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Social Commitments

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II. Social Change and Development
Social and Cultural Commitments

We are committed to building and maintaining positive relationships with our Papuan neighbors, in particular the indigenous communities closest to our area of operation. We have adopted a Social, Employment and Human Rights Policy, which is included in the appendices to this report. We are committed to providing opportunities for social, educational and economic development, including special efforts to train and hire those indigenous to the area. We also strive to learn more about the Papuan people, their histories and changing circumstances, in building more constructive relationships and enhancing our outreach efforts. Most important is our commitment to extend respect to indigenous Papuans and their culture and to consult with them in an ongoing dialogue on issues of mutual interest.

We understand the need of the unique peoples of Papua to preserve their cultural traditions and are committed to helping them accomplish this goal. We have long supported the annual Asmat and Kamoro Art and Cultural Festivals. We have sponsored social, artistic, cultural, language and economic studies of the Amungme and Kamoro people. These studies have improved mutual communication and understanding with our neighbors, and have also contributed significantly to international knowledge of their unique cultures. We have also sponsored two books about the Kamoro and Amungme to help us and others throughout the world understand and appreciate their special cultures.

We believe that programs to preserve and celebrate the unique cultural traditions of the area help to build mutually beneficial relationships with our neighbors in the Indonesian province of Papua. Pictured - Amungme cultural festival in Agimuga.

Building Mutually-Beneficial Relationships

In furtherance of our commitment to build and maintain constructive and positive relationships with our Papuan neighbors, we engage in continual dialogue with local leaders. These dialogues have led to important agreements with the Amungme and Kamoro peoples.

PT Freeport Indonesia has also established trust funds for the Amungme and Kamoro to which the Company has contributed $6.5 million 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., thereby 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. These funds are in addition to the social development fund (see Freeport Partnership Fund for Community Development) established by PT Freeport Indonesia, which has received approximately $152 million from our operations since 1996 for investments in projects selected by a board of local stakeholders.

A memorandum of understanding (MOU) consummated in 2000 by Amungme and Kamoro local community organizations and PT Freeport Indonesia focuses on socioeconomic resources, human rights, land rights and environmental issues. This landmark agreement, achieved after five years of negotiations, fosters continuous dialogue to improve mutual understanding and respect, to enable the local people to achieve their aspirations and to continue harmonious relationships. As part of the 2000 agreement, the MOU Forum was created - consisting of representatives of LEMASA, the Amungme tribal agency; LEMASKO, the Kamoro tribal agency; the regional government and PT Freeport Indonesia. The MOU Forum meets regularly to discuss issues related to implementation of the 2000 Memorandum of Understanding. This continual dialogue has led to further agreements and mutually beneficial projects and has instilled a sense of partnership and community between us and our Papuan neighbors and aligning our shared interests in a sustainable and more
promising future.

PT Freeport Indonesia's Community Liaison Office is actively involved in building and maintaining positive relationships in local communities, while supporting traditional activities in the region. Pictured, CLO team members meet with traditional boat builders in a Kamoro village.