employee who repor ts suspected
violations. We require appropriate personnel to certify
annually that they have neither par ticipated in nor are
aware of any human rights violation. If a human
rights violation
is repor ted, information about that violation would
be forwarded to the Indonesian Human Rights
Commission.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 7
(continued on page 10)
WITH AN EYE TOWARD THE FUTURE, PT Freepor t Indonesia works in par tnership with the local people and the
government to foster sustainable education, health and economic development initiatives.
HANDS-ON COMMITMENT COMMUNITY LIAISON OFFICERS HELPTO DEVELOP COMMUNITY LEADERS
AS PART OF THE WOMEN IN DEVELOPMENT
INITIATIVE, Community Liaison Of ficer
Mathea Mamoyau (right) discusses
traditional ar ts business oppor tunities with
women in the Kamoro community.
Papua is a land of barriers. Perhaps nowhere else in the world is there such a convergence of geographical,
cultural and linguistic divides. In our Social, Employment and Human Rights Policy, Freepor t-McMoRan
Copper & Gold Inc. and PT Freepor t Indonesia pledge to build positive relationships with our Papuan
neighbors based on their expressed needs, to respect and work hard to understand their culture and to
consult them on impor tant issues.
These goals are impor tant to us and we have professionals who design plans to achieve them. But how
to carr y them out, when our operations area includes: starkly dif ferent Papuan communities in the
mountainous highlands and the tropical lowlands; seven dif ferent Papuan tribes, each with its unique
culture and language; and the vast dif ferences between the Papuan culture and languages and those of our
workers from other par ts of Indonesia and other nations? Clearly, without some special ef for t, any plan
designed to implement our goals would be little more than a sheet of paper.
Freepor t's Community Liaison Of fice (CLO) was created for this purpose, to breach those barriers. The
CLO is par t of our Social Outreach and Local Development Depar tment, and shares its goals of building a
positive relationship with our neighbors based on mutual trust, identifying the real needs of the local
communities and assisting in implementing programs that meet those needs. There are two branches of the
CLO - one for the villages in the highlands, one for the villages in the lowlands.
Our Community Liaison Of ficers (CLOs) are the first line of communication between the company and its
neighboring communities. The 40 employees in this program meet with local leaders to hear their views
about company operations as well as other impor tant community issues and provide this feedback to
management. In addition, they work with local government of fices, through our Government Relations
Depar tment, and non-governmental organizations, through our Primary NGO Capacity Building Program and
our NGO (Non-Governmental Organizations) Af fairs Of fice, to assist in coordinating and socializing ser vices
designed to help the communities. They even help with community activities and events.
But the CLOs are also community goodwill ambassadors and help groom future community leaders.
"Capacity-building is vital," said Daniel Ajamiseba, Manager of External Development. "The CLOs work with
LEMASA and LEMASKO (the Amungme and Kamoro tribal organizations) to help prepare their leaders. They
8 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
GEORGE DEDA
YOUTH IN SPORTS PROGRAMS
include soccer, rugby, boxing,
volleyball, swimming and track
and field.
COMMUNITY LIAISON OFFICER
GEORGE DEDA (upper photo),
says these activities develop
leadership, character and
motivation among youth in the
growing Mimika region.
also meet with individuals to tr y to find out what their problems are with each other, then work to reconcile
them."
An impor tant CLO program is Women and Youth in Development, which, Ajamiseba explained, aims to
enhance the development of women and youth in the community in terms of health, education and the
reduction of family and community violence.
Women in Development activities include training in human rights with regard to family violence,
education on HIV/AIDS, training in crafts and nutrition, development of a database of influential female
leaders and organizations in the area, and a program to bring in speakers to provide educational programs
on self improvement and development.
The Youth in Spor ts program provides coaching, training and competitive events for hundreds of local
youth in soccer, rugby, boxing, volleyball, swimming and track and field. "Spor ts ser ve as an entr y point to
get youths in school," said CLO George Deda, who heads CLO programs in Kwamki Lama, a Papuan
community near Timika. "The purpose is to keep teenagers and youths involved in good activities. On the
social side, spor ts also create a community of interest."
The coaches and par ticipants take spor ts ver y seriously. Besides local and regional competitions, the
rugby team and members of the boxing and swimming teams have competed at the national level.
That determination to excel may actually have saved lives. The Timika rugby team, called the Kotekas, was
in Bali in October 2002 for a national tournament. While members of many of the teams went out in the
evening to par ty at well-known Balinese clubs, CLO Yan Yoteni, head of the Youth in Spor ts program, said he
told his team "Don't go around tonight and we'll make the semifinals."
That was the night of the terrible October 12, 2002 bombing attack on Bali nightclubs that killed 202
people, including a number of rugby players. But none of the Timika team was hur t. "They all had discipline
and stayed in," said Yoteni - and thus avoided the tragedy that could have threatened their lives.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 9
We have also joined other mining and oil and
gas companies and human rights organizations in
endorsing the joint U.S. Depar tment of State-British
Foreign Of fice Voluntar y Principles on Human Rights
and Security. These Principles are included in
appendices to this repor t. Twice each year,
par ticipants in the voluntar y principles program
meet to review the implementation of the principles
and to seek better ways to provide security for
extractive industr y operations around the world to
protect employees and investments while assuring
the highest level of human rights compliance.
Freepor t-McMoRan Copper & Gold Inc.
representatives regularly par ticipate in these
meetings.
Overseeing the development and implementation
of our policy on human rights is an internationally
recognized exper t, Judge Gabrielle Kirk McDonald.
Judge McDonald has been a distinguished civil
rights attorney and U.S. federal judge and formerly
ser ved as President of the International Criminal
Tribunal for the former Yugoslavia. She ser ves as
Special Counsel on Human Rights to the Chairman
of the Board of Freepor t-McMoRan Copper & Gold
Inc. and is an Advisor y Director for the company.
Judge McDonald repor ts regularly to the Freepor t-
McMoRan Copper & Gold Inc. Chairman and Board
of Directors on human rights issues and
developments.
FREEPORT PARTNERSHIP FUND FOR COMMUNITY
DEVELOPMENT
PT Freepor t Indonesia and our joint venture par tner
have since 1996 committed one percent of
revenues for the benefit of the local community
through the Freepor t Par tnership Fund for
Community Development, which was previously
called the Freepor t Fund for Irian Jaya
Development. Contributions to the par tnership fund
were approximately $22 million in 2003, and the
total contributions to the fund are nearly $132
million since inception.
The par tnership fund is administered and
disbursed by an organization called the Lembaga
Pengembangan Masyarakat Amungme dan Kamoro
(LPMAK), which is the Indonesian acronym for the
Amungme and Kamoro Community Development
Institute. LPMAK is managed by a Board of
Commissioners consisting of representatives from
the local government; Papuan regional leaders;
leaders from the Amungme and Kamoro; and PT
Freepor t Indonesia. LPMAK's Board of
Commissioners establishes annual budgets for
three main development program areas - health,
education and village development. The budgets are
based on development priorities determined by
LPMAK's Board and the projects suppor ted by
LPMAK directly benefit the Amungme and Kamoro
people and five other indigenous communities in
the Mimika Regency - the Dani, Moni, Ekari/Mee,
Damal and Nduga people. These groups are
represented on the LPMAK board through their
community, church and government leaders.
II. SOCIAL CHANGE AND DEVELOPMENT
10 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
(continued from page 7)
The activities of the LPMAK are conducted
through program bureaus, consisting of exper t
facilitators and community leaders, who also
cooperate with local government agencies and other
non-governmental organizations. These teams review
project proposals submitted in accordance with
guidelines and budgets established by LPMAK. These
proposals are then reviewed by LPMAK's Board of
Directors. LPMAK programs are closely coordinated
with the local government to ensure maximum impact
in improving the quality of life for residents in the
Mimika area.
The LPMAK guidelines ensure that project
proposals reflect the charitable and development
objectives of LPMAK and are subject to financial
and audit guidelines. Cer tain types of activities are
strictly prohibited and are not funded, including
political activities and projects that do not have a
wide impact on the community. Each year an
independent auditor issues a repor t on the LPMAK
activities, and regular monthly progress repor ts are
made publicly available to ensure that LPMAK's
activities are transparent.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 11
PT FREEPORT
INDONESIA PROVIDED
FUNDS to construct the
Banti hospital in the
highlands Amungme
community, and suppor ts
medical facilities and
programs throughout the
region.
(continued on page 14)
THE ARROW POINTSFOR PAPUAN EMPLOYEE
"Nemangkawi" means "white arrow" in Amungkal, the traditional language of the Amungme community. It is
the name the Amungme gave to the glacier and snow-covered mountain that reaches the highest point
between the Andes and the Himalaya. The snow-covered mountain sits just to the east of the Grasberg
mining complex. On a clear day, Nemangkawi can be seen from the Arafura Sea some 130 kilometers
south. Silas Natkime, a leader of the Amungme community and a supervisor with PT Freepor t Indonesia's
employee development unit, feels that the name "Nemangkawi" appropriately captures the aspirations of
most Papuan employees of PT Freepor t Indonesia. As a result, he suggested it as the name for the new
forward-looking employee development institution that PT Freepor t Indonesia will char ter to foster the
development of and oppor tunities for the Papuan people.
"The arrow points upward; so should the future for the workers from this area," explains Silas, whose
job is to see to it that the company lives up to its commitments to Papuan employee development. The
Nemangkawi Mining Institute is a key to make it happen. The Institute's goal is to develop 300 trained
Papuan apprentices with world-class skills who can enter into the workforce - working for PT Freepor t
Indonesia, one of its contractors or other businesses in Papua - each year. The Institute is par t of a
sweeping employee development program that seeks to provide ongoing oppor tunities for all PT Freepor t
Indonesia employees across the operations, as well as for the new recruits.
Quick with a broad smile and a firm handshake, Silas is a natural communicator (he speaks his native
Amungme, Indonesian and English) and his enthusiasm for his job is infectious. He has worked for the
mining company for 19 years; moving up the ladder from an entr y-level job as a Welding Trainee to his
current position as General Forman of Papuan Development in PT Freepor t Indonesia's Quality Management
Services Depar tment (QMS). He is also a leader of a Papuan Employees Organization known as Tongoi of
Papua, a group that provides a communications link between the company management and its rank and
file Papuan workers.
Having grown up the son of an impor tant tribal leader in the traditional Amungme community of Wa,
Silas has watched PT Freepor t Indonesia grow from a small operation in the 1970s to the world-class
mining complex it is today. At 40 years old, he explains
that meaningful employment for members of his generation
has been tough to come by for a number of reasons. "The
local Papuan people did not have the means to get a good
education for many years. Back in the 1970s the closest
schools were several days walk away," Silas explains. PT
Freepor t Indonesia has sent thousands of local youth to
school on scholarships, has built local schools and has
worked with the local government to set up programs to
improve local education. But, according to Peter Mosel,
Silas' mentor and the Manager of QMS for PT Freepor t
Indonesia, the vast majority of applicants from the local
area, even in recent years, were not properly prepared for
most good jobs.
To remedy the situation, Mosel, Silas and the senior
management of PT Freepor t Indonesia have adopted a
12 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
EMPLOYEE DEVELOPMENT MENTORS Silas
Natkime (left) and Peter Mosel (in red
jacket) oversee programs ranging from
basic literacy to advanced technical
skills with a goal of guiding hundreds of
local Papuans into careers.
