Freeport-McMoRan does not tolerate human rights transgressions. Our Human Rights Policy requires that we recognize and respect human rights and conduct business in a manner consistent with the Universal Declaration of Human Rights, educate our employees and protect any employee who reports suspected violations.

We have identified human rights risks at our sites in the DRC, Indonesia and Peru. Because site and country risks vary, we have established site-specific human rights policies and procedures consistent with the Freeport-McMoRan Human Rights Policy, in-country laws and regulations, and the Voluntary Principles on Security and Human Rights. In addition, we appoint Human Rights Compliance Officers for overseeing compliance and training, as well as a grievance mechanism for reporting, documenting and following up on all human rights allegations that are reported in our areas of operations.

Human Rights Program Assessment in Indonesia. Freeport-McMoRan, with the assistance of a third-party consultant, conducted an assessment of its human rights program at PTFI during the second half of 2010. Specific elements reviewed included risk assessment processes, training and awareness programs, and grievance mechanisms to report incidents and allegations. A key outcome was a recommendation to conduct a more robust risk assessment focused on security and human rights. A new assessment tool resulted that included the input of employees at different levels of the organization to address risks within and beyond the project area, including risks to local communities. We plan to roll-out an updated security and human rights risk assessment process in both Indonesia and the DRC in 2011, as well as other international sites by 2012.

In 2010, PTFI conducted more than 28,000 hours of training on the Company’s Human Rights Policy with employees and contractors, as well as community leaders, partner organizations, students, and police and armed forces personnel. During assessment of PTFI’s human rights training program, an independent survey was conducted of 170 individuals, including Company personnel ranging from the President Director and internal security guard force to the local police personnel and civic leaders. Those interviewed had a high awareness of human rights principles; however, they had a low understanding of how these related to their individual roles and obligations. Findings also revealed, in some cases, a lack of understanding of the need to keep the identities of both the individuals reporting issues and the alleged assailants confidential. The fear of retaliation is a significant factor in the reluctance to report human rights violations, and we are evaluating ways to address this challenge. Based on this survey information, PTFI’s human rights training module is being revised to improve effectiveness and ensure understanding of individual roles and responsibilities.

Security

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.

Although TFM is far removed from the conflict areas in the eastern and northeastern parts of the DRC, it still faces security risks, primarily because of illegal artisanal miners working in the TFM concession area.

Our unarmed internal security departments perform functions, such as protecting facilities, monitoring shipments of supplies and products, assisting in traffic control and aiding in emergency response operations. Our Human Rights Policy requires that the Voluntary Principles on Security and Human Rights serve as guidelines for our security programs, including interactions with government police, military personnel and private security contractors. Please refer to the Business Ethics section for a description of our payments related to government-provided security in Indonesia and the DRC.

TFM implemented human rights refresher training for 298 members (77%) of its guard force during 2010. Human rights education and training activities for private security contractors are planned in 2011; contractors currently conduct their own training. In 2010, at the request of the commander of the National Mines Police assigned to the TFM concession, TFM began providing two-hour presentations to promote the Voluntary Principles to Mines Police personnel. We will continue to work with the National Mines Police to promote awareness and respect for human rights. In 2010, PTFI provided training on its human rights program and the Voluntary Principles to more than 13,000 employees, contractors and community members as well as 1,000 police and military personnel. Indonesian translations of the Voluntary Principles on Security and Human Rights also were distributed to more than 2,000 host government, company and private security personnel.

Implementation of the Voluntary Principles includes regular reviews by Freeport-McMoRan management and site visits and meetings with the site Human Rights Compliance Officers and Security Managers. We will continue to use an external consultant to provide third-party assessments of Voluntary Principles implementation and training in the DRC in 2011, similar to the one conducted in Indonesia in 2010.

Reporting Mechanisms

In 2010, 12 human rights allegations were reported to the PTFI Human Rights Compliance Officer. These cases did not include any allegations of human rights transgressions committed by PTFI personnel against the community, but there were a number of incidents against or among our employees. The majority of these allegations (five cases) were criminal cases, three were harassment cases, one was employment-related and three were unverifiable. All cases were documented and investigated or are in the process of being investigated by the PTFI Human Rights Compliance Officer or the government authorities.

All five of the criminal cases involved allegations that public security forces physically intimidated and assaulted Company or contractor personnel (three of the cases being PTFI guard force employees). PTFI’s procedure is to notify the direct commanders of the perpetrators, who then investigate the case and determine disciplinary action (as of January 2011, disciplinary action was taken in four of the cases and processing for the fifth case is still pending). In 2010, PTFI experienced an increase in human rights allegations made against host country security (five cases in 2010 and three cases in 2009) and a decline in internal cases related to employment issues (one case in 2010 and six cases in 2009), which were the majority of cases in 2009. These incidents highlight the importance of continued training for host country security forces and the improved effectiveness of the Company’s grievance mechanism.

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