Under the Indonesian
constitution, all unimproved land is, by law, owned by the
Government and all minerals belong to the Government. PT
Freeport Indonesia's "January Agreement" of 1974 with the
Amungme was the first recognition in Indonesia of hak ulayat,
or the right of traditional people to land used for hunting and
gathering. Subsequent to that agreement, the Government formally
recognized the right to compensation for hak ulayat land
rights. Compensation in the form of rekognisi, or
recognition, is paid to communities for a release of hak
ulayat rights, as hak ulayat is a communal property
right. PT Freeport Indonesia has paid rekognisi in
several instances over the years through programs mutually
agreed upon with the affected local Papuans and the Government.
Two such multi-year rekognisi programs are ongoing in the
highland and lowland areas of our operations. These two
rekognisi programs are providing millions of dollars worth
of infrastructure, social and economic development projects
including housing, school buildings and student dormitories,
medical clinics, places of worship, community buildings, office
buildings, roads, bridges, water tanks, electrical power,
motorboats for transportation and fishing, sports facilities and
feasibility studies for business opportunities. Activities
during 2004 included the following:
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- The Kamoro Village
Recognition Program, compensating for the release of land to
the Government by five Kamoro villages in the lowlands,
including land used for the tailings deposition area, cargo
dock facilities, the port and electrical transmission line
corridor. The program initially focused on physical
infrastructure, but now targets ongoing needs such as
economic development and income generation, health education
and access to health facilities, nutritional instruction,
continuing education for post-secondary students, village
and social institution development and preservation of the
Kamoro culture. Included are programs to develop a sago
plantation and to foster the commercialization of the local
fishing industry.
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- The Tiga Desa (Three
Village) Development Program, a similar program for three
Amungme villages in the highlands. This program provided
additional rekognisi to the Amungme living nearest
the mine, who had been compensated in the 1974 agreement, in
connection with the expanded scope and continuing success of
our operations. This program focuses on infrastructure
through 2005 and includes construction of bridges, roads,
protective levee, housing, water and sewer service. A
significant event in 2004 was a ceremony dedicating five new
churches in the Tsinga Valley constructed under this
program.
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In addition, land rights trust
funds for the Amungme and Kamoro tribes were created in 2001 to
provide voluntary special recognition for the holders of the
hak ulayat, or traditional land rights, in the mining area
and for the expanded scope and continuing success of the mining
operations. PT Freeport Indonesia has contributed $6.5 million
to these funds through 2004 and, in conformance with the
applicable land rights agreement, will continue to make
contributions of $1 million annually. A portion of these funds
has been used to purchase shares in Freeport-McMoRan Copper &
Gold Inc., permitting the Amungme and Kamoro to become equity
participants in the mine. As of March 1, 2005, the funds held a
combined total of nearly 60,000 common shares in Freeport-
McMoRan Copper & Gold Inc., worth more than $2.4 million at the
share price as of that date.
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