UPWARDDEVELOPMENT
TRIFENA TINAL
multi-faceted approach to company training ef for ts. "We're looking to prepare as many as 300 indigenous
Papuans to enter the workforce each year," says Mosel, an Australian native who has spent most of his
professional career at various mining projects in Indonesia. "We assess 40-50 applicants each week from
the seven local traditional communities. A small percentage is ready to enter into our Apprenticeship
programs. However, we've found that most of those tested have been falling shor t, so we've geared our
ef for ts toward getting them prepared," explains Mosel. "We created a Pre-Apprentice program that begins
with the ver y basics - learning to read and to do basic mathematics. From there, they move up to learning
a craft that is most suited to their strengths," Mosel adds, with Silas Natkime nodding in agreement.
"Silas' role includes counseling these young people - finding out what their interests are and guiding them
into a career path." Par ticipants understand that jobs are not guaranteed to those who complete the
program. The intent is to develop skills in the Papuan people so that they are able to compete for jobs and
per form in the workplace on the same basis as those from Indonesia's more developed regions who have
had better educational oppor tunities.
The Pre-Apprentice and Apprentice programs are managed by Trifena Tinal, a young engineer from the
Damal/Amungme community who grew up in Freepor t's company town Tembagapura. Trifena obtained her
Civil Engineering degree at the University of New Orleans and has returned home to devote her energy to
preparing her fellow Papuans for the workforce.
Trifena says that these programs are reversing the way managers think about hiring employees from the
local area. "When people don't hire Papuans, they say the Papuans don't have the skills. Now we're
providing that skill, so their employment oppor tunities are greater. What we're doing is solving the root
causes of unemployment," she explains.
Optimistic about what the future holds for her generation and beyond, Trifena says that it is essentially
up to the individual to succeed, now that there are so many oppor tunities being of fered. "Freepor t has
made the commitments and it's up to us to take advantage of them. There are so many oppor tunities now,
it's scar y," she says, laughing.
Mosel says that Silas and Trifena's enthusiasm are indicative of the program's success. "Trifena came
in after her last group of pre-apprentices achieved the highest scores in their round of advanced tests and
shouted 'It's working!..It's working!' Seeing that kind of excitement is the payoff for all the hard work," he says.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 13
APPRENTICE TRAINEES in the Deep
Ore Zone underground mine learn
skills to work in one of the world's
largest mining complexes.
TRIFENA TINAL (upper photo)
manages the Pre-Apprentice and
Apprentice programs.
(continued from page 11)
LPMAK has made a significant impact on the
lives of the local people by funding projects
benefiting residents in villages throughout the
Mimika area. Examples include hospitals in Timika
and Banti which treat thousands of patients each
year as described below; the LPMAK education
program which has provided scholarships or
educational assistance to thousands of Papuan
students; and village-based programs which have
provided electricity, water, church facilities, and
other infrastructure to remote villages in the
highlands of Papua. LPMAK is an accountable,
professionally managed and successful
development program which is one of the largest,
privately funded social development programs in
Asia.
PROVISION OF MEDICAL SERVICES
One of the most impor tant positive impacts from PT
Freepor t Indonesia's presence in Papua has been
the provision of medical ser vices carried out
through LPMAK. Prior to the initiation of the
programs suppor ted by PT Freepor t Indonesia,
healthcare was minimal or nonexistent in our
operations area. We have worked for years to
develop an integrated and coordinated healthcare
system capable of delivering comprehensive,
II. SOCIAL CHANGE AND DEVELOPMENT
14 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
PT FREEPORT INDONESIA PUBLIC
HEALTH INITIATIVES include a sweeping
program to fight malaria through vector
control, education, preventive healthcare
and treatment. Identifying malaria-
carrying mosquitos is a daily routine for
dozens of PT-FI Public Health
Depar tment workers.
competent and sustainable medical ser vices to the
local Papuans, both in the highlands and lowlands
areas near our operations.
This system relies on community-based health
clinics providing a range of preventive and
outpatient ser vices, coordinated with two modern
hospitals which provide comprehensive inpatient
healthcare. Thousands of Papuans receive quality
medical ser vices each year from this system. The
results have been gratifying - dramatically reducing
infant mor tality and the incidence of malaria, for
example.
Construction was completed in 2002 of a 74-
bed hospital in Banti which is now providing
healthcare to Papuans in the highlands area. A
separate 75-bed hospital opened in Timika in 1999
to ser ve Papuans living in the lowlands. PT Freepor t
Indonesia provided funds to construct both of these
facilities and suppor ts 10 other clinics providing
quality medical care to those living in other
communities. We have under taken comprehensive
public health programs for prenatal care, and the
prevention and control of malaria, tuberculosis and
HIV/AIDS.
TRAINING, EDUCATION AND PAPUAN DEVELOPMENT
Training, development and continuing education are
critical components to ensuring long-term operating
ef ficiency in any business. These matters become
even more impor tant when operating in a
developing region without a long histor y of
advanced educational programs. Job training
programs in Papua must of fer more than technical
skills development. PT Freepor t Indonesia of fers
more classroom and on-the-job training hours than
many universities. Training programs range from
basic literacy and mathematics to "pre-
apprenticeship" programs for individuals with no
prior career training, advanced technical
apprenticeships, career and leadership
development, and business management programs
that provide world-class skills to our workers.
In 1996, PT Freepor t Indonesia committed to
significantly improve an already-aggressive program
of training and education. The company pledged to
double the number of indigenous Papuan employees
throughout the workforce by 2001 and to double
that number again by 2006. The company also
pledged to at least double the total number of
Papuan management and professional employees.
Both goals were surpassed ahead of target dates.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 15
16
AN AGGRESSIVE TRAINING AND
EMPLOYEE DEVELOPMENT PROGRAM
seeks to provide skills and create job
oppor tunities for hundreds of local
Papuans each year.
At the end of 2003, PT Freepor t Indonesia and its
direct contractors had approximately 2,500 Papuan
employees, compared to 600 in 1996, including
210 Papuan management staf f employees,
compared to less than 50 in 1996. Another 1,000
Papuans were employed by privatized companies
serving PT Freepor t Indonesia.
With a view toward long-term development of
additional underground mining projects in the PT
Freepor t Indonesia project area, employee
development managers, working with members of
the local community, have formed the Nemangkawi
Mining Institute. The Institute's goal is to provide
pre-apprentice, apprenticeship and advanced career
development oppor tunities for some 300 Papuans
per year, with enrollment projected at 1,000 at any
given time. Graduates of the Institute will compete
on equal terms for positions within the Freepor t
organization and related enterprises each year.
In addition to these training and education
programs, educational assistance for non-PT
Freepor t Indonesia employees has been provided to
thousands of Papuan students through LPMAK and
the Freepor t Par tnership Fund for Community
Development. However, recent assessments have
indicated that the desired results for the traditional
inhabitants of our operations area were not being
achieved through this program. Significant deficits
in local elementar y, junior high and high school
educational programs meant that the scholarship
funds were benefiting Papuans from outside the
area of our operations more than local Papuans.
Due to this, LPMAK has embarked on a three-
year transformation of its educational program to
emphasize working with the local Mimika
government and provincial government to upgrade
the local educational system from elementar y
through high school. The program will involve
teacher recruitment, curriculum development,
upgrading school buildings and facilities and
creating a monitoring system to help ensure that
education in Mimika is ef fective and ef ficient.
Scholarships for Papuans, especially those at the
university level, will continue, but will not be the
major focus of the LPMAK program.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 17
(continued on page 20)
3/96 12/96 12 / 97 12/98 12/99 12/00 12 / 01 12 / 02 12 / 03
2,000
2,50 0
1,50 0
Goal
Actual
1,000
50 0
TOTAL PAPUAN EMPLOYEES
Goal
Actual
3/96 12/96 12 / 97 12/98 12/99 12/00 12 / 01 12 / 02 12 / 03
20 0
250
150
50
Number of StaffNumber of Employees
10 0
TOTAL PAPUAN PROFESS IONAL STAFF
Figure 3. PT Freeport Indonesia has surpassed its goals for Papuan employees and Papuan staff since 1996.
AMUNGME GOLDBOUTIQUE COFFEE BUSINESS BLENDSTRADITIONAL WAYS, MODERN TASTES
The Wa Valley in the Papuan Central Highlands is a long
way from Seattle, Washington in many respects. Greater
Seattle, with a population of more than three million, is a
major city known globally as a bir thplace of high
technology and New Age thinking. The Wa Valley,
population 1,500, is home to a traditional culture that is
only emerging from the Stone Age. One would imagine
that there are many degrees of separation between these
two places at opposite ends of the ear th.
There are, however, uncanny ties that bind the Wa
Valley with the Pacific Nor thwest. They include an
Anthropologist, a rainy, foggy, cool climate, and the cof fee
bean. Seattle gave bir th to a movement that has
transformed the way westerners think about a cup of
cof fee. Thanks to several well-known Seattle-based
corporations and their ubiquitous cof fee houses around
the globe, folks are shelling out three dollars and
upwards for café latte, espresso and exotic boutique
brews. Enlightened consumers, who see cof fee as much
as a political statement as a pick-me-up, are demanding
their gourmet beans be organically grown in the shade by
businesses which empower traditional people.
As Seattle impacts the cof fee world, cof fee is having an impact in far-flung Utekini in the Wa Valley, as
well as several adjacent valleys and the traditional Amungme villages of Tsinga, Aroanop, Jila and Hoea.
Local farmers in these small settlements - men and women who only a few years ago were raising sweet
potatoes and other staples for their families -- are poised to provide a hot commodity to a growing world of
cof fee connoisseurs.
What many of us now take for granted as a morning necessity is on the verge of transforming the way a
small group of farmers and entrepreneurs think about their future. Thanks to the ef for ts of an
Anthropologist and the backing of PT Freepor t Indonesia, cof fee and other crops grown in the Wa Valley are
par t of a sustainable agricultural project.
Carolyn Cook, originally from the Pacific Nor thwest, came to Papua in the late 1970s as par t of a
Freepor t expatriate family. So enamored of the traditional Amungme people, she later decided to pursue a
PhD in Anthropology so that she could study and assist the traditional highlands people around the Freepor t
mining project. As par t of her disser tation, Ms. Cook spent nine months living among the Amungme people
in the remote Tsinga Valley, studying the traditional peoples' unique ties to their mountain land and a
protein-rich nut from a native Pandanus palm. She returned to the area in the 1990s with a mission.
Today, Dr. Cook is working to empower the Amungme from the Wa Valley - women and men alike - to help
them develop a sustainable enterprise.
18 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
WOMEN HAVE TAKEN A LEAD ROLE in
the Amungme Gold project. Entrepreneur
Catarina Murib prepares fresh beans for
roasting.
CAROLYN COOK
"Cof fee is not among the traditional crops of the Amungme. But the climate here is ideal for great
Arabica," explains Cook from a fog enshrouded terrace in Utekini. Two women, are at work on a terrace
below harvesting red-leaf lettuce from a small plot, while several men transplant Pandanus trees onto a
mountain slope above. "The Amungme in our program decided they wanted to tr y it, along with these other
crops, knowing that there is a market for it. It was their decision to name it Amungme Gold," she says, with
hopes that this commodity, like the gold and copper being mined several kilometers away, will bring a bright
financial future to the people in the valley. "This cof fee is the variety that is in demand around the world,"
says Cook, beaming an encouraging smile toward the women working the nearby field. "It is organically
grown. No pesticides or chemical fer tilizers. It is picked and processed by hand, and its sale will directly
impact the growers in a positive way," explains Dr. Cook.
