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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

U.S. Punishes Mining Company Over Abuse

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Forest Networking a Project of Ecological Enterprises

November 16, 1995

OVERVIEW & SOURCE

The Los Angeles Times reports on the Clinton administration's

unprecedented cut off of federal insurance for a U.S. company

based on alleged damage to tropical rain forests and rivers. The

Freeport-McMoran mining company, operating in Irian Jaya,

Indonesia, has been the target of much criticism for environmental

and human rights abuses. In a positive environmental move by the

Clinton administration, the mining gian has lost federal insurance

against political risk. How many other American corporations are

damaging developing countries environments (usually with

environmental standards for more slack than in the US)? This may

set a positive precedent. As always with print media articles,

this item should be considered a photocopy and reprint rights

sought from the source.

g.b.

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RELAYED TEXT STARTS HERE:

Headline: "U.S. Punishes Mining Company Over Abuse

Source: San Francisco Chronicle

Date: Thursday, November 2, 1995

By Jim Mann, Los Angeles Times

Page 4

Washington

In an unprecedented action against environmental abuse by American

companies overseas, the Clinton administration yesterday cut off

$100 million in federal insurance to a U.S. company whose gold and

copper mining in Indonesia were said to be damaging tropical rain

forests and rivers.

The Overseas Private Investment Corp., the federal agency that

provides political-risk insurance for U.S. firms operating abroad,

terminated its guarantees for the Indonesian operations of

Freeport-McMoran Copper & Gold Inc. of New Orleans.

It was the first time the agency had cut off insurance to any

American company for environmental or human rights reasons.

American businesses trying to start operations in new areas often

say they need the agency's insurance more than any other help from

the U.S. government. Political-risk insurance, which protects a

company against the possibility that its assets overseas will be

damaged or seized because of political upheaval, is often hard to

obtain from private insurers.

On Friday, President Clinto turned aside an appeal from Indonesian

President Suharto, who urged the administration to preserve the

insurance guarantees for Freeport-McMoran. The American company

owns 80 percent of the Indonesian mining venture; the Indonesian

government holds 9 percent, and private investors in Indonesia the

remaining 11 percent.

Freeport-McMoran said in a statement yesterday that it was

"disturbed" by the government's action. It said that the agency

"lacks a legal basis for cancelling the coverage" and that the

dispute had been submitted to arbitration.

The company also said it was in compliance with Indonesian

environmental regulations and was "committed to the highest

environmental standards in our mining operations."

Freeport-McMoran's mines, in the Indonesian province of Irian Jaya

on the island of New Guinea, contain copper and gold reserves that

are among the largest in the world. The largest single American

investor in Indonesia, the company has expanded its operations

rapidly in the past few years.

And Indonesian organization called Indonesian Forum for the

Environment has complained that while expanding, Freeport-McMoran

has dumped toxic tailings into local waters, damaging rivers and a

wide swath of rain forest alongside.

A federal law requires the investment agency to refuse to reinsure

any American investment overseas if the project "will pose a major

or unreasonable environmental, health or safety standard." In

terminating Freeport-McMoran's insurance, the agency said the

expansion of the mining operation on Irian Jaya was harming the

Indonesian environment.

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Networked by:

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