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INDONESIA: UPDATE 1-NYC comptroller wants review of miner Freeport

December 5th, 2006

New York City Comptroller William Thompson, who oversees the city's pension funds, on Tuesday called for a review of Freeport-McMoRan Copper & Gold Inc.'s environmental policies and practices in Indonesia.

New Orleans-based Freeport-McMoRan, one of the world's largest gold and copper producers, derives most of its income from its Grasberg mine on Indonesia's West Papua province, the world's largest copper and gold mine by reserves.

The comptroller cited reports that allege Freeport-McMoRan dumps nearly 230,000 tons of waste a day, including toxic metals, into Indonesia's river system. Indonesia's Minister of the Environment in March accused the miner of violating water quality regulations and Thompson said new allegations of environmental violations had been levied against the company in the last several months.

"Freeport McMoRan's poor environmental record needs to be examined," Thompson said in a statement. "The least the company can do is ensure that it is not causing environmental damage to the rivers and in any way harming the people of Indonesia."

Freeport-McMoRan said it was reviewing the New York City Pension Funds' call and would respond in due course to Thompson and the Securities and Exchange Commission (SEC).

"Obviously we disagree as we think we have strong and sound environmental policies, including annual audits," said spokesman William Collier.

He denied that tailings, or waste, from mining operations at Grasberg were toxic and said reports of new allegations of violations were "inaccurate."

"In fact, we are in the midst of working with the environment ministry and undergoing voluntary audits. That continues and the ministry has not issued a report or any findings," said Collier.

The New York City Pension Funds for teachers, police, firefighters and other public employees, which combined hold 544,458 Freeport shares worth about $33.6 million, want shareholders at next year's annual meeting to push Freeport to review its environmental practices in Indonesia. Thompson called for a report to shareholders from that study by next September.

Thompson earlier this year asked the U.S. Justice Department to investigate if Freeport payments to Indonesian military forces violated the Foreign Corrupt Practices Act. Thompson also asked the SEC to review Freeport's 2004 and 2005 proxies to determine whether it made misleading statements about those payments.

Last month Freeport agreed to acquire the much larger Phelps Dodge Corp., a major copper producer, for $25.9 billion.

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