The venture is bringing about some fundamental social change in the valley. Cook explains that women
have always done the hard work in this community. Now, she says, they are reaping financial gain and are
equals when it comes to business decisions.
"These plants have been here for four years and they are bearing some great fruit," she explains -
pointing out a small branch on a cof fee plant loaded with rich red cherries that will soon be processed and
roasted in the valley's processing center. Inside the open-air building, a young mother turns a crank on a
machine designed to pull the hulls from dried cof fee beans. Her two-year old son tugs at her skir t as Mom
goes about her labor.
The project in Utekini and in the other nearby valleys is currently yielding only enough to supply the
Freepor t operation's retail shops and dining halls. However, time and additional nur turing from Dr. Cook
and the Local Business Development Unit of PT
Freepor t Indonesia, will eventually lead to
development of expor t markets. This project is one
of dozens of similar projects the unit has star ted
with an eye toward a future long after the mines
have been depleted.
The Amungme Gold entrepreneurs are all
members of the traditional landowning families
from the Wa and adjacent valleys. Besides great-
tasting cof fee, they are prospering by cultivating
Pandanus nuts, a traditional protein-providing
staple impor tant to the local population, fresh
herbs, various lettuces, mushrooms and
ornamental plants.
Dr. Cook admits that she won't be around to
help the team forever. Her mission is to help the
Amungme Gold farmers set up their business and
slowly back of f - leaving the future to the Amungme
entrepreneurs and their families.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 19
JUTAK JAMANG SHARES KNOWLEDGE with his younger
counterpar ts as they prepare soil for the transplant of
Pandanus palms. The plant produces a protein-rich nut
popular in the highlands communities.
BUSINESS DEVELOPMENT
An essential par t of working toward a sustainable
economy in the area of our operations is helping
Papuans learn how to run their own businesses and
providing star tup assistance to get Papuan
entrepreneurs star ted. In the lowlands, for example,
we are working with the Kamoro, the traditional
inhabitants, to develop fisheries with expor t
potential. Such ef for ts in the past had been
hampered by the lack of an ice factor y and a quality
processing facility. With PT Freepor t Indonesia's
help, PT Kapiri, a Kamoro-owned company, has
star ted an ice factor y and processing facility and is
purchasing vessels to collect fish from Kamoro
fishermen.
Similarly, an integrated animal husbandr y and
poultr y production center is being developed in
Timika in the lowlands. This enterprise, which
employs 400 Papuans, produces pigs, chickens,
ducks and chicken and duck eggs. A Papuan-owned
meat market has also been established in Timika
with help from the business assistance program
and is now operating profitably. In the village of
Banti in the highlands, the supermarket is owned by
a highland Amungme company and its staf f is
completely Papuan.
LAND RIGHTS RECOGNITION PROGRAMS
Under the Indonesian constitution, all unimproved
land is, by law, owned by the government and all
minerals belong to the government. PT Freepor t
Indonesia's "Januar y Agreement" of 1974 with the
Amungme was the first recognition in Indonesia of
hak ulayat, or the right of traditional people to
undeveloped land they used for hunting and
gathering. Subsequent to that agreement, the
government formally recognized the right to
compensation for hak ulayat land rights.
Compensation in the form of rekognisi, or
recognition, is paid to communities for a release of
hak ulayat rights, as hak ulayat is a communal
proper ty right. PT Freepor t Indonesia has paid
recognition in several instances over the years
through programs mutually agreed upon with the
af fected local Papuans and the government.
Two such multi-year programs were successfully
completed in 2003:
• The Kamoro Village Recognition Program, a
five-year program compensating for the release
of land to the government by five Kamoro
villages in the lowlands, including land used for
the tailings deposition area, cargo dock
facilities, the por t and electrical transmission
line corridor.
20 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
II. SOCIAL CHANGE AND DEVELOPMENT
(continued from page 17)
• The Tiga Desa (Three Village) Development
Program, a similar program for three Amungme
villages in the highlands. This program provided
additional recognition to the Amungme living
nearest the mine, who had been compensated
in the 1974 agreement, for the expanded
scope and continuing success of our
operations.
These two programs provided millions of dollars
wor th of infrastructure, social and economic
development projects including housing, school
buildings and student dormitories, medical clinics,
places of worship, community buildings, of fice
buildings, roads, bridges, water tanks, electrical
power, motorboats for transpor tation and fishing,
spor ts facilities and feasibility studies for business
oppor tunities.
In addition, the Land Rights Trust Fund for the
Amungme and Kamoro communities was created in
2001 to provide voluntar y special recognition for
the holders of the hak ulayat, or traditional land
rights, in the mining area and for the expanded
scope and continuing success of the mining
operations. PT Freepor t Indonesia provided $2.5
million initially and annual contributions thereafter
at a current level of $1 million annually, enabling
the Amungme and Kamoro tribes to use some of
these funds to purchase shares in Freepor t-
McMoRan Copper & Gold Inc., thereby becoming
stakeholders in the mine.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 21
NEARLY HALF OF THE
HOMEOWNERS in the
modern environmental
planned community of
Kuala Kencana are
indigenous Papuans.
SOCIAL AND HUMAN RIGHTS PERFORMANCE AUDIT
Our Social, Employment and Human Rights Policy
reflects the general standards for the social and
economic development of the people within PT
Freepor t Indonesia's Contract of Work area; the
commitment of the company to the increased
employment of native Papuans, both in number and
positions of authority; and the respect for and
protection of the human rights of employees, their
dependents and the local community around our
operations. While we believe we have a strong
policy, only ef fective implementation of its goals will
make it a reality. In 2003, Freepor t-McMoRan
Copper & Gold Inc., PT Freepor t Indonesia and the
International Center for Corporate Accountability
(ICCA) announced that ICCA will audit our policy,
which has been adopted by both companies, to
assess its ef fectiveness and the extent of our
compliance.
During 2003, teams from ICCA traveled to
Papua to gather information to be the basis of
benchmarks in a repor ting system. Once the
repor ting system is complete, ICCA will review it
with our staf f to ensure understanding. Following
this process, the formal audit will begin and is
expected to be completed by the end of 2004. ICCA
will repor t its findings to the company, noting areas
where improvements are needed. The company will
respond with a plan to implement these
improvements. Both ICCA's repor t and the
company's response will be made public.
PROVISION OF SECURITY
Consistent with our Contract of Work, corporate
responsibility and the Voluntar y Principles on
Human Rights and Security as well as our
company's duty to protect its employees and
proper ty, PT Freepor t Indonesia has taken
appropriate steps to provide a safe and secure
working environment. As par t of its security
program, the company maintains its own internal
security depar tment, which per forms functions such
as protecting company facilities, monitoring the
shipment of company goods through the airpor t and
terminal, assisting in traf fic control and aiding
rescue operations. PT Freepor t Indonesia's civilian
security employees (numbering about 670) are
unarmed and per form duties consistent with their
internal security role. For 2003, the total costs for
its internal civilian security depar tment were $13.9
million ($11.2 million net to PT Freepor t Indonesia).
The security depar tment receives human rights
training and each member is required to cer tify his
compliance with our human rights policy.
PT Freepor t Indonesia, on the same basis as all
businesses and residents of Indonesia, relies on
the Government of Indonesia for the provision of
public order, upholding the rule of law and
protection of personnel and proper ty. The Grasberg
mine has been designated by the Indonesian
government as one of Indonesia's vital national
assets. This designation results in the militar y's
playing a significant role in protecting the area of
company operations. The government is
responsible for employing police and militar y
personnel and funding and directing their
22 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
II. SOCIAL CHANGE AND DEVELOPMENT
operations. From the outset of PT Freepor t
Indonesia's operations, the government has looked
to the company to provide logistical and
infrastructure suppor t and supplemental funding for
these necessar y ser vices, because of the limited
resources of the government and the remote
location and lack of development in Papua. The
need for this type of suppor t is not unique to the
company nor is it limited to the security arena in
Indonesia.
Prior to a civil disturbance incident in
Tembagapura in 1996, there was limited and
inadequate infrastructure for government security
personnel. Following company discussions with the
government in the aftermath of the civil
disturbance, the government conducted a complete
review of our project area - which encompasses
700,000 acres and currently has a population of
more than 120,000 - and subsequently
implemented a new comprehensive approach to
security in the area. In addition, the local Mimika
government became a full Kabupaten, a larger
governmental entity encompassing a larger
geographic area and requiring more government
personnel, including police and militar y. The
number of government security personnel grew from
200 to over 2,000, including, among other units,
Coast Guard at the portsite, Air Force at the airport,
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 23
THE POPULATION IN TIMIKA, the largest local community in the PT Freepor t Indonesia operations area, has grown from
fewer than 1,000 in the early 1970's to more than 80,000 today.
riot control personnel to deal with civil disturbances,
and both perimeter and on-site security at the mine
and the mill.
In addition to establishing separate
infrastructure (such as of fices and housing), the
suppor t and assistance for the government-provided
security in Papua includes mitigating living costs
and the hardship elements of posting in Papua,
better ensuring that personnel are properly fed and
lodged, and have the logistical resources to patrol
company roads and secure its operating area.
Oversight of suppor t requests is conducted to verify
that only appropriate and legitimate requests are
granted.
This suppor t for the government security
institutions assigned to the company's area of
operations represents a prudent response by our
company to protect its workforce and proper ty,
especially considering the expectations imposed by
the government on companies conducting business
in remote areas of Indonesia. In addition, the
provision of suppor t is consistent with the
company's obligations under the Contract of Work,
our philosophy of responsible corporate citizenship,
the joint U.S. State Depar tment-British Foreign
Office Voluntar y Principles on Human Rights and
Security, and is in keeping with our commitment to
pursue practices to promote human rights.
For 2003, the total expenses associated with
suppor t for government-provided security for the
operations were $7.3 million ($5.9 million net to PT
Freepor t Indonesia). The suppor t consists of costs
incurred and allocated by the company for
infrastructure, food, housing, fuel, travel, vehicle
repairs, allowances to cover incidental and
administrative costs, and community assistance
programs conducted by the militar y and police. The
total capital costs for associated infrastructure for
2003 was $0.8 million ($0.6 million net to PT
Freepor t Indonesia).
AUGUST 31, 2002 INCIDENT
A shooting incident involving unknown assailants on
a remote section of the mountain road near the PT
Freepor t Indonesia mine on August 31, 2002
resulted in the deaths of two American teachers
and an Indonesian teacher and injuries to ten other
individuals. The Indonesian government
subsequently enhanced security at our operations
and there have been no fur ther incidents of this
kind. The Government of Indonesia and the U.S.
Federal Bureau of Investigation continue to actively
investigate this terrible criminal act. PT Freepor t
Indonesia has suppor ted and cooperated fully with
the investigations and sincerely hopes that the
perpetrators, whoever they are, will soon be brought
to justice. After meeting in Bali, Indonesia on October
22, 2003, U.S. President George W. Bush and
Indonesian President Megawati Soekarnoputri
II. SOCIAL CHANGE AND DEVELOPMENT
24 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
issued a joint statement expressing their sorrow
over the killings, noting that the joint
Indonesian/U.S. investigations were proceeding
well, and reaf firming their "shared commitment to
find the murderers and bring them to justice,
whoever they may be."
