In our business, service providers with the highest risk for involvement in incidents related to human rights are our private security contractors at PTFI and TFM. In 2011, PTFI employed two private security contractors, whom are unarmed, to assist with protection of Company assets and passenger/supply convoy logistics. The contractors are international companies and signatories to the International Code of Conduct for Private Security Providers.  In 2011, TFM contracted two private security firms who are unarmed.  One of the contractors was newly assigned to the TFM mining concession and selected based on their experience working with the United Nations in the DRC. At TFM, all contract security employees undergo background checks, using the same procedures as applied for TFM internal security personnel. Contracts with the private security providers at both operations include specific language related to the Voluntary Principles on Security and Human Rights, and state that contractors are required to comply with the Company's Human Rights Policy and the Voluntary Principles.

Security risks near our Grasberg operation in Papua, Indonesia, stem primarily from three factors: the presence of separatist activists and advocates in the region; the presence of illegal gold panners in the project area; and social, political and ethnic tensions within the local community and in other areas of the province.

PTFI’s unarmed internal security personnel perform functions such as protecting facilities, monitoring shipments of supplies and products, assisting in traffic control and aiding in emergency response operations. The Grasberg minerals district has been designated by the Government of Indonesia as one of Indonesia’s vital national assets. This designation results in the police, and to a lesser extent, the military, playing a significant role in protecting the area of our operations. The Government of Indonesia is responsible for employing police and military personnel and directing their operations. PTFI’s share of support costs for the government-provided security was $14 million for 2011. This supplemental support consists of infrastructure and other costs, such as food, housing, fuel, travel, vehicle repairs, allowances to cover incidental and administrative costs, and community assistance programs conducted by the military and police.

At PTFI, a number of shooting incidents by unknown assailants occurred along the road leading to the project area resulting in nine fatalities during 2011, which included employees, contractors and community members. Between July 2009 and February 2012, there have been a disturbing 15 fatalities and 56 injuries from shooting incidents within our project area. A review of risks, engagement strategies, security strategies and a call for full investigations and justice continue to be a high priority for our management and employees as well as the local community.

In 2011, PTFI also experienced its first significant labor dispute, which resulted in an approximate three-month strike. During the strike there was increased tension and aggression in the community and area of operations, which included intimidation of employees who attempted to report to work and other criminal acts resulting in significant damage to personal and Company property. Unrelated to the shooting incidents previously mentioned, during the strike a fatality occurred as a result of a confrontation between police and strikers and subsequently another employee injured in the confrontation died from unknown causes. These deaths are currently under investigation by the Government of Indonesia.

In the DRC, TFM is far removed from the conflict areas in the eastern and northeastern regions of the country, however it still faces security risks, primarily because of illegal artisanal miners working in its concession area. The DRC government has assigned Mines Police to the TFM concession area. The Mines Police are a division of the Congolese National Police (PNC) and are responsible for maintaining security in mining concessions throughout the DRC. TFM provides food, housing, monetary allowances and logistical support as well as direct payments to the government for the provision of the security assigned to the concession area. The total cost to TFM for this support, including in-kind support, totaled less than $1 million in 2011.

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