| Freeport Partnership Fund for Community Development |
| PT Freeport Indonesia and our joint venture partner have since 1996 committed a portion of revenues for the benefit of the local community through the Freeport Partnership Fund for Community Development. The partnership fund is administered and disbursed by an organization called the Lembaga Pembangunan Masyarakat Amungme dan Kamoro (LPMAK), or, in English, the Amungme and Kamoro Community Development Institution. LPMAK is managed by a Board of Commissioners consisting of representatives from the local government, Papuan regional leaders, leaders from the local Amungme and Kamoro communities and PT Freeport Indonesia. | ||
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| LPMAK’s Board of Commissioners
establishes annual budgets for three main development program
areas — health, education and economic development — as well as
funding for programs supporting cultural and religious
activities. The budgets are based on development priorities
determined by LPMAK’s Board of Directors. The projects supported
by LPMAK directly benefit the Amungme and Kamoro people and five
other indigenous communities in the Mimika Regency — the Dani,
Moni, Ekari/Mee, Damal and Nduga peoples. These groups are
represented on the LPMAK Board of Directors through their
community, church and government leaders. LPMAK’s secretariat
office and program bureaus, which handle the daily activity of
the organization, currently consist of 120 employees, 76 percent
of whom are Papuan. LPMAK has made a significant impact on the lives of the local people by funding projects benefiting residents in villages throughout the Mimika area. Examples include hospitals in Timika and Banti that treat thousands of patients each year; the LPMAK education program, which has provided scholarships or educational assistance to thousands of Papuan students; and economic and village development programs that have provided rural income generation projects, clean water, church facilities, and other infrastructure to remote villages in the highlands of Papua. LPMAK is an accountable, professionally managed and successful development program. It is one of the largest privately funded social development programs in Asia. During 2006, highlights of activities supported by LPMAK included: • Funding for two community hospitals that treated more than 12,000 in-patient visits and 125,000 out-patient visits during 2006 alone. The hospitals provide health care for the entire community, but services are provided for nominal administrative fees or free of charge to members of the seven Papuan tribal groups indigenous to the area. • Partnership programs with the local government for mother and child health, and the prevention and treatment of malaria and HIV/AIDS, as well as the training of nurses and the operation of two clinics built by LPMAK in the remote highlands. • Clean water projects at local government health clinics, including construction of wells and toilets for families in the remote Agimuga District. • Scholarships for over 1,500 students from middle school to university levels, with almost 300 post-secondary students graduating in 2006. • Improved quality of student dormitories through construction of new boys’ and girls’ dormitories and funding for four other dormitories so that students from remote areas have the opportunity to attend middle and high school. • In partnership with local church education foundations, construction of new classrooms and school facilities and hiring of additional teachers to improve the quality of education in coastal areas. • Support and technical training for more than 1,300 agriculture, animal husbandry, fishing, trade and services projects within the seven main tribal communities in the area. • Capacity building activities for local Amungme and Kamoro tribal councils, including support to local church organizations for training, HIV/AIDS education, education support, and construction of church facilities. |
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| Contributions to the partnership
fund were $52 million for 2006, a 14 percent increase over
2005’s contribution, reflecting the company’s exceptional
financial performance in 2006. The total contributions to the
fund approximate $242 million since inception. The activities of
the LPMAK are conducted through program bureaus, consisting of
expert facilitators and community leaders, who also cooperate
with local government agencies and other non-governmental
organizations. These teams review project proposals submitted in
accordance with guidelines and budgets established by LPMAK.
These proposals are then reviewed by LPMAK’s Board of Directors.
LPMAK programs are closely coordinated with the local government
to ensure maximum impact in improving the quality of life for
residents in the Mimika area. Funds in excess of LPMAK’s
approved annual program budget are placed in a provident fund
for future program funding. As of December 2006, LPMAK had $45.5
million invested in the provident fund. The LPMAK charter stipulates that project proposals must reflect the charitable and development objectives of LPMAK and are subject to financial and audit guidelines. Certain types of activities are strictly prohibited and are not funded, including political activities and projects that do not have a wide impact on the community. Each year an independent auditor issues a report on the LPMAK activities, and LPMAK publishes an annual report, a monthly newsletter, and regular local news articles detailing its programs to ensure transparency to the local communities. |
| Development Organization Seeks Global Input to Run World-Class Program |
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The Amungme and Kamoro Community
Development Organization (LPMAK) is the community council
responsible for managing the multi-million dollar community
fund for development in the region surrounding the Freeport
project area. LPMAK operates one of the largest development
programs in Indonesia. LPMAK’s funding from the Freeport Partnership Fund for Community Development in 2006 totaled approximately $48 million, with total contributions to the fund since its inception 10 years ago totaling approximately $242 million. LPMAK has the responsibility to deliver to the Papuan people in the area high-quality health, education and economic development programs. LPMAK Executive Secretary John Nakiaya understands that operating a world-class program requires a global perspective. That’s one reason PT Freeport Indonesia’s Social Outreach and Local Development group’s Capacity Building section recently facilitated a work-study visit for the LPMAK leadership to the Palabora Foundation in South Africa, where the Palabora Foundation has enjoyed a long and successful association with the mining industry. The key objective was to study and compare best practices in the areas of health, education and economic development. Nakiaya explained, “We are here to learn from the successful initiatives of the Palabora Foundation. The results they have achieved are numerous, but that does not intimidate us from accomplishing the same, as we would like to adopt some of their methods and work ethic for our programs in Papua.” Nakiaya says he learned that his South African peers do not offer as wide a variety of programs as those managed by his own organization, but rather a few focused, specialized education programs for children and training programs for adults. He adds, “Their partnership with the government is also impressive, incorporating labor and funding assistance to support the foundation programs. It is this partnership that has contributed to their success.” The Freeport and LPMAK group visited several schools, clinics and training centers in the region. Freeport Vice President of Social Outreach and Local Development Arief Latif said, “Palabora has very similar issues and programs to what we have in Indonesia. These similarities will expedite the application of ‘lessons learned’ and ‘best practices’ to our programs.” The work-study is part of Freeport Indonesia’s ongoing support to help LPMAK strengthen its organization, and to improve and maximize the deployment of resources for community development. In the 10 years since the Partnership Fund was initiated, Freeport Indonesia has devoted professional resources to assist its partners at LPMAK to work toward best practices, including facilitating introductions to other successful programs. |
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LPMAK Executive
Director John Nakiaya, as part of a best practices
work-study program, |