POLITICAL ISSUES
On July 5, 2004, Indonesia, an emerging
democracy, is scheduled to hold its first-ever direct
Presidential election. The central government in
Indonesia has also approved a measure granting
greater autonomy to its provinces. Many leaders in
the Province of Papua, where PT Freepor t
Indonesia's operations are located, continue to
dispute the manner in which the autonomy measure
is being implemented. In addition, the central
government has approved a measure dividing the
Province of Papua into three provinces to improve
governance and this has also been opposed by
some Papuans, while other Papuans suppor t it. In
August 2003, when Papuan suppor ters of the
par titioning attempted to implement creation of the
new Central Irian Jaya Province, which includes PT
Freepor t Indonesia, conflict erupted in Timika, the
largest city in the area of our operations with a
population estimated at 80,000. Fighting between
Papuans suppor ting and opposing the new province
resulted in five deaths and allegations from both
sides of other human rights violations.
As a private contractor to the Republic of
Indonesia, PT Freepor t Indonesia takes no position
for or against any candidate for political of fice. We
have had excellent working relationships with four
Indonesian presidential administrations and fully
expect that relationship will continue with the next
administration. In addition, as a contractor to the
government, we do not take a position on issues
that are the purview of the Indonesian government,
such as autonomy and par titioning of the Province
of Papua. However, we strongly suppor t democratic
dialogue and peaceful resolution of these issues. In
the case of the August 2003 fighting over
par titioning, for example, PT Freepor t Indonesia
actively suppor ted the peace agreement between
the two sides in the conflict by providing
compensation for the families of victims on both
sides and by suppor ting the traditional peace
celebrations that ended the fighting.
Social Change and Development FREEPORT-McMoRan COPPER & GOLD INC. 25
ONGOING DIALOGUE WITH OUR
NEIGHBORS helps to develop mutual
understanding and par tnership for
sustainable development programs.
Pictured, Gabrielle McDonald
(second from left), Special Counsel
on Human Rights to the Chairman of
the Board of Freepor t-McMoRan
Copper & Gold Inc., and community
leaders in Timika.
MAKING BUSINESS ETHICS A PRIORITY
Freepor t-McMoRan Copper & Gold Inc., PT Freepor t
Indonesia and Atlantic Copper, S.A. have in place a
comprehensive Ethics and Business Conduct Policy
which requires all employees to adhere to ethical
standards established by the company and
consistent with applicable laws, including the U.S.
Foreign Corrupt Practices Act (FCPA) and the
Sarbanes-Oxley Act. All appropriate company
personnel are required to cer tify annually their
adherence to this policy. In addition, employees are
required to notify the company compliance of ficer of
any activity, transaction or other information
involving a suspected violation of the policy. Any
repor ted incidents or concerns about violations or
potential violations are investigated and resolved
appropriately.
We conduct periodic training sessions for our
managers, supervisors and other personnel so they
can identify potential issues and know how to
respond appropriately. We also periodically review
our policies and procedures to ensure that
applicable legal requirements and expectations
regarding corporate responsibility are met.
See our Ethics and Business Conduct Policy on
our web site (www.fcx.com).
II. SOCIAL CHANGE AND DEVELOPMENT
26 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
DOLPHINS FEED along the coast of the Arafura Sea in the PT Freepor t Indonesia Project Area.
III. ENVIRONMENTAL MANAGEMENT
ENVIRONMENTAL COMMITMENTS
We are committed to minimizing the impact of our
operations on the surrounding environment and to
reclaiming and revegetating af fected land. Through
our Environmental Policy, which is included as an
appendix to this repor t, we have also adopted the
Environmental Char ter of the International Council
on Mining and Metals. We commit in these policies
to sound environmental management and practices,
to providing adequate resources to fulfill that
responsibility and to continuous improvement of our
environmental per formance at ever y operational
site. We are also strongly committed to continue
suppor ting scientific research to understand the
environments in which we operate and improve
environmental technologies; and, to comprehensive
monitoring to determine the ef fectiveness of our
management practices. We also work with
governmental agencies, the local population and
responsible non-governmental organizations to
enhance our environmental per formance.
ENVIRONMENTAL AUDITS
In our Environmental Policy, we commit our company
to routine internal and external environmental
audits to assess our environmental compliance,
management systems and practices. PT Freepor t
Indonesia's environmental audits provide our
managers with information on current environmental
per formance and help identify oppor tunities for
improvement.
In 2003, two environmental audits were
conducted. Representatives from Freepor t-
McMoRan Copper & Gold Inc. audited PT Freepor t
Indonesia's operations in August as par t of the
annual corporate internal auditing program.
Environmental Management FREEPORT-McMoRan COPPER & GOLD INC. 27
III. ENVIRONMENTAL MANAGEMENT
1998 1999 2000 20 01 20 02 20 03
20,000
15,000
Personnel Trained Man-Hours of Training
10,000
5,000
Figure 4. Environmental training of all employees and contractpersonnel is an important aspect of PT Freeport Indonesia’sEnvironmental Management System (EMS).
In November, the International Cer tification
Services Division of Société Générale de
Surveillance (SGS), an ISO 14001 registration body
based in Geneva, Switzerland with of fices in
Indonesia, conducted an environmental
management system audit of PT Freepor t Indonesia
as a requirement to maintain the ISO 14001
cer tification granted in 2001. (Please see ISO
14001 Environmental Management System section
below.) Actions have been taken to implement
recommendations for improvements that were made
in both audits.
Our environmental management system also
includes an in-house environmental inspection
program that is conducted continually throughout
the year. These inspections are conducted at 369
facilities, including contractors and privatized
companies, from the Grasberg mine site to the
por t. The purpose is to assess conformance by all
facilities to our environmental management system.
The results from these inspections ser ve as a
measurement of our environmental per formance
and a basis for determining continual improvement.
The results are also used in the calculation of
employee bonuses, providing an added incentive for
our workforce to maintain high environmental
per formance.
ISO 14001 ENVIRONMENTAL MANAGEMENT SYSTEM
ISO (International Standardization Organization)
14001 is an international standard that provides
companies with a systematic approach to ef fective
environmental management and continuous
improvement. PT Freepor t Indonesia was one of the
first mining operations in Indonesia to achieve this
recognition when we were awarded ISO 14001
cer tification in December, 2001 for our mining and
ore processing operations. This significant
achievement demonstrates our strong commitment
to providing ef fective environmental management at
our operations. This formal cer tified environmental
management system is the basis for measuring
continual improvements in our environmental
per formance, a cornerstone of ISO 14001.
Periodic follow-up reviews are required by ISO
14001 protocols. These are conducted by the
cer tification agency to determine the status of
conformance and to assess continued cer tification
for our operational facilities. PT Freepor t Indonesia
was reviewed in 2002 and again in November 2003
in conjunction with the audit by the cer tification
agency, SGS International Cer tification Services,
Inc. The audit verified that PT Freepor t Indonesia's
Environmental Management System was in
conformance to the ISO 14001 standards in both
2002 and 2003 and remains cer tified.
III. ENVIRONMENTAL MANAGEMENT
28 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
TAILINGS MANAGEMENT PROGRAM
Tailings are finely ground natural rock residue from
the processing of mineralized ore by physical
grinding and flotation methods used in our
operations. PT Freepor t Indonesia uses a river
system for tailings transpor t to a designated area
in the lowlands and coastal zone, called the
Modified Ajkwa Deposition Area, which is an
engineered, managed system for the deposition and
control of tailings.
The tailings deposition system is operated
under PT Freepor t Indonesia's comprehensive
tailings management plan, as approved by the
Government of Indonesia. The first stage of
construction of the lateral containment structures,
or levees, for the deposition area was completed in
1997. The second stage of construction work,
including an extension of the levees, was
completed in 2002. Work is continually conducted
on various enhancements to the system, including
inspections, monitoring and physical works.
We continually evaluate and update the tailings
management plan to minimize potential risks. PT
Freepor t Indonesia conducted comprehensive
technical evaluations of alternative tailings disposal
options using internationally recognized scientific
exper ts and adopted the most appropriate site-
specific management system. Independent
environmental audits of PT Freepor t Indonesia's
environmental management system concluded that
the company's tailings management plan
represents the best alternative, considering the
applicable geotechnical, topographic, climatological,
seismic and water quality conditions.
Environmental Management FREEPORT-McMoRan COPPER & GOLD INC. 29
THE MODIFIED AJKWA DEPOSITION AREA is the engineered, managed system for deposition and control of the tailings sediment
from the mining operations. Reclamation programs in soils containing tailings, including the Maurujaya Reclamation Center have
demonstrated success in growing dozens of plants and cash crops, and suppor ting aquaculture and livestock projects.
PT Freepor t Indonesia has also submitted to the
Government of Indonesia a thorough Environmental
Risk Assessment of the tailings management
system. This assessment found that the
environmental impacts of PT Freepor t Indonesia's
expanded operations were consistent with those
anticipated by the company's comprehensive
environmental and social impact study, the AMDAL,
which was completed in 1997 and approved by the
Government of Indonesia.
Studies of tailings reclamation and
establishment of demonstration plots on tailings
areas show that tailings can be readily revegetated
with native forestr y - in fact, natural re-colonization
takes place rapidly - and agricultural plants.
Details of results to date are discussed in more
detail below.
Extensive sampling of water quality in the
tailings management system shows that the water
in the Ajkwa River, which transpor ts the tailings
from PT Freepor t Indonesia's mill in the highlands
to the lowlands deposition area, meets the
Indonesian and U.S. Environmental Protection
Agency drinking water standards for dissolved
metals. Data from biological sampling continue to
demonstrate that the estuary downstream of the
tailings deposition area is a functioning ecosystem
based both on the number of species and the
number of specimens collected of nektonic, or free-
swimming, organisms such as fish and shrimp.
RECLAMATION AND REVEGETATION
PT Freepor t Indonesia is committed to
reclaiming or revegetating disturbed land when it is
no longer used for our operations. We have
conducted comprehensive reclamation studies and
programs for many years in both the highlands and
the lowlands areas to provide sound, scientific data
to guide our management decisions as to the best
techniques and plant species to maximize success
of these programs.
HIGHLANDS
The highland ecosystem is shaped by environmental
extremes that include ver y low nocturnal
temperatures, high solar radiation during the day
but with shor t periods of photosynthesis, heavy fog,
high rainfalls and poor soils. Plants growing there
are highly specialized, having evolved to sur vive in
these harsh conditions. International scientific
exper ts and PT Freepor t Indonesia staf f have
III. ENVIRONMENTAL MANAGEMENT
30 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
1998 1999 2000 20 01 20 02 20 03
1.00
0 .75
0.50
1.50
1. 25
0.25
0.00
Figure 5. Copper concentrations in the Ajkwa River arewell within drinking water standards for dissolved metals.
Annual Average Concentration
Part
s Pe
r M
illio
n
U.S. EPA drinking water standard for dissolved copper
Indonesian drinking water standard for dissolved copper
studied the ecology of the alpine ecosystem in our
work area and have developed methods to reliably
produce planting stock for native species. Studies
under taken to date include: ethno-botany,
biodiversity of the sub-alpine and alpine
ecosystems, the use of moss for pioneering
reclamation strategies, and tissue culture for
propagating native alpine plants. Although final
closure of the overburden areas is decades away,
we are committed to reclaim areas of overburden
each year as they become available, monitoring the
per formance of various planting techniques and
modifying programs to enhance their long-term
success.
Through year-end 2003, more than 56 hectares
of disturbed land at the mine have been
revegetated to comply with PT Freepor t Indonesia's
commitment to the Government of Indonesia. Most
of the disturbed areas in the highlands remain in
active use and therefore are not yet available for
revegetation. In 2003, some 9.5 hectares were
revegetated.
