REB
(undated)

P. T. Freeport Indonesia Company ("PT-FI"), an affiliate of Freeport-McMoRan Copper & Gold Inc., has reviewed the report issued by Indonesia's National Commission on Human Rights ("KOMNAS HAM") regarding the deaths of 16 civilians in Irian Jaya (West Papua). Due to the nature of the Commission's investigation, it would have been inappropriate for PT-FI to comment prior to the release of the report. PT-FI cooperated fully with the KOMNAS HAM panel in its investigation and provided logistical support during the panel's visits to Irian Jaya (West Papua). Although the Commission has stated in its report that PT-FI was not directly involved in these incidents, we feel compelled to clarify its role in the province, as well as the overall scope of our operations in the region as they relate to the incidents and locations listed in the KOMNAS HAM report.

Irian Jaya (West Papua) is an Indonesian province that represents one-half of the island of New Guinea, the second largest island in the world. Irian Jaya is vastly underdeveloped with very difficult terrain ranging from coastal swamps and dense rain forests, rising to cloud forests, and eventually to alpine highlands of jagged mountain peaks of 5,500 meteres. It is in the high mountains that PT-FI operates the Grasberg copper and gold mine. Communications and road transportation on most of Irian Jaya (West Papua) are non-existent. Although PT-FI and another affiliated Company (P.T. Irja Eastern Mining) are under contract to mine and explore for minerals in a 9 million acre area of Irian Jaya (West Papua), the vast majority of this area is unaffected by the Company's operations. The Company's area of active operations represents only a narrow corridor of land from the coast to the mine.

The only transportation artery in our corridor is a 118 kilometer (74 mile) road that begins at sea level at PT-FI's port site, skirts the open town of Timika (population approximately 25,000), and rises to an elevation of almost 3,000 meters at PT-FI's mill complex. This is an unpaved road, that in vast stretches is an isolated area that has high rainfall creating limited visibility during many hours of the day. Because it follows a sharp mountain ridge, there is no access east or west off of the road. PT-FI has a continuous stream of traffic along this artery 24 hours a day. Most of the traffic is comprised of large trucks hauling supplies and equipment. With the exception of helicopter-supported exploration activities, PT-FI's presence in Irian Jaya is limited to a large extent to the Grasberg mine and mill complex near Tembagapura in the high mountains, the Company community of Tembagapura in a mountain valley, the area surrounding the community of Timika in the lowlands, and the port community of Amammapare near the Arafura Sea.

PT-FI's mine operates 365 days a year and is one of the largest natural resource developments in the world. Freeport-McMoRan Copper and Gold is publicly owned by shareholders all over the world, and PT-FI operates this mine as a government contractor based on a mining contract with the Government of Indonesia. Freeport pays taxes to the Government of Indonesia and has been one of Indonesia's top ten taxpayers for four of the last five years, and will continue as one of the highest taxpayers for many years as a result of the revenues from this mine.

PT-FI and its contractors directly employ 15,000 individuals in this corridor, over 96% of whom are Indonesian, and approximately 1,700 of whom are from the province of Irian Jaya (West Papua). There are as many as 35,000 other people who live in this area who do not work for the Company or its contractors. PT-FI has no governmental or security authority in the area.

PT-FI is clearly committed to a long-term presence in Irian Jaya (West Papua). In order to better focus on its core business of minerals exploration and mining, PT-FI has embarked on a number of partnerships to facilitate "privatization" of many of the services and assets not directly related to PT-FI's core focus. An Indonesian corporation has purchased and is now managing a major part of the operation's infrastructure assets, including retail centers, housing and other facilities. An international group of power companies is managing the generation and distribution of power throughout the PT-FI area. An international shipping company owns and manages the port facility, shipping facilities and other logistical services. An Indonesian Joint Venture has purchased assets associated with air transportation. This privatization program, which began in the early 1990's and will expand in the future, has resulted in a much greater diversity of business in Irian Jaya (West Papua). It has transformed the once-isolated "company community" area into a thriving, open business and industrial region.

As part of its corporate citizenship program, PT-FI implements, in coordination with the government, a comprehensive sustainable development program in the operations corridor as well as other programs throughout the exploration area. PT-FI has made significant contributions and investments in surrounding communities in education, medical treatment, vocational job development and other economic development initiatives. PT-FI hopes that the continued growth of this world class mine will provide for years to come economic benefits to all of the people of Indonesia in general and to citizens of Irian Jaya in particular.

The Company employs unarmed internal security guards. They are not affiliated with the military. The job is to serve as property watchmen monitoring the safety and security of the PT-FI workforce and property within the confines of active operations areas. Police services and external security are provided by the Government of Indonesia, which is responsible for the security of its citizens and vital assets. Freeport, as a corporate citizen, exercises no control, nor will it in the future, over the civilian population.

Because of the growing population in this region and the vital importance of the PT-FI operations, the government has established a military presence in the region. The military had increased its presence in the area following the November 1994 shooting by unknown assailants of an Indonesian PT-FI employee who was part of a road maintenance crew. Under its Contract of Work, PT-FI, as well as other "privatized" contractors, is obligated to provide to the Government, including the military, free and open access to its areas of operation and use of certain infrastructure assets, including roads, airstrips and ports. We provide other support, including food, transportation and shelter to military personnel involved in routine security detail, upon request. We do not provide transportation or other assistance to military personnel involved in combat operations.

Of the incidents described in the KOMNAS HAM report, one incident involved the deaths of eleven people in the Agani village near Hoea, which is located 90 kilometers east of Freeport's active operations area. It is not located in PT-FI's Contract of Work area. PT-FI had no knowledge of the incident until military leaders and International Red Cross requested the Company's logistical support several days following the incident to conduct an investigation.

Regarding the other incidents reported within PT-FI's Contract of Work area, it is important to point out that the facilities in which these events occurred were not under the control of PT-FI. Some of these incidents took place in the open communities near Timika. Regarding the reported incident involving a bus, PT-FI was asked by the Indonesian military for the use of a bus to transport individuals who were being questioned as part of an investigation into an incident involving armed dissidents. The shipping containers listed in earlier reports were storage vessels that the Indonesian military had requested several years ago for storage of material goods. The use of these containers for any other purpose was without the knowledge of PT-FI. With regard to an incident at a "Freeport workshop" in Koperapoka, it should be noted that PT-FI has no workshops or company facilities in Koperapoka or the surrounding areas.

In conclusion, PT-FI hopes the KOMNAS HAM report and the attention that has been given to Irian Jaya (West Papua) in recent months will result in close attention to the explosive growth that has take place in the region, which has grown from a population of several hundred individuals when Freeport began its operations in 1970, to the 50,000 people who live in the region today.

(Typed by Robert S. Boyer from a copy obtained from REB.)