Freeport hopes partnership fund to be kept at one percent of gross sales

PT Freeport Indonesia, the local unit of U.S. mining giant Freeport-McMoRan Copper & Gold Inc, hopes that the partnership funds, which should be given by the gold and copper mining company to Papua residents as part of its contribution for the development of the local economy, could be maintained at the current level of one percent of gross sales, Investor Daily reported Saturday.

"The partnership funds have been very large even for the company like Freeport. So I don't think we need to increase the percentage of the partnership funds," Freeport's Executive Vice President and Director for External Affairs August Kafiar said in his comment on the proposed increase in the percentage of the so called partnership funds which are given by the company to finance community development programs and the social welfare improvement program.

Speaking during a dialogue on Freeport's operation in Jakarta on Friday, Kafiar said that the amount of the partnership fund would automatically increase if there is a rise in the company's sales.

"This year, the partnership fund will reach about US$22 million, up from about $20 million in 2005," he said.

Freeport is required to provide partnership fund totaling one percent of its gross sales to the local people as part of its contribution to the empowerment of the local people. This year's partnership fund of about $22 million would be disbursed beginning in July.

With regard to the proposal on the need to change the evaluation period on the disbursement of the partnership fund, he said that the management of Freeport had given a positive response to the idea and agreed to shorten the evaluation period to five years from 10 years at present.

"We will sign new memorandum of understanding with the stakeholders on the revision of the evaluation period, and on the percentage of the partnership fund that must be given to the local people," he added.

Meanwhile, Simon F. Sembiring, the director general of coal and geothermal at the ministry of energy and mineral resources, said that the proposal to increase in the percentage of the partnership fund should be discussed by the company and stakeholders comprising of government and representatives of the local community.

"But for your information, the percentage of the partnership funds has been very large. The most important thing is now how to use the funds," he said. (*)