The intensive studies in the past have identified
the types of native highlands plant species that do
well in reclamation, while current research is
designed to learn how to help improve sur vival of
these species in the harsh conditions. Therefore,
highlands reclamation in 2003 focused on the
implementation of recommendations from previous
studies. Native bacteria were used to enhance
moss establishment at the final placement areas of
overburden. Tissue culture techniques and
conventional cutting methods were used to develop
large-scale propagation that successfully resulted in
a 78 percent sur vival rate of 22,000 propagated
plants, comprising three species of native alpine
plants.
LOWLANDS
In the lowlands, reclamation research has
repeatedly demonstrated that native species
successfully colonize naturally and grow on soils
containing tailings. Soils containing tailings are ver y
suitable for growing many agricultural crops when
the soils are ameliorated with organic carbon. The
objective of PT Freepor t Indonesia's reclamation
and revegetation program in the lowlands is to
transform the tailings deposits in the Modified
Ajkwa Deposition Area into agricultural or other
productive land use or to return it to native
vegetation after mining is completed.
Cumulatively through the end of 2003, 142
plant species have been planted experimentally on
soils containing tailings and 125 of these were
considered successful. Some plant species that
were successfully tested to date include legume
cover crops for fodder; local trees such as
Casuarina, betel nut and matoa; cash crops plants
such as pineapple, melon, and banana; and,
vegetables and grains such as chili peppers,
cucumbers, tomatoes, rice, string beans and
Environmental Management FREEPORT-McMoRan COPPER & GOLD INC. 31
Figure 6. Reclamation testing shows success for manyspecies on soils containing tailings; overburden testing,utilizing only native species, is more difficult due tohigh altitude conditions, but successes continue toincrease.
(Data is cumulative 19 95 through 20 03.)
Tailings Overburden
9 0
60
120
150
30
Species Tested Species Successful
Number of Plant Species
pumpkins.
Harvests of edible plants and fruit from many of
these species were conducted in 2003. A total of
321 samples from 51 edible plants and fruit were
collected during 2003 for metals-uptake analysis.
PT Freepor t Indonesia's comprehensive sampling
program monitors environmental conditions in the
tailings deposition area and rigorous testing
per formed on these edible plants and fruits
continues to indicate that metals uptake from the
minerals naturally contained in the tailings is
minimal and levels remain safely below the
maximum allowable levels stipulated in national and
international standards for all plants.
PT Freepor t Indonesia exceeded its commitment
to the Government of Indonesia to reclaim 375
hectares of tailings deposition area by the end of
2003, when 473 hectares were planted. Some
16,000 trees were planted in 2003 in the tailings
deposition area, consisting primarily of Casuarina
(15,000 trees) and matoa (1,000 trees). Monitoring
of the growth of these trees continues to indicate
excellent progress.
An animal husbandr y program has been
developed in the lowlands to demonstrate that
cattle can be safely raised and grazed on deposited
tailings. This project was established in cooperation
with the local government to monitor cattle health.
Legumes have been planted along with sago and
Casuarina. The legumes are nitrogen-fixers that add
nutrients to the soils containing tailings. They are
harvested as feed for the cattle and the cattle's
manure provides fur ther soil enrichment.
In addition to the production of commercial
crops, another strategy of tailings reclamation is to
encourage natural ecological succession (the
natural regrowth of native species) in designated
areas. Natural succession occurs quickly in many
areas of the deposition area, led by Phragmites
karka grass. The Phragmites grass produces detrital
biomass which enrichens soils containing tailings.
This process improves water retention capacity of
the soils so that other species can propagate. An
independent research project, completed in late
2002 on natural succession of vegetation on
tailings in an area outside the current deposition
area, but which previously received tailings, found
that, in a period of only a few years, 264 plant
species have naturally colonized and are growing
III. ENVIRONMENTAL MANAGEMENT
32 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
PINEAPPLES ARE AMONG THE DOZENS OF PLANTS AND CASH
CROPS that grow successfully on tailings. Locally hired
reclamation employees apply traditional knowledge of plants
and animals as par t of the sustainable agricultural program.
well. This aspect of tailings reclamation has been
observed and studied by PT Freepor t Indonesia for
years, but the formal confirmation and
documentation of this process by independent
scientists is significant.
The Ajkwa estuar y receives a por tion of tailings,
which pass through the Modified Ajkwa Deposition
Area. Some of the newly-formed lands from these
sediments have been naturally colonized by
mangroves. Within the past several years, six
mangrove species, 30 species of crabs and
shrimps, four species of snails and several species
of fish and marine polychaetes (worms) were
identified in the mangrove colonization areas. To
accelerate the primary succession process in these
newly formed lands, PT Freepor t Indonesia initiated
an assisted mangrove colonization program in April
2002. A total of 75,000 mangrove seedlings were
planted in 2003 on 30 hectares, utilizing
contractors from the Kamoro people, the traditional
lowlands inhabitants. Monitoring of the sur vival rate
of mangrove seedlings that were planted showed
that the planted seedlings growth and sur vival rates
are similar to rates repor ted for other assisted
colonization programs from around the world
described in scientific literature.
OVERBURDEN AND ACID ROCK DRAINAGE MANAGEMENT
Overburden is rock that must be moved aside to
gain access to ore that is mined and processed to
produce metals for commercial purposes. PT
Freepor t Indonesia handles overburden under a
comprehensive Overburden Management Plan
approved by the Government of Indonesia. Most
metals occur in nature as sulphide minerals. When
ore is mined and overburden containing sulphides
is left exposed to the elements, the action of water,
oxygen and natural bacteria has the potential to
create sulphuric acid. This acidic water can dissolve
metals contained in overburden rock and be
transpor ted in water drainage systems and, if not
properly managed, cause adverse environmental
impacts. This process is known as acid rock
drainage.
PT Freepor t Indonesia manages and monitors
acid rock drainage from its operations. Independent
audits of PT Freepor t Indonesia's environmental
management system concluded that our overburden
management programs are "…consistent with
international practice." Under the Government-
approved overburden management plan, PT Freepor t
Indonesia places overburden in managed areas
around the Grasberg open pit.
PT Freepor t Indonesia's acid rock drainage
mitigation plans provide for capture and treatment
of the existing acid rock drainage, in conjunction
with limestone blending and limestone capping of
existing overburden placement areas. These actions
are expected to significantly reduce future acid rock
drainage generation. Throughout 2003, acid rock
drainage from the mine was captured and
transpor ted via a system of pipes to the mill for
lime neutralization.
Environmental Management FREEPORT-McMoRan COPPER & GOLD INC. 33
NATIVE HIGHLANDS SPECIES of grasses, mosses and shrubs
are successfully grown on overburden placement areas.
Overburden sites and the open pit will be revegetated or
reclaimed after the end of mine-life.
LONG-TERM ENVIRONMENTAL MONITORING PROGRAM
PT Freepor t Indonesia's long-term environmental
monitoring program evaluates potential impacts of
our operations by routinely measuring water quality,
biology, hydrology, sediments, air quality and
meteorology in our area of operations. For 2003,
the overall monitoring program included the
collection of over 6,500 environmental samples and
over 44,000 separate analyses on these samples,
which included aquatic biology, aquatic tissue, plant
tissue, mine water, sur face water, ground water,
sanitar y wastewater, river sediments and tailings.
The program ensures that we have the scientific
information necessar y to make management
decisions about our operations to minimize and
mitigate environmental impacts.
In 2003, PT Freepor t Indonesia monitored water
quality at over 150 locations throughout the project
area, collected over 1,800 water samples and
conducted over 20,000 water quality analyses. We
monitored more than 200 sampling locations for
nekton, benthos, plankton, and mangrove
inver tebrates in the aquatic biology program. Data
from this sampling continue to show that the
estuar y downstream of the tailings deposition is a
functioning ecosystem, based on both the number
of species and the number of specimens collected
of nektonic, or free-swimming, organisms such as
fish and shrimp. Between 1999 and 2003, more
than 2,000 samples of aquatic fauna were
collected and a total of nearly 17,000 analyses
were conducted on them.
The monitoring of benthos, or bottom-dwelling
organisms, continued in 2003 at 12 sites in the
estuaries and 40 sites in the Arafura Sea. The
results of this monitoring indicated that tailings
sites generally have lower species counts, but high
densities of ver y small polychaetes, or marine
worms, which are pioneer species to disturbed
areas. Recover y of benthos diversity is now
occurring in areas that once received tailings in the
Minajerwi estuar y. The monitoring found no impact
of tailings on the marine benthos in the Arafura Sea
outside of the tailings management area.
WASTE MANAGEMENT AND RECYCLING
PT Freepor t Indonesia's environmental management
programs involve all aspects of its operations, not
just those related to monitoring. We have a
comprehensive waste management system using
the principles of re-use, recycling and reduction.
III. ENVIRONMENTAL MANAGEMENT
34 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
AquaticTissue
SurfaceWater
Tailings
20,000
15,000
10,000
5,000
Figure 7. The comprehensive Long-Term EnvironmentalMonitoring Program encompasses a large number ofsamples and analyses used by PT Freeport Indonesia forenvironmental assessments.
Type of Analysis
20 01 20 02 20 03
AquaticBiology
Waste minimization programs involving reduction
and substitution with environmentally friendly
products have been previously established and will
be continued. Bulk containers, waste oil, used
papers and tires are all re-used locally in an
environmentally acceptable manner. Other
recyclable materials such as aluminum, scrap
metals and used batteries are collected and stored
in a temporar y storage area for subsequent
disposal in accordance with the requirements of the
Indonesian government.
Wastes, including small amounts of hazardous
waste, are segregated at the point of origin
wherever possible. Medical wastes are separated
from other wastes in a special container for final
destruction in an approved high-temperature waste
incinerator. Collection and packaging of small
amounts of wastes from gold assay work on ore
samples are conducted in compliance with
Indonesian government regulations. PT Freepor t
Indonesia's other solid wastes are disposed in
three designated locations, including landfills for
iner t wastes and a landfill for biodegradable
wastes, which is lined and equipped with a leachate
collection and treatment system. The second cell of
the lined-landfill star ted operation in the first-
quar ter 2003 to replace the first cell that is now
full.
PT Freepor t Indonesia has implemented new
government regulations on Domestic Liquid Waste
(Decree of Environmental Ministr y, Government of
Indonesia: Number 112 - 2003) that af fect our ten
sewage treatment plants. The ef fluent quality from
all sewage treatment plants is monitored regularly
for the parameters of pH, BOD, TSS and oil and
grease.
BIODIVERSITY
The PT Freepor t Indonesia project area is located in
the Province of Papua, which is an area of high
biodiversity. In order to gather baseline information
necessar y for ef fective biodiversity management,
we have conducted a number of ecological studies
within our project area. These biodiversity studies,
conducted by PT Freepor t Indonesia and
international exper ts from 1996-2003, included
surveys of: vegetation (from Lowland, Montane,
Sub-alpine, Alpine and Nival Zones), ethno-botany,
medicinal plants, mammals, birds, amphibians,
reptiles, fish, soil fauna, and both aquatic and
terrestrial insects.
Extensive botanical and taxonomy surveys within
the PT Freepor t Indonesia project area (from
Coastal to Nival Zones) were also carried out over a
six-year period by staf f from the KEW Garden,
London, in conjunction with assistance from
Indonesian institutions. More than 5,000 flowering
and fruiting plant species were identified and
prepared for herbariums. Posters of the vegetation
zones and taxonomy of the plants were produced.
