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Tailings Mgmt

Freeport-McMoRan Copper & Gold

III. ENVIRONMENTAL MANAGEMENT

TAILINGS MANAGEMENT Program

Tailings are finely ground natural rock residue from the processing of mineralized ore by physical grinding and flotation methods used in our operations. PT Freeport Indonesia uses a river system for tailings transport to a designated area in the lowlands and coastal zone, called the Modified Ajkwa Deposition Area, which is an engineered, managed system for the deposition and control of tailings.

The tailings deposition system is operated under PT Freeport Indonesia's comprehensive tailings management plan, as approved by the Government of Indonesia. The first stage of construction of the lateral containment structures, or levees, for the deposition area was completed in 1997. The second stage of construction work, including an extension of the levees, was completed in 2002. Work is continually conducted on various enhancements to the system, including inspections, monitoring and physical works.

We continually evaluate and update the tailings management plan to minimize potential risks. PT Freeport Indonesia conducted comprehensive technical evaluations of alternative tailings disposal options using internationally recognized scientific experts and adopted the most appropriate site-specific management system. Independent environmental audits of PT Freeport Indonesia's environmental management system concluded that the company's tailings management plan represents the best alternative, considering the applicable geotechnical, topographic, climatological, seismic and water quality conditions.

The Modified Ajkwa Deposition Area is the engineered, managed system for deposition and control of the tailings sediment from the mining operations. Reclamation programs in soils containing tailings, including the Maurujaya Reclamation Center have demonstrated success in growing dozens of plants and cash crops, and supporting aquaculture and livestock projects.

Figure 5. Copper concentrations in the Ajkwa River are well within drinking water standards for dissolved metals.

PT Freeport Indonesia has also submitted to the Government of Indonesia a thorough Environmental Risk Assessment of the tailings management system. This assessment found that the environmental impacts of PT Freeport Indonesia's expanded operations were consistent with those anticipated by the company's comprehensive environmental and social impact study, the AMDAL, which was completed in 1997 and approved by the Government of Indonesia.

Studies of tailings reclamation and establishment of demonstration plots on tailings areas show that tailings can be readily revegetated with native forestry - in fact, natural re-colonization takes place rapidly - and agricultural plants. Details of results to date are discussed in more detail below.

Extensive sampling of water quality in the tailings management system shows that the water in the Ajkwa River, which transports the tailings from PT Freeport Indonesia's mill in the highlands to the lowlands deposition area, meets the Indonesian and U.S. Environmental Protection Agency drinking water standards for dissolved metals. Data from biological sampling continue to demonstrate that the estuary downstream of the tailings deposition area is a functioning ecosystem based both on the number of species and the number of specimens collected of nektonic, or free-swimming, organisms such as fish and shrimp.