November 28, 1995

To: Mr. James R. Moffett,
Chairman of the Board,
Chief Executive Officer,
Freeport McMoRan Copper & Gold, Inc.,
1615 Poydras Street,
New Orleans, LA 70112

Dear Mr. Moffett,

Thank you for your recent offer to continue a dialogue regarding environmental and social aspects of Freeport's operations in Irian Jaya (West Papua). Given the recent reports (ACFOA, The Bishop of Jayapura, Komnas HAM) regarding human rights violations near Freeport's mining operations and the Overseas Private Investment Corporation's (OPIC) cancellation of "political risk" insurance on environmental grounds, we find this is an appropriate time to offer recommendations to address environmental impacts, promote the integrity of local communities and improve living conditions for local indigenous people living near Freeport's area of influence. Our starting point and primary concern is the right of local indigenous people to live in dignity and without fear. The recommendations below are derived from discussions with Indonesian NGOs and community workers in Jakarta and Irian Jaya (West Papua):

Publicly Release Results of Independent Environmental Audits

We understand that Freeport has commissioned two U.S.-based consultancy firms to conduct independent environmental and social audits of its operations in Irian Jaya (West Papua). We believe this is a positive sign of Freeport's efforts to improve its environmental and social performance in Irian Jaya (West Papua). However, in order to increase public confidence in this process, Freeport must publicly release the audit results, raw data, terms of reference and testing methods. The goal of the audits should be to determine whether Freeport is in compliance with national and international environmental laws.

Review Tailings Management Plan (TRMP)

For a number of years Indonesian NGOs have requested that Freeport consider alternatives to its current method of dumping tailings directly into the Aghawagon, Otomona and Ajkwa rivers in Irian Jaya (West Papua). We support this request and submit that Freeport should now commence a review of viable alternatives to its current tailing and river management plan in consultation with Indonesian NGOs and mining experts.

Independent Environmental Monitoring

Freeport should allow local people and Indonesian NGOs to set up an independent permanent monitoring system at the mine site and along the Aghawagon, Otomona and Ajkwa River systems. In conjunction with this, Freeport should release its own environmental monitoring studies and environmental assessments to interested and affected parties. Those conducting NGO monitoring should be allowed unlimited access to Freeport-maintained roads. The NGO monitoring system would include, but not be limited to:

• soil and water sampling along river systems;
• survey of forest destruction;
• impacts on local communities of tailings deposition in local river systems;
• impacts of mining operations on glaciers;
• impacts on Lorentz National Reserve;
• monitoring of overburden and rockwaste disposal; and
• environmental impacts at Portsite (Amammapare).

Creation of an Independent Mediation Panel

Freeport should agree to settling disputes with the Amungme and Kamoro through independent and professional mediators in the form of an independent mediation panel. The panel would handle local indigenous grievances against the company, including issues related to land disputes, land rights, compensation for damages, environmental damage, and Freeport security, in accordance with national and international law. Such a panel could be started on a pilot basis and could include an international lawyer, mediation expert, local church representative, an anthropologist familiar with local indigenous languages and customs, and representatives of other relevant disciplines. The composition of the panel and its operational procedures should be mutually agreed to by the company, local people and Indonesian NGOs.

Providing a mechanism for local people to air grievances against the company would help improve communications between local people and the company. Before the establishment of a panel, Freeport should not attempt to force or rush negotiations or settlements with local indigenous people. Also, Freeport should not attempt to solve local problems solely through disbursement of funds.

Demilitarization of Freeport's Concession and Area of Influence:

The human rights abuses recently documented by ACFOA, The Bishop of Jayapura and the Komnas HAM (Indonesian National Commission on Human Rights) in and around Freeport's area of influence reportedly stem from military retaliation against local Amungme people and/or so-called rebels who are protesting against Freeport operations and expansion. NGO interviews with community workers around Timika indicate that local people, particularly Amungme, live in fear of military intimidation, harassment and retaliation. There are additional reports that Amungme living in Waa and Banti also have problems with the military when attempting to move from one village to another, or when travelling from Tembagapura to Timika.

We believe that preventing further human rights abuses against local people should be a top priority for Freeport, and that Freeport shares a moral responsibility for the recent tragic events since the military is protecting Freeport operations, and Freeport provides the military with logistical support and equipment. We submit that Freeport should ask the Indonesian government to drastically reduce the Indonesian military presence in and around Freeport's area of operations and influence. By reducing military presence, Freeport will help to create an environment more conducive to understanding local problems and improving relations with local people.

We understand that reducing the military presence near the mine site may entail amending Freeport's contract with the Government of Indonesia, but the gravity of the recent human rights violations and the urgent need to prevent further abuses clearly warrant this approach. In our view, it would also be to Freeport's advantage to distance itself from the Indonesian military, which has been criticized by international human rights groups and the government's own human rights commission for its dismal human rights record in Irian Jaya (West Papua), Aceh, East Timor and elsewhere.

Through its community development programs and support of local health facilities, Freeport has expressed a desire to improve the lives of local indigenous people. We believe that implementation of these recommendations will further contribute to this objective, as well as ameliorate problems of local people such as land rights issues and intimidation by the military. Efforts towards community development such as education, work opportunities and resolution of disputes between parties cannot effectively occur in an oppressive atmosphere of fear and intimation. In many ways, Freeport's operations in Irian Jaya (West Papua) offer a unique opportunity for an American company to set an example for this remote region in promoting environmental stewardship, corporate responsibility, and respect for human rights and land rights of indigenous peoples.

We look forward to your response to these important matters.

Sincerely,
Lori Udall, Washington Director, International Rivers Network
and David Hunter, Senior Attorney, Center for International Environmental Law

on behalf of:

• Akiko Tsuro, Director, Japan NGO Network on Indonesia
• Yoichi Kuroda, Coordinator, Japan Tropical Forest Action Network, Japan
• Andrea Durbin, Int'l Project Director, Friends of the Earth, USA
• Aya Saitoh, Aid Impact Coordinator, Friends of the Earth-Japan, Japan
• Cindy Bhule, Director, Indigenous Peoples Program, Bank Information Center, USA
• Matthew Jamieson, Director, Mineral Policy Institute, Australia
• Barbara Bramble, Director, International Program National Wildlife Federation, USA
• S. Jacob Scherr, Director International Program, Natural Resources Defense Council, USA
• Daniel A. Seligman, Senior Fellow, Trade and Environment Program, Sierra Club, USA
• Bruce Rich, Director, International Program, Environmental Defense Fund, USA