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By Puspa Madani Staff Reporter

JAKARTA, Indonesia (May 17, 2000 - Joyo Indonesian News/Asian Wall Street Journal/Kabar Irian)---Indonesia said it will order PT Freeport Indonesia, a unit of Freeport-McMoRan Copper & Gold Inc., to cut back production at its Grasberg gold and copper mine in Papua province, after a fatal landslide at a waste rock dump there earlier this month.

The move indicates Indonesian President Abdurrahman Wahid’s government intends to get tough on the mining company, which once enjoyed close relations with former President Suharto's administration. Environment Minister Sonny Keraf said Wednesday that the cabinet had decided -- after hearing the results of an investigation by two ministries -- that Freeport must submit a comprehensive new plan and obtain government approval before opening a new dump for the waste rock.

Freeport must also clean up "all destruction and pollution that had been caused" by the sludge dumped into Wanagon Lake by the landslide. In addition, Freeport must allow a criminal investigation by the police and government officials into the four men's deaths caused by the landslide. And it must compensate losses suffered by residents of a nearby village affected by the incident.

Mr. Keraf said a letter including all the demands will be sent to Freeport early next week at the latest. Today is a public holiday in Indonesia. "It must be done as soon as possible to avoid further destruction of the environment" caused by the waste rock, he said. He didn't say how much production would be cut. Last week he had threatened to suspend production at the site.

Mr. Keraf denied the government was singling out Freeport for punishment. "This is not a personal matter. This is a matter of the nation. The environment must be saved. Further destruction must be avoided," he said.

A Freeport spokesman, Mindo Pangaribuan, said dumping had stopped on the day of the landslide, May 4. He said other locations were being sought for waste disposal, all within the Grasberg area. "It's still inside the working contract site and it has been part of the approved mining plan," he said.

Critics say Freeport ignored pressure from the central government to reduce the risk posed by the dumping of waste into the basin after a similar, nonfatal landslide at the site in 1998. The latest incident also has added fuel to the demands from resource-rich outer regions such as Papua province for greater control over such industries, as well as a bigger share of their profits.

Freeport reached an agreement with Mr. Suharto's government in 1991 to extend its contract to mine the Grasberg deposit until 2041. Last year, Freeport produced 1.4 billion ounces of copper and 2.4 million ounces of gold. It made net profit of $100.8 million.

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