MAC: Mines and Communities

Jim Bob rakes in millions from Papua goldmine

Published by MAC on 2006-03-24

Jim Bob rakes in millions from Papua goldmine

by Jamie Freed

24th March 2006


AUSTRALIA'S top mining executives earn millions of dollars a year but, apparently, a lot less than some of their American counterparts.

Freeport McMoRan Copper & Gold, owner of the troubled Grasberg mine in Indonesia's Papua province, paid its two top executives a combined $US83 million ($115.7 million) last year.

Freeport's annual earnings rose to $US995.1 million from $US202.3 million last year due to record commodity prices. But the New Orleans company has since faced heavy criticism of its environmental and security practices in Papua.

Freeport's colourful chairman, James "Jim Bob" Moffett, pocketed $US47 million, while chief executive Richard Adkerson was paid $US36 million, according to filings made to the US Securities and Exchange Commission yesterday.

Mr Moffett's base salary was $US2.5 million but he received a $US19 million bonus, $US21.5 million worth of stock options and various other forms of compensation to take the total to $US47 million.

By comparison, BHP Billiton chief executive Chip Goodyear received a $US5 million salary package in 2005, while Rio chief executive Leigh Clifford earned $US6.7 million.

BHP has a market value of $US102 billion, making the diversified resources behemoth 10 times as large as Freeport, which is a one-mine company worth $US10 billion. Mr Goodyear served as Freeport's chief financial officer in the mid-1990s before joining BHP in 1999.

Freeport's Grasberg mine is the biggest goldmine in the world and the second largest copper mine. Rio sold its 13 per cent stake in Freeport for $US882 million in March 2004 but has a 40 per cent interest in Grasberg's copper and gold reserves discovered after 1994.

A detailed report in The New York Times last year said Freeport has paid local military and police at least $US20 million for questionable purposes since 1998 and allowed waste to seep into surrounding groundwater.

The problems have intensified in recent weeks. Two people were killed and four others injured in a landslide yesterday, according to wire reports. The Indonesian Government has given Freeport two to three years to fix the environmental problems at the mine.

Additionally, four security officers were killed and dozens of demonstrators injured in a protest at the mine earlier this week.

Despite the troubles at Grasberg, Freeport said Mr Moffett's $US47 million compensation package was justified because he "has been and continues to be instrumental in fostering our company's relationship with the government of Indonesia".

Freeport added Mr Moffett was a talented geologist and understood the "important issues pertaining to our work with the local people in Papua".

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