World's Largest Gold Mine Cancels World Bank Insurance Contract
9/19/96
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Headline: World's Largest Gold Mine Cancels World Bank Insurance Contract
Source: InterPress Service
Date: 9/19/96
Author: Pratap Chatterjee
SAN FRANCISCO, Sep 19 (IPS) - A World Bank insurance contract for the
world's largest gold mine on the island of New Guinea in the South Pacific
has been cancelled.
Freeport McMoRan, a New Orleans-based company, operates the gold mine in the
central mountains of Irian Jaya.
But the company last week informed the World Bank's Multilateral Investment
Guarantee Agency (MIGA) that it no longer required a six-year-old,
50-million-dollar contract against political risks.
Freeport officials have not returned calls from IPS. But a MIGA spokesman
said the agency was informed by fax last Thursday of Freeport's ''business
decision'' to terminate the insurance contract that was originally signed in
1990.
Freeport has a similar, 100-million-dollar contract with the U.S.
government's political risk insurance agency, the Overseas Private
Investment Corporation (OPIC). OPIC cancelled the policy last November on
environmental grounds but re-instated it in April until the end of 1996.
In a letter to Freeport at the time, OPIC lawyer Robert O'Sullivan cited
environmental problems associated with ''acid mine drainage...toxic
metals...and the mismanagement of solid and hazardous wastes at the site.''
By Freeport's own accounts, copper and gold extraction at the mine results
in the dumping of more than 120,000 tonnes of waste into local rivers every
day.
U.S. government sources also say that one of the unstated reasons for the
cancellation of the insurance was a series of massacres of local indigeneous
peoples by Indonesian army troops who are guarding the mine site.
For its part, MIGA had been preparing to conduct its own investigation and
was to send a three-member team to Irian Jaya. World Bank sources say that
Jim McNeill, a Canadian diplomat at the World Commission on Environment and
Development, was to lead the team in the next few weeks, but that Freeport's
latest move had pre-empted the trip.
MIGA is, however, playing down suggestions that Freeport's decision to end
the contract was tied to the upcoming investigation. The MIGA official
stressed that no date had been set for the experts to visit the mine. He
argued that clients do have the right to cancel policies, and noted that as
of Jan. 30, MIGA had written 223 policies, 177 of which remained on the
books.
''Our decision to put together a panel of experts was predicated on a
continuing relationship between Freeport McMoRan and MIGA,'' the spokesman
said. ''The policy has been cancelled, so that relationship is gone.''
The cancellation is remarkable in light of political troubles on the island.
In March, major riots against Freeport resulted in several million dollars
of property damage.
Environmentalists in Irian Jaya, who did not wish to be named, told IPS that
Freeport's latest move has robbed local groups of the chance to make the
company accountable to the international community.
''This is not good news,'' one environmentalist told IPS by telephone from
Irian Jaya. ''Theverage that we had, and now, that is gone.''
Meanwhile, the Amungme and Komoro tribes in New Guinea, on whose lands
Freeport is mining for gold, have brought a six- billion-dollar lawsuit
against Freeport over both environmental and human rights issues. The case
is before New Orleans courts. Sources in New Guinea told IPS that more than
3,000 people have signed on to the lawsuit.