From the scientific point of view, PT Freepor t
Indonesia's biodiversity programs have significantly
contributed to the knowledge of natural science in
Papua through the discover y of new species,
reference collections, and the publication of
papers, books and posters. Most recently, PT
Freepor t Indonesia has published two books in its
biodiversity series: "The Freshwater Fish of the
Timika Region, New Guinea" and "The Butter flies of
Mimika."
Environmental Management FREEPORT-McMoRan COPPER & GOLD INC. 35
SAFETY
Our safety per formance has consistently compared
favorably to the average per formance of U.S. and
international mining companies. In 2003, our lost-
time injur y rate per 200,000 hours worked was
0.34 compared to the U.S. metallic mining industr y
average rate of 2.18 for 2002 (the latest data
available). Our total repor table rate (all repor table
injuries) for 2003 was 0.65 compared to the U.S.
average of 3.70.
However, an October 9, 2003 slippage of
material in the Grasberg open pit mine resulted in
the deaths of eight workers. On November 22,
2003, two workers were asphyxiated in an
underground tunnel conveying ore from the
Grasberg mine to mill facilities. The incident
occurred when ore from the Grasberg sur face mine
containing previously unencountered concentrations
of elemental sulphur released fumes in the tunnel.
These were unforeseeable events. These
dishear tening accidents contributed to PT Freepor t
Indonesia's fatal accident rate per 200,000 hours
worked of 0.06, compared to the U.S. average of
0.01.
While unforeseeable, these events were
unacceptable and a comprehensive series of safety
initiatives have been and are being implemented to
improve safety per formance. Due to safety
concerns accociated with the slippage, PT Freepor t
Indonesia changed its mine plan sequencing to shift
from mining high-grade ore to focus on mining the
south wall of the pit so that safe access to the
high-grade ore areas can be restored. Other safety
initiatives include the addition of safety personnel,
and management emphasis on the top priority to be
given to safety policy and procedures through direct
contact with employees in the field and direct
involvement of management in the implementation
of safety procedures and policy.
Visit our web sites at: www.fcx.com
and www.ptfi.com.
SAFETY
36 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
ATLANTIC COPPER, S.A.
ENVIRONMENTAL PROGRAMS UPDATE
As a wholly owned subsidiar y of Freepor t-McMoRan
Copper & Gold Inc., Atlantic Copper, S.A. is also
committed to sustainable development in its
operations through its Policy of Social
Responsibility, social development and
environmental management programs. Atlantic
Copper, S.A. management is currently par ticipating
in a program designed to help Spanish companies
integrate the principles of sustainable development
into all their decisions and activities.
In 2003, the environmental management
systems at Atlantic Copper's operations in Huelva,
Córdoba and Barcelona were audited by the
Spanish Association for Standardization and
Cer tification (AENOR), in accordance with ISO
14001:96 international cer tification standard and
the new European Union Environmental, Eco-
Management and Eco-Auditing (EMAS) Regulation
No. 761/2001. All of these received positive
results from the audits, which are required annually
to retain the ISO 14001 cer tification that Atlantic
Copper achieved in prior years.
The annual Freepor t-McMoRan Copper & Gold
Inc. internal, environmental and safety audit was
conducted at the Huelva operations in 2003. (The
smaller Córdoba and Barcelona operations are
audited on a bi-annual basis). The audit repor t
noted that environmental programs at the Huelva
smelter facility were comprehensive, well-managed
and reflected a strong commitment by all levels of
management to fulfill the company's environmental
responsibilities. The facility was found to be in
material compliance with applicable Spanish and
European Union laws, regulations and directives.
In Februar y 2003, Atlantic Copper and the
Andalusian Regional Government entered into a
Voluntar y Agreement for Sustainable Development
that establishes a plan for Atlantic Copper to
achieve compliance with the new European Union
requirements of the Integrated Pollution Prevention
and Control Program (IPPC). The agreement
establishes Atlantic Copper as a leader within its
sector in moving forward promptly to implement this
program, which will be required of all industries in
the European Union by October 30, 2007.
Visit our web site at: www.atlantic-copper.es.
Atlantic Copper, S.A. FREEPORT-McMoRan COPPER & GOLD INC. 37
ATLANTIC COPPER, S.A.
AT THE ATLANTIC COPPER
SMELTER, molten copper from the
furnace is cast into anodes using a
continuous casting wheel. In 2003,
Atlantic Copper produced almost
650 million pounds of anodes.
Environmental Policy . . . . . . . . . . . . . . . . . . . . . . . . . .APPENDIX A
Social, Employment and Human Rights Policy . . . . . . . . . . . . . . . . . . . . . . . . .APPENDIX B
Human Rights Policy and Implementation . . . . . . . . . . . . . .APPENDIX C
Voluntary Principles on Security and Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . .APPENDIX D
38 FREEPORT-McMoRan COPPER & GOLD INC.
APPENDIX TABLE OF CONTENTS
APPENDIX AFREEPORT-McMoRan COPPER & GOLD INC.
ENVIRONMENTAL POLICY
GENERAL
Freeport-McMoRan Copper & Gold Inc. (FCX)believes that, as a responsible corporate citizen, itis the duty of the company and its operatingaffiliates to minimize the impact of their operationson the environment and, where feasible, to protectand enhance the quality of the environment in areaswhere they operate. FCX is also committed toproviding a safe working environment for itsemployees and a healthy social/economicenvironment for the local people in its operationalareas.
FCX is committed not only to compliance withfederal, state, and local environmental statutes andregulations, but also to continuous improvement ofits environmental performance at every operationalsite. Environmental audits will continue to beconducted to assess environmental compliance,management systems and practices. Goals andbenchmarks will be established in each operatingunit as a yardstick to measure environmentalperformance. FCX will also work with governmentalagencies, the local population and responsible non-governmental organizations to enhance itsenvironmental performance.
ENVIRONMENTAL PRINCIPLES
To achieve these Policy objectives, FCX and itsoperating affiliates will:
● Comply in all material respects with allapplicable environmental laws and regulations and,in jurisdictions where these are absent orinadequate, apply cost-effective managementpractices to advance environmental protection andto minimize environmental risks.
● Make environmental management a highcorporate priority and the integration ofenvironmental policies, programs, and practices anessential element of management.
● Provide adequate resources, staff, and requisite
training so that employees at all levels are able tofulfill their environmental responsibilities; andcommunicate with all employees, contractors andvendors on the importance of environmentalprotection.
● Review and take account of the environmentaleffects of each activity, whether exploration, miningor processing; and plan and conduct the design,development, operation, and closure of any facility,including pollution control systems, in a mannerthat optimizes the economic use of resources whilereducing adverse environmental effects.
● Promote responsible stewardship and recyclingefforts of its products.
● Conduct regular environmental reviews,assessments and audits and act on the results.
● Acknowledge that certain areas may haveparticular ecological or cultural values as well asdevelopment potential and, in such instances,consider these values along with the economic,social, and other benefits resulting fromdevelopment.
● Support research to expand scientific knowledgeand develop improved technologies to protect theenvironment, promote the international transfer oftechnologies that mitigate adverse environmentaleffects, and use technologies and practices whichtake due account and respect of local cultures,customs and values as well as the economic andenvironmental needs.
● Recognize local communities as stakeholdersand engage with them in a process of consultationand communication regarding environmentalmanagement issues and impacts.
● Accept the responsibility of supporting resource conservation and sustainable development in all operational areas.
ENVIRONMENTAL AUDITING
Environmental auditing is a key component of thisEnvironmental Policy. This process is a systematic,
2003 Working Toward Sustainable Development APPENDIX A
objective evaluation of facility operations andpractices which is designed to:
1. Verify compliance with environmental regulations,internal policies, and accepted practices.
2. Evaluate the effectiveness of environmentalmanagement systems in place.
3. Identify and assess any reasonably foreseeablerisks associated with hazardous conditionsattributable to environmental and related factorsand provide an avenue for effective prevention andresolution.
As prescribed in the FCX Environmental AuditingProtocol, major operational facilities are to continueto be internally audited on an annual basis. Smallerfacilities, with senior management concurrence, canbe audited on a biannual basis. Periodic, externalaudits may also be deemed appropriate for certainfacilities by FCX Senior Management. The formalauditing protocol covers all aspects ofenvironmental management, programs, controls andtreatment facilities.
OVERSIGHT AND COMMUNICATION
The FCX Board of Directors Public Policy Committeeand the Board will periodically review and updatethis Environmental Policy. Based on the resultsobtained from the periodic evaluations and audits,FCX Senior Management will review and revise, asneeded, environmental objectives, environmentalprograms and the environmental managementsystem of each operating unit.
FCX will work to foster throughout the Companyand its operating affiliates a sense of responsibilityregarding the environment. FCX also recognizes itsresponsibility to communicate to the public on itsenvironmental status and progress through annualreports, publication of external audit results,notifications of all environmental certifications, andother public statements and announcements.
FREEPORT-McMoRan COPPER & GOLD INC.APPENDIX A
APPENDIX BFREEPORT-McMoRan COPPER & GOLD INC.
SOCIAL, EMPLOYMENT AND HUMANRIGHTS POLICY
GENERAL
Freeport-McMoRan Copper & Gold Inc. (FCX)believes that, as a responsible corporate citizen, itis the duty of the company and its operatingaffiliates to foster positive social and employmentrelationships in every area where they operate, andFCX is committed to continuous improvement ofthose relationships. FCX is dedicated to ensuringthat its operations are conducted in a manner thatrespects the Universal Declaration of Human Rightsand other applicable international standards ofhuman rights, the laws and regulations of the hostcountry, and the culture of the people who areindigenous to the areas in which the companyoperates. FCX will work to be a partner in the socialand economic development of the people in andaround areas of operations.
SOCIAL RELATIONSHIPS AND DEVELOPMENT
To achieve these Policy objectives, FCX and itsoperating affiliates will:
● Build relationships with people in the hostcountry and especially with people indigenous toareas of operations or exploration;
● Work continuously to understand the culture andsocial patterns of the people in the host countryand especially the people indigenous to areas ofoperations or exploration. To accomplish this, thecompany and its affiliates will undertake social,cultural and medical studies;
● Consult with local populations about important operational issues that will impact theircommunities;
● Work with the host country government, the localpeople and responsible non-governmentalorganizations to create and periodically updatesocial integration and/or sustainable development
plans for all operational sites. These plans shalladdress the issue of economic and social viabilityof each operating area after cessation ofoperations;
● Provide for periodic outside, independent auditsof the social and human rights performance of thecompany.
EMPLOYMENT
FCX and its operating affiliates will:
● Obey the laws and regulations of the hostcountry with respect to employment practices;
● Adhere to applicable international standards ofhealth and safety;
● Employ as many citizens of the host country aspracticable and will, wherever practicable, employpeople who are indigenous to the operational orexploration site;
● Provide training to citizens of the host countryand especially to those indigenous to anoperational or exploration area to prepare them foremployment in the operation;
● Promote employees on the basis of theirwillingness and ability to perform the job withoutdiscriminating on the basis of race, creed, genderor national origin. However, special efforts will bemade to train and hire people indigenous to eachoperational or exploration area.
