VZCZCXRO5217
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #3049/01 3051028
ZNR UUUUU ZZH
R 011028Z NOV 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 6887
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBJ/AMEMBASSY BEIJING 4444
RUEHBY/AMEMBASSY CANBERRA 1474
RUEHPB/AMEMBASSY PORT MORESBY 3520
RUEHKO/AMEMBASSY TOKYO 1044
RUEHWL/AMEMBASSY WELLINGTON 1956
RUEAIIA/CIA WASHDC
RHHJJPI/USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 JAKARTA 003049 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EAP, EAP/MTS, EAP/ANP, INR/EAP 
PLEASE PASS TO USAID 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM EAID ID
SUBJECT: FREEPORT IN PAPUA: COMMUNITY DEVELOPMENT AND 
TRAINING AND HIRING PAPUANS 
 
REF: JAKARTA 2783 
 
JAKARTA 00003049  001.2 OF 002 
 
 
¶1. (SBU)  This cable is Sensitive But Unclassified-please 
handle accordingly.  Not for distribution outside of USG 
channels. 
 
¶2. (SBU) SUMMARY: Freeport McMoRan is making efforts to 
address the economic impact of its operations in Papua, 
Indonesia.  During the DCM's recent visit, the company 
showcased efforts to compensate local populations affected by 
the mine and to recruit and train Papuan employees.  The 
company's efforts are impressive but economic 
underdevelopment remains a problem throughout Papua, not just 
in the area of Freeport's operations.  SUMMARY. 
 
¶3. (SBU) Mission routinely receives complaints and questions 
about elements of U.S.-based Freeport McMoRan's mining 
operations in Papua.  The complaints focus largely on three 
areas:  environmental impact; community development; and 
commitment to train and hire a local Papuan workforce.  The 
underlying question is whether the Freeport's operation 
benefits Papuans.  Some members of the international press, 
the NGO community and U.S. Congress share these concerns. 
 
¶4. (SBU) Reftel described some of the company's environmental 
protection efforts.  This cable, based on the DCM's recent 
trip to Timika, describes Freeport's community development 
and personnel practices.  Freeport's programs for the people 
of Papua are structured around three concentric circles of 
the population:  the Kamoro and Amengme ethnic groups, most 
directly affected by the mine; the seven ethnic groups 
(including the Kamoro and Amengme) in the area surrounding 
the mine; and, the other people of Papua.   Beyond the Papuan 
population, the company also has programs for non-Papuan 
Indonesians. 
 
COMMUNITY DEVELOPMENT 
 
¶5. (SBU) Freeport funds two major community development 
programs, amounting to tens of millions of dollars each year, 
depending on world copper prices.  Freeport's Land Rights 
Recognition Program and Three Village Program focus entirely 
on the Kamoro and Amengme people, is designed to compensate 
them for the loss of traditional lands an other community 
property as a result of the mine's establishment.  The funds, 
currently totaling over $20 million, are managed by local 
foundations, one for each ethnic group.  Priorities of these 
foundations include housing, education, infrastructure and 
health care.  The program also provides grants for local 
Papuans to start small businesses. 
 
¶6. (SBU) Freeport also funds a larger community developent 
effort via the "one percent fund," under which one percent of 
the company's gross revenue goes to a foundation that goes by 
the acronym LPMAK.  Under current world gold and copper 
prices, the company pays about $50 million annually to this 
foundation.  LPMAK's executive director John Nakiaya told the 
DCM on October 7 that his foundation's top three priorities 
are education, health and economic development.  LPMAK's 
programs are designed to assist all seven ethnic groups in 
area of the mine, but the board of directors is dominated by 
Kamoro and Amengme, which try to block projects for the other 
five groups.  (NOTE:  Environmental projects, such as the 
reclamation project described in reftel are funded by the 
company separately, not using one percent funds.) 
 
¶7. (SBU) LPMAK currently manages projects amounting to about 
$20 million per year, which means that the foundation is 
amassing huge funding surpluses that currently sit in rather 
unproductive back accounts. L7q^QQ _LPMAK project is the 
sole hospital in Timika, which provides medical care at no 
cost to members of the seven ethnic groups and at modest 
charge to others.  The local government has completed the 
construction of a new public hospital but this hospital has 
not yet opened. 
 
¶8. (SBU) Nakiaya also told the DCM that he supports recent 
 
JAKARTA 00003049  002.2 OF 002 
 
 
efforts by Freeport and USAID to develop a Public Private 
Partnership.  The current modest partnership focuses entirely 
on cold storage and transportation of Papuan agricultural and 
marine products, to the tune of about one million dollars per 
year.  He was less definitive, however, when asked how he 
would view a major expansion of that Freeport-USAID 
partnership to other community development projects. 
 
TRAINING AND HIRING PAPUANS 
 
¶9. (SBU) Freeport has also established the Nemangkawi Mining 
Institute, an impressive training facility, managed by 
another foundation, fully funded by the company with funding 
separate from the "one percent program.  This institute, 
budgeted at $7-10 million per year, has trained or is 
training about 1,500 Indonesians, 90% of whom are Papuans, 
for skilled mining jobs.  Graduates of the three-year 
training program are free to seek employment anywhere (and a 
number have gone to Australia).  Although Freeport does not 
guarantee their employment, the company has hired most of the 
current 500 graduates in skilled positions such as machine 
operators, welders, and office workers.  This training does 
not involve university graduates, such as engineers or 
managers, where the number of Papuans hired by the company is 
not so impressive. 
 
¶10. (SBU) While Freeport still has image problems and 
difficult relations with many Papuans, the company is clearly 
committed to contributing to community development, and 
training and hiring of the Papuan people, especially those in 
areas surrounding the mine.  Critics of the company should be 
encouraged to see for themselves what the company is doing 
before making a final judgment. 
 
HUME