| Under the Indonesian
constitution, all unimproved land is, by law, owned by the
Government of Indonesia and all minerals belong to the
Government of Indonesia. 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 of Indonesia 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. Such payments
are made in the form of mutually agreed projects or programs
benefiting the community. PT Freeport Indonesia has paid
rekognisi in several instances over the years through
programs mutually agreed upon with the local Papuans and the
Government of Indonesia. |
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The highlands village of Banti, where Freeport Indonesia
works in partnership with the community to provide
houses and other infrastructure as part of the Tiga Desa
(Three Village) Development Program. |
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Two such multi-year rekognisi
programs are currently ongoing in the highland and lowland areas
of our operations. These two 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. Specifically:
• The Kamoro Village Recognition Program, compensating for the
release of land to the Government of Indonesia 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, including housing and community
facilities, 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
commercialization of the local fishing industry. Activities in
2006 included installing water wells and pumps; contracting for
electrical service to three villages; elevating a road and
building a permanent bridge in one village; distributing fishing
assistance packages to more than 400 families, including
outboard motors and fuel, nets and cool-boxes; and providing
ongoing training in nutrition and sewing to women in all five
villages.
• The Tiga Desa (Three Village) Development Program is 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,
but who have been affected by the expanded scope and continuing
success of our operations. This program focused on
infrastructure through 2005 and includes construction of
bridges, roads, protective levees, housing, water and sewer
service, and hydroelectric development. During 2006, 15 houses,
eight bridges and 13 pig enclosures were built, work continued
on one airstrip, and renovations were made to 24 homes. In
addition, a collective septic tank servicing 75 village homes
was constructed and 212 private septic systems were built in
more remote areas. A clean water pipeline was constructed and
275 village structures were wired for hydroelectric power. |
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Freeport Community Development Construction
Superintendent
Ginting T. Surantha visits with children at a village
development site in Banti. |
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An important recent development
was the 2005 signing of a Memorandum of Understanding between
the people of the three villages and PT Freeport Indonesia
outlining the scope of work for the recognition program through
2010.
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 in the mining area
and for the expanded scope and continuing success of the mining
operations. PT Freeport Indonesia has contributed $8.5 million to
these funds through 2006 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 December 31, 2006, the funds held a
combined total of nearly 22,000 common shares in
Freeport-McMoRan Copper & Gold Inc., worth more than $1.2 million
valued at the share price as of that date. |
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