HUMAN RIGHTS
FCX, its affiliates and employees are dedicated tothe promotion of the rule of law and protection ofhuman rights at all operational sites. The companyand its affiliates will adhere to the principles of theUniversal Declaration of Human Rights and otherapplicable international standards of human rightsand all laws of the host country wherever thecompany operates. The company and its affiliateswill:
● Educate employees about human rights;
2003 Working Toward Sustainable Development APPENDIX B
● Notify all employees that the company requiresthem to treat employees and non-employees in andaround areas of company operation with dignity andrespect;
● Take appropriate action against any employeewho violates the human rights of others;
● Report any credible accusation of a human rights violations to the appropriate government authoritiesand other agencies;
● Provide the company’s full cooperation with any responsible human rights investigation and tosupport appropriate punishment for any provenviolations;
● Protect all employees who report suspectedhuman rights violations;
● Work proactively to create a constructive climatefor promotion of human rights in all areas where itoperates by implementing programs and policiesaimed at building positive relationships, and bysetting a good example;
● Do all in its power to make certain its propertyand/or equipment is not used by any party in theviolation of human rights.
HUMAN RIGHTS REPORTING
Each operational site will have a Human RightsCompliance Officer and there will be a corporateHuman Rights Compliance Officer. The HumanRights Compliance Officers will be responsible toreceive all reports of possible human rightsviolations, to evaluate those reports and to forward them to appropriate government authoritiesand, where applicable, to non-governmentalorganizations. Each year staff employees, allsecurity employees and all community developmentemployees will be required to fill out and submit tothe corporate Human Rights Compliance Officer aHuman Rights Assurance Letter stating that theyunderstand the company’s Social and Human RightsPolicy and that they have neither taken part in anyactivities that would violate human rights nor havethey witnessed any such activities. The corporateHuman Rights Compliance Officer will make a reportto the Public Policy Committee of the FCX Board ofDirectors each year about human rights andcompliance with the company’s Social, Employmentand Human Rights Policy.
FREEPORT-McMoRan COPPER & GOLD INC.APPENDIX B
APPENDIX CFREEPORT-McMoRan COPPER & GOLD INC.
HUMAN RIGHTS POLICY AND IMPLEMENTATION
I. POLICY
The Board of Directors of Freeport-McMoRan Copper &Gold Inc. (FCX) adopted a Social and Human RightsPolicy at its meeting on February 2, 1999. As part ofthat policy, the management of FCX and its affiliates arerequired to support the human rights of all those wholive and work around the sites of FCX or any FCXaffiliate operations and to inform and educate allemployees about human rights. Also, FCX and itsaffiliates are committed to establish a mechanism bywhich employees and others can report suspectedhuman rights violations to Company management. Thefull text of the human rights portion of the FCX Socialand Human Rights Policy follows.
GENERAL
Freeport-McMoRan Copper & Gold Inc. (FCX) believesthat, as a responsible corporate citizen, it is the duty ofthe Company and its operating affiliates to fosterpositive social relationships in every area in which theyoperate, and FCX is committed to continuousimprovement of those relationships. FCX is dedicatedto ensuring that its operations are conducted in amanner that respects the Universal Declaration ofHuman Rights and other applicable internationalstandards of human rights, the laws and regulations ofthe host country, and the culture of the people who areindigenous to the areas in which the Company operates.FCX will work to be a patient partner in the social andeconomic development of the people in and around allareas of operations.
HUMAN RIGHTS
FCX, its affiliates and its employees are dedicated tothe promotion and protection of human rights. Thecompany and its affiliates will adhere to the principlesof the Universal Declaration of Human Rights and otherapplicable standards of human rights and all laws of thehost country wherever the company operates. Thecompany and its affiliates will:
● educate employees about human rights;
● notify all employees that the company requires themto treat employees and non-employees in and aroundareas of company operation with dignity and respect;
● take appropriate action against any employee whoviolates the human rights of others;
● report any credible accusation of a human rightsviolations to the appropriate government authorities andother agencies;
● provide the company’s full cooperation with any responsible human rights investigation, and to supportappropriate punishment for any proven violations;
● protect all employees who report suspected humanrights violations;
● work proactively to create a constructive climate forpromotion of human rights in all areas where itoperates by implementing programs and policies aimedat building positive relationships and by setting a goodexample; and
● do all in its power to make certain its propertyand/or equipment is not used by any party in violationof human rights.
II.POLICY IMPLEMENTATIONHUMAN RIGHTS COMPLIANCE OFFICER
The FCX Human Rights Compliance Officer will belocated at the FCX corporate headquarters in NewOrleans, Louisiana. The Compliance Officer will beassisted by on-site officers at all operational locations.The Compliance Officer and his/her assistants willreceive by telephone, electronic mail, or fax all reportsabout possible human rights violations. The ComplianceOfficer and the on-site assistants will investigate allreports of possible violations, and the ComplianceOfficer will report to the Public Policy Committee of theBoard of Directors at least annually on compliance withthe Social and Human Rights Policy. Alison Hartman isthe company-wide corporate Human Rights ComplianceOfficer.
2003 Working Toward Sustainable Development APPENDIX C
HUMAN RIGHTS DECLARATION FOR EMPLOYEES
Once each year all staff employees, all employees ofthe Security Department and all communitydevelopment employees will be asked to sign thefollowing declaration about human rights as part of theannual Assurance Letter process:“I hereby declare that I have neither participated in norwitnessed any action which deprived the human rightsof any person in or around any operations area of FCXor any FCX affiliate. I further agree during the comingyear to report to the Company’s Human RightsCompliance Officer any action I see taken either byemployees or others in or around the operations areaof FCX or any FCX affiliate that could be construed as aviolation of human rights.”
HUMAN RIGHTS-DEFINITIONS AND PROCEDURES
The Universal Declaration of Human Rights providesthe standard definition of human rights. Although theUniversal Declaration is intended to set a standard ofhuman rights for governments, it also can give generalguidance to companies and others that wish toestablish a standard for decision making whichrespects both employees and the communities in whichthey work. Of the thirty articles in the UniversalDeclaration, several are of special importance for PTFreeport Indonesia’s Social and Human Rights Policy:
Article 3: Everyone has the right to life, liberty, andsecurity of person.
Article 5: No one shall be subjected to torture or tocruel, inhuman, or degrading treatment or punishment.
Article 9: No one shall be subjected to arbitrary arrest,detention, or exile.
Article 12: No one shall be subjected to arbitraryinterference with his privacy, family, home orcorrespondence, nor attacks upon his honor andreputation. Everyone has the right to the protection ofthe law against such interference or attacks.
Employees are expected to respect these humanrights principles, and if an employee sees any of these
principles being disregarded it is the employee’sobligation to report such disregard to the HumanRights Compliance Officer.
EMPLOYEE AND CONTRACTOR GUIDANCE
There are several scenarios involving potential humanrights problems of which employees should be aware.The most difficult involves property that may beconstrued as belonging to Freeport. This includesbuildings, containers, aircraft, trucks, busses, lightvehicles and other company equipment. Under certainconditions, Indonesian law permits the police andmilitary to request the use of and/or commandeersuch equipment in cases where they believe anemergency situation exists. Even when thoseconditions do not exist, there have been times whengovernment officials have requested the use ofcompany and contractor equipment and in some cases,equipment has been commandeered. If a requestcomes from Indonesian authorities to use Freeportequipment and there is time for managementconsideration of the request, you should ask therequesting party to contact the General Manager. Ifequipment in your control is commandeered and thereis no opportunity to refer the matter to companymanagement, you should surrender the vehicle to theofficer, but you should not operate the equipment andyou should immediately notify senior management thatthe equipment has been commandeered. You shouldfully identify the equipment commandeered, where andwhen the equipment was taken, by whom (if known)and for what purpose (if known).
If you see a Freeport employee, contractor or anyoneelse behaving in such a way that you suspect that he isviolating someone’s human rights, you should note theperson’s name (if known) and department (if a Freeportemployee or contractor), the time and place in whichthe incident took place, the nature of the possibleviolation and any other information that would behelpful to the company and the authorities ininvestigating the incident. This should be reportedimmediately to the Human Rights Compliance Officer atthe employee’s work location. Generally, you shouldnot try to intervene in the incident.
FREEPORT-McMoRan COPPER & GOLD INC.APPENDIX C
APPENDIX DDECEMBER 19, 2000
VOLUNTARY PRINCIPLES ON SECURITY AND HUMAN RIGHTS
The Governments of the United States and the UnitedKingdom, companies in the extractive and energysectors ("Companies"), and non-governmentalorganizations, all with an interest in human rights andcorporate social responsibility, have engaged in adialogue on security and human rights.
The participants recognize the importance of thepromotion and protection of human rights throughoutthe world and the constructive role business and civilsociety (including non-governmental organizations,labor/trade unions and local communities) can play inadvancing these goals. Through this dialogue, theparticipants have developed the following set ofvoluntary principles to guide Companies in maintainingthe safety and security of their operations within anoperating framework that ensures respect for humanrights and fundamental freedoms. Mindful of thesegoals, the participants agree to the importance ofcontinuing this dialogue and keeping under review theseprinciples to ensure their continuing relevance andefficacy.
___________________
Acknowledging that security is a fundamental need,shared by individuals, communities, businesses andgovernments alike, and acknowledging the difficultsecurity issues faced by Companies operating globally,we recognize that security and respect for human rightscan and should be consistent;
Understanding that governments have the primary responsibility to promote and protect human rights andthat all parties to a conflict are obliged to observeapplicable international humanitarian law, we recognizethat we share the common goal of promoting respectfor human rights, particularly those set forth in theUniversal Declaration of Human Rights, andinternational humanitarian law;
Emphasizing the importance of safeguarding theintegrity of company personnel and property, Companiesrecognize a commitment to act in a manner consistentwith the laws of the countries within which they arepresent, to be mindful of the highest applicableinternational standards, and to promote the observanceof applicable international law enforcement principles(e.g., the U.N. Code of Conduct for Law Enforcement
Officials and the U.N. Basic Principles on the Use ofForce and Firearms by Law Enforcement Officials),particularly with regard to the use of force;
Taking note of the effect that Companies’ activities mayhave on local communities, we recognize the value ofengaging with civil society and host and homegovernments to contribute to the welfare of the localcommunity while mitigating any potential for conflictwhere possible;
Understanding that useful, credible information is avital component of security and human rights, werecognize the importance of sharing and understandingour respective experiences regarding, inter alia, bestsecurity practices and procedures, country human rightssituations, and public and private security, subject toconfidentiality constraints;
Acknowledging that home governments and multilateralinstitutions may, on occasion, assist host governmentswith security sector reform, developing institutionalcapacities and strengthening the rule of law, werecognize the important role Companies and civilsociety can play in supporting these efforts;
We hereby express our support for the followingvoluntary principles regarding security and human rightsin the extractive sector, which fall into three categories,risk assessment, relations with public security andrelations with private security:
RISK ASSESSMENT
The ability to assess accurately risks present in aCompany’s operating environment is critical to thesecurity of personnel, local communities and assets;the success of the Company’s short and long-termoperations; and to the promotion and protection ofhuman rights. In some circumstances, this is relativelysimple; in others, it is important to obtain extensivebackground information from different sources;monitoring and adapting to changing, complex political,economic, law enforcement, military and socialsituations; and maintaining productive relations withlocal communities and government officials.
The quality of complicated risk assessments is largelydependent on the assembling of regularly updated,credible information from a broad range of perspectives- local and national governments, security firms, othercompanies, home governments, multilateral institutionsand civil society knowledgeable about local conditions.This information may be most effective when shared to
2003 Working Toward Sustainable Development APPENDIX D
the fullest extent possible (bearing in mindconfidentiality considerations) between Companies,concerned civil society, and governments.
