The New York Times
December 27, 2005


Rachel's summary: During this seasonal celebration of opulence and
excess, when homage to gold is visible everywhere, it's good to recall
where much of our gold comes from -- from Freeport McMoRan, a U.S.
corporation in league with brutal military rulers, that denies its
workers basic human rights, dumps billions of tons of toxic waste
directly into streams and wetlands, and disallows democracy.

Below a Mountain of Wealth, a River of Waste

By Jane Perlez and Raymond Bonner

JAKARTA, Indonesia -- The closest most people will ever get to remote
Papua, or the operations of Freeport-McMoRan, is a computer tour using
Google Earth to swoop down over the rain forests and glacier-capped
mountains where the American company mines the world's largest gold

With a few taps on a keyboard, satellite images quickly reveal the
deepening spiral that Freeport has bored out of its Grasberg mine as
it pursues a virtually bottomless store of gold hidden inside. They
also show a spreading soot-colored bruise of almost a billion tons of
mine waste that the New Orleans-based company has dumped directly into
a jungle river of what had been one of the world's last untouched

What is far harder to discern is the intricate web of political and
military ties that have helped shield Freeport from the rising
pressures that other gold miners have faced to clean up their
practices. Only lightly touched by a scant regulatory regime, and
cloaked in the protection of the military, Freeport has managed to
maintain a nearly impenetrable redoubt on the easternmost Indonesian
province as it taps one of the country's richest assets.

Months of investigation by The New York Times revealed a level of
contacts and financial support to the military not fully disclosed by
Freeport, despite years of requests by shareholders concerned about
potential violations of American laws and the company's relations with
a military whose human rights record is so blighted that the United
States severed ties for a dozen years until November.

Company records obtained by The Times show that from 1998 through
2004, Freeport gave military and police generals, colonels, majors and
captains, and military units, nearly $20 million. Individual
commanders received tens of thousands of dollars, in one case up to
$150,000, according to the documents. They were provided by an
individual close to Freeport and confirmed as authentic by current and
former employees.

Freeport said in a written response to The Times that it had "taken
appropriate steps" in accordance with American and Indonesian laws to
provide a secure working environment for its more than 18,000
employees and contract workers.

"There is no alternative to our reliance on the Indonesian military
and police in this regard," the company said. "The need for this
security, the support provided for such security, and the procedures
governing such support, as well as decisions regarding our
relationships with the Indonesian government and its security
institutions, are ordinary business activities."

While mining and natural resource companies sometimes contribute to
the costs to foreign governments in securing their operations,
payments to individual officers raise questions of bribes, said
several people interviewed by The Times, including a former Indonesian
attorney general, who said it was illegal under Indonesian law for
officers to accept direct payments.

The Times's investigation also found that, according to one current
and two former company officials who helped set up a covert program,
Freeport intercepted e-mail messages to spy on its environmental
opponents. Freeport declined to comment.

More than 30 current and former Freeport employees and consultants
were interviewed over the past several months for this article. Very
few would speak for attribution, saying they feared the company's

Freeport's support of the military is one measure of its extraordinary
working environment. In the 1960's, when Freeport entered Papua, its
explorers were among the very first outsiders ever encountered by
local tribesmen swathed only in penis gourds and armed with bows and

Since then, Freeport has built what amounts to an entirely new society
and economy, all of its own making. Where nary a road existed,
Freeport, with the help of the San Francisco-based construction
company Bechtel, built virtually every stitch of infrastructure over
impossible terrain in engineering feats that it boasts are
unparalleled on the planet.

That history, Papua's extreme remoteness and the company's long ties
to the Indonesian government have given Freeport exceptional sway over
a 21st-century version of the old company town, built on a scale
unique even by the standards of modern mega-mining.

"If any operation like this was put forward now, it wouldn't be
allowed," said Witoro Soelarno, a senior investigator at the
Department of Energy and Mineral Resources, who has visited the mine
many times. "But now the operation exists, and many people depend on

For years, to secure Freeport's domain, James R. Moffett, a Louisiana-
born geologist who is the company chairman, assiduously courted
Indonesia's longtime dictator, President Suharto, and his cronies,
having Freeport pay for their vacations and some of their children's
college education, and cutting them in on deals that made them rich,
current and former employees said.

It was a marriage of mutual convenience. As Freeport prospered into a
company with $2.3 billion in revenues, it also became among the
biggest -- in some years the biggest -- source of revenue for the
government. It remains so.

Freeport says that it provided Indonesia with $33 billion in direct
and indirect benefits from 1992 to 2004, almost 2 percent of the
country's gross domestic product. With gold prices hitting a 25-year
high of $540 an ounce this month, the company estimates it will pay
the government $1 billion this year.

With Suharto's ouster in 1998, after 30 years of unchallenged power,
Freeport's special place was left vulnerable. But its importance to
Indonesia's treasury and its carefully cultivated cocoon of support
have helped secure it against challenges from local people,
environmental groups, and even the country's own Environment Ministry.

Letters and other documents provided to The Times by government
officials showed that the Environment Ministry repeatedly warned the
company since 1997 that Freeport was breaching environmental laws.
They also reveal the ministry's deep frustration.

At one point last year, a ministry scientist wrote that the mine's
production was so huge, and regulatory tools so weak, that it was like
"painting on clouds" to persuade Freeport to comply with the
ministry's requests to reduce environmental damage.

That frustration stems from an operation that, by Freeport's own
estimates, will generate an estimated six billion tons of waste before
it is through -- more than twice as much earth as was excavated for
the Panama Canal.

Much of that waste has already been dumped in the mountains
surrounding the mine or down a system of rivers that descends steeply
onto the island's low-lying wetlands, close to Lorentz National Park,
a pristine rain forest that has been granted special status by the
United Nations.

A multimillion-dollar 2002 study by an American consulting company,
Parametrix, paid for by Freeport and its joint venture partner, Rio
Tinto, and not previously made public, noted that the rivers upstream
and the wetlands inundated with waste were now "unsuitable for aquatic
life." The report was made available to The Times by the Environment

Freeport says it strives to mitigate the environmental effect of its
mine, while also maximizing the benefits to its shareholders. The
Times made repeated requests to Freeport and to the Indonesian
government to visit the mine and its surrounding area, which requires
special permission for journalists. All were turned down.

Freeport refused to make any official available for an interview and
would respond to questions only in writing. A cover letter signed by
its legal counsel, Stanley S. Arkin, said that Grasberg is a copper
mine, with the gold retrieved as a byproduct, and that many
journalists had visited the mine before the government tightened its
rules in the 1990's. "Freeport has nothing to hide," Mr. Arkin wrote.

Indeed, at Grasberg, Freeport-McMoRan Copper & Gold mines the world's
third-largest copper deposit. The mine also has proven reserves of 46
million ounces of gold, according to the company