MAC: Mines and Communities

Papua Update

Published by MAC on 2006-12-06

Papua Update

6th December 2006

The head of New York's city pension funds is demanding a review of Freeport McMoran's operations in West Papua.

Papua New Guinea's mining minster is vaunting the re-opening of the Panguna mine on Bougainville in 2008 and strongly hinting that Rio Tinto will be welcomed back onto the island.

NY City Comptroller Wants Freeport Environmental Study

PlanetArk US

6th December 2006

NEW YORK - 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 island, the world's largest copper and gold mine by reserves.

The comptroller cited reports that Freeport-McMoRan dumps nearly 230,000 tons of waste a day, including toxic metals, into Indonesia's river system.

Meanwhile Indonesia's Minister of the Environment in March accused the miner of violating water quality regulations.

In March this year a landslide near the Grasberg mine killed three people and injured dozens more.

"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."

City pension funds for teachers, police, firefighters and other public employees, which combined hold 544,458 Freeport shares worth about US$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.

A Freeport official declined immediate comment.

Thompson earlier this year asked the US Justice Department to investigate if Freeport payments to Indonesian military forces violated the Foreign Corrupt Practices Act. Thompson also asked the US Securities and Exchange Commission 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 US$25.9 billion.


PNG landowners demand mine benefits

Radio Australia

6th December 2006

Papua New Guinea landowners say they want to be equal partners in the development of the country's mining and petroleum resources.

They have told a conference in Sydney, Australia, that the PNG government and big companies are exploiting the country's minerals and not providing essential services.

Jonathan Paraia is a representative of landowner groups in Porgera, in the resource-rich province of Southern Highlands.

He says its important that services such as health and education are delivered to local people.

Mining to restart on Bougainville?

By James Attwood


6th December 2006

SYDNEY (Dow Jones)--Papua New Guinea's government expects to agree terms with Bougainville authorities next year to lift a moratorium on mining in the battle-scarred island and resume operations the following year.

"Give us two years and mining will restart in the Panguna mine," PNG mining minister Sam Akoitai told Dow Jones Newswires Tuesday.

Anglo Australian miner Rio Tinto Plc. (RTP) shut the massive Panguna copper and gold mine in May 1989 after repeated attacks on infrastructure and workers by secessionist rebels.

Speaking on the sidelines of a PNG mining conference in Sydney, Akoitai said both the Bougainville autonomous government and foreign investors are keen to resume activities in the minerals-rich South Pacific island once fiscal arrangements are agreed.

"Bougainville is a place where every man and woman will swim across to," he said, when asked about the current level of investor interest.

"I've been approached by many many companies who are interested in doing exploration in Bougainville and also companies interested in talking about Panguna," he said.

"But my approach would be I'd rather work with the devil I know than getting somebody new to come in and start again," he said, referring to Rio Tinto subsidiary Bougainville Copper Ltd. (BOC.AU)

"I've had the opportunity to work with Bougainville Copper for nine years and think they're doing a very good job."

Besides holding the position of PNG national mining minister, Akoitai is also the parliamentary member for Central Bougainville.

Panguna produced about 180,000 tons of copper a year to rank as the world's third-largest copper mine. It remains closed despite a 1998 cease-fire and the formation of an autonomous island government.

Any decision on resuming mining at the dismantled operation is estimated to cost around US$1 billion.

Before any decision can be taken, however, stakeholders must complete a review of new fiscal and operating terms for exploration and mining on the island, Akoitai said.

The long-delayed review process is expected to begin in the first quarter of next year and take "months" to complete, he said, adding the benefits for Bougainville would have to be significantly better than current terms.

"It's an issue close to me. I'm from Bougainville and I also represent the electorate where the mine is. I would want the review process to be concluded quickly so we can decide the future of mining in Bougainville."

"The whole reason the government in Bougainville asked for this review process to began is so we can sort out the outstanding issues and then perhaps start mining from a clean sheet."

Benefits for the local community would have to be in line with new benchmarks of modern mines, he said, without elaborating.

Akoitai said Australia's Ord River Resources Ltd. (ORD.AU) and Gallipoli Mining Pty Ltd are among companies to make recent approaches to authorities on the possibility of exploring in Bougainville.

-By James Attwood, Dow Jones Newswires; 612-8235-2957;


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