Bearing in mind these general principles, werecognize that accurate, effective risk assessmentsshould consider the following factors:
● Identification of security risks. Security risks canresult from political, economic, civil or social factors.Moreover, certain personnel and assets may be atgreater risk than others. Identification of security risksallows a Company to take measures to minimize riskand to assess whether Company actions may heightenrisk.
● Potential for violence. Depending on theenvironment, violence can be widespread or limited toparticular regions, and it can develop with little or nowarning. Civil society, home and host governmentrepresentatives and other sources should be consultedto identify risks presented by the potential for violence.Risk assessments should examine patterns of violencein areas of Company operations for educational,predictive and preventative purposes.
● Human rights records. Risk assessments shouldconsider the available human rights records of publicsecurity forces, paramilitaries, local and national lawenforcement, as well as the reputation of privatesecurity. Awareness of past abuses and allegations canhelp Companies to avoid recurrences as well as topromote accountability. Also, identification of thecapability of the above entities to respond to situationsof violence in a lawful manner (i.e., consistent withapplicable international standards) allows Companies todevelop appropriate measures in operatingenvironments.
● Rule of law. Risk assessments should consider thelocal prosecuting authority and judiciary’s capacity tohold accountable those responsible for human rightsabuses and for those responsible for violations ofinternational humanitarian law in a manner thatrespects the rights of the accused.
● Conflict analysis. Identification of andunderstanding the root causes and nature of localconflicts, as well as the level of adherence to humanrights and international humanitarian law standards bykey actors, can be instructive for the development ofstrategies for managing relations between the Company,local communities, Company employees and theirunions, and host governments. Risk assessmentsshould also consider the potential for future conflicts.
● Equipment transfers. Where Companies provide equipment (including lethal and non-lethal equipment) topublic or private security, they should consider the riskof such transfers, any relevant export licensingrequirements, and the feasibility of measures tomitigate foreseeable negative consequences, includingadequate controls to prevent misappropriation ordiversion of equipment which may lead to human rightsabuses. In making risk assessments, companiesshould consider any relevant past incidents involvingprevious equipment transfers.
INTERACTIONS BETWEEN COMPANIES AND PUBLICSECURITY
Although governments have the primary role ofmaintaining law and order, security and respect forhuman rights, Companies have an interest in ensuringthat actions taken by governments, particularly theactions of public security providers, are consistent withthe protection and promotion of human rights. In caseswhere there is a need to supplement security providedby host governments, Companies may be required orexpected to contribute to, or otherwise reimburse, thecosts of protecting Company facilities and personnelborne by public security. While public security isexpected to act in a manner consistent with local andnational laws as well as with human rights standardsand international humanitarian law, within this contextabuses may nevertheless occur.
In an effort to reduce the risk of such abuses and topromote respect for human rights generally, we haveidentified the following voluntary principles to guiderelationships between Companies and public securityregarding security provided to Companies:
SECURITY ARRANGEMENTS
● Companies should consult regularly with host governments and local communities about the impact oftheir security arrangements on those communities.
● Companies should communicate their policiesregarding ethical conduct and human rights to publicsecurity providers, and express their desire that securitybe provided in a manner consistent with those policiesby personnel with adequate and effective training.
● Companies should encourage host governments topermit making security arrangements transparent andaccessible to the public, subject to any overriding safetyand security concerns.
FREEPORT-McMoRan COPPER & GOLD INC.APPENDIX D
DEPLOYMENT AND CONDUCT
● The primary role of public security should be tomaintain the rule of law, including safeguarding humanrights and deterring acts that threaten Companypersonnel and facilities. The type and number of publicsecurity forces deployed should be competent,appropriate and proportional to the threat.
● Equipment imports and exports should comply withall applicable law and regulations. Companies thatprovide equipment to public security should take allappropriate and lawful measures to mitigate anyforeseeable negative consequences, including humanrights abuses and violations of internationalhumanitarian law.
● Companies should use their influence to promotethe following principles with public security:(a) individuals credibly implicated in human rightsabuses should not provide security services forCompanies; (b) force should be used only when strictlynecessary and to an extent proportional to the threat;and (c) the rights of individuals should not be violatedwhile exercising the right to exercise freedom ofassociation and peaceful assembly, the right to engagein collective bargaining, or other related rights ofCompany employees as recognized by the UniversalDeclaration of Human Rights and the ILO Declaration onFundamental Principles and Rights at Work.
● In cases where physical force is used by publicsecurity, such incidents should be reported to theappropriate authorities and to the Company. Whereforce is used, medical aid should be provided to injuredpersons, including to offenders.
CONSULTATION AND ADVICE
● Companies should hold structured meetings withpublic security on a regular basis to discuss security,human rights and related work-place safety issues.Companies should also consult regularly with otherCompanies, host and home governments, and civilsociety to discuss security and human rights. WhereCompanies operating in the same region have commonconcerns, they should consider collectively raising thoseconcerns with the host and home governments.
● In their consultations with host governments,Companies should take all appropriate measures topromote observance of applicable international lawenforcement principles, particularly those reflected inthe U.N. Code of Conduct for Law Enforcement Officials
and the U.N. Basic Principles on the Use of Force andFirearms.
● Companies should support efforts by governments,civil society and multilateral institutions to providehuman rights training and education for public securityas well as their efforts to strengthen state institutionsto ensure accountability and respect for human rights.
RESPONSES TO HUMAN RIGHTS ABUSES
● Companies should record and report any credible allegations of human rights abuses by public security intheir areas of operation to appropriate host governmentauthorities. Where appropriate, Companies should urgeinvestigation and that action be taken to prevent anyrecurrence.
● Companies should actively monitor the status of investigations and press for their proper resolution.
● Companies should, to the extent reasonable,monitor the use of equipment provided by the Companyand to investigate properly situations in which suchequipment is used in an inappropriate manner.
● Every effort should be made to ensure thatinformation used as the basis for allegations of humanrights abuses is credible and based on reliableevidence. The security and safety of sources should beprotected. Additional or more accurate information thatmay alter previous allegations should be made availableas appropriate to concerned parties.
INTERACTIONS BETWEEN COMPANIES AND PRIVATESECURITY
Where host governments are unable or unwilling to provideadequate security to protect a Company’s personnel orassets, it may be necessary to engage private securityproviders as a complement to public security. In thiscontext, private security may have to coordinate with stateforces, (law enforcement, in particular) to carry weaponsand to consider the defensive local use of force. Given therisks associated with such activities, we recognize thefollowing voluntary principles to guide private securityconduct:
● Private security should observe the policies of thecontracting Company regarding ethical conduct and humanrights; the law and professional standards of the countryin which they operate; emerging best practices developedby industry, civil society, and governments; and promotethe observance of international humanitarian law.
2003 Working Toward Sustainable Development APPENDIX D
● Private security should maintain high levels oftechnical and professional proficiency, particularly withregard to the local use of force and firearms.
● Private security should act in a lawful manner. Theyshould exercise restraint and caution in a mannerconsistent with applicable international guidelinesregarding the local use of force, including the U.N.Principles on the Use of Force and Firearms by LawEnforcement Officials and the U.N. Code of Conduct forLaw Enforcement Officials, as well as with emergingbest practices developed by Companies, civil society,and governments.
● Private security should have policies regardingappropriate conduct and the local use of force (e.g.,rules of engagement). Practice under these policiesshould be capable of being monitored by Companies or,where appropriate, by independent third parties. Suchmonitoring should encompass detailed investigationsinto allegations of abusive or unlawful acts; theavailability of disciplinary measures sufficient to preventand deter; and procedures for reporting allegations torelevant local law enforcement authorities whenappropriate.
● All allegations of human rights abuses by privatesecurity should be recorded. Credible allegationsshould be properly investigated. In those cases whereallegations against private security providers areforwarded to the relevant law enforcement authorities,Companies should actively monitor the status ofinvestigations and press for their proper resolution.
● Consistent with their function, private security shouldprovide only preventative and defensive services andshould not engage in activities exclusively theresponsibility of state military or law enforcementauthorities. Companies should designate services,technology and equipment capable of offensive anddefensive purposes as being for defensive use only.
● Private security should (a) not employ individualscredibly implicated in human rights abuses to providesecurity services; (b) use force only when strictlynecessary and to an extent proportional to the threat;and (c) not violate the rights of individuals whileexercising the right to exercise freedom of associationand peaceful assembly, to engage in collectivebargaining, or other related rights of Companyemployees as recognized by the Universal Declaration ofHuman Rights and the ILO Declaration on FundamentalPrinciples and Rights at Work.
● In cases where physical force is used, privatesecurity should properly investigate and report theincident to the Company. Private security should referthe matter to local authorities and/or take disciplinaryaction where appropriate. Where force is used, medicalaid should be provided to injured persons, including tooffenders.
● Private security should maintain the confidentiality ofinformation obtained as a result of its position assecurity provider, except where to do so wouldjeopardize the principles contained herein.
To minimize the risk that private security exceed theirauthority as providers of security, and to promoterespect for human rights generally, we have developedthe following additional voluntary principles andguidelines:
● Where appropriate, Companies should include the principles outlined above as contractual provisions in agreements with private security providers and ensurethat private security personnel are adequately trained torespect the rights of employees and the localcommunity. To the extent practicable, agreementsbetween Companies and private security should requireinvestigation of unlawful or abusive behavior andappropriate disciplinary action. Agreements should alsopermit termination of the relationship by Companieswhere there is credible evidence of unlawful or abusivebehavior by private security personnel.
● Companies should consult and monitor privatesecurity providers to ensure they fulfill their obligation toprovide security in a manner consistent with theprinciples outlined above. Where appropriate,Companies should seek to employ private securityproviders that are representative of the local population.
● Companies should review the background of private security they intend to employ, particularly with regard tothe use of excessive force. Such reviews should includean assessment of previous services provided to thehost government and whether these services raiseconcern about the private security firm’s dual role as aprivate security provider and government contractor.
● Companies should consult with other Companies,home country officials, host country officials, and civilsociety regarding experiences with private security.Where appropriate and lawful, Companies shouldfacilitate the exchange of information about unlawfulactivity and abuses committed by private securityproviders.
FREEPORT-McMoRan COPPER & GOLD INC.APPENDIX D
On the Cover: THE FACES OF THE PROGRAMS that lie at the heart of our commitment to ensure a healthy environment and strongcommunities in our area of operation in Papua, Indonesia.
Top from left : PAPUAN EMPLOYEE DEVELOPMENT, agro-forestry business development, and provision of healthcare.
Bottom from left : COMMUNITY sports programs, education and infrastructure.
Back Cover Top: NATIVE SPECIES of grasses, shrubs and trees revegetate large sections of the AjkwaDeposition Area, offering a thriving ecosystem for birds and other animals . Other portions of the tailingssediment deposition area are being actively reclaimed with trees and cash crops.
Back Cover Bottom: THE MODIFIED AJKWA DEPOSITION AREA is the engineered, managed system for deposition and control of thetailings sediment from the mining operations. Reclamation programs in soils containing tailings, including the Maurujaya ReclamationCenter, have demonstrated success in growing dozens of plants and cash crops, and supporting aquaculture and livestock projects.
2003 Working Toward Sustainable Development 2003 Working Toward Sustainable DevelopmentFREEPORT-McMoRan COPPER & GOLD INC.
Indonesia
Papua,Indonesia
Papua
GrasbergMineComplex
Jakarta
Jayapura
Tembagapura
Timika
Arafura Sea
Indian Ocean
Kuala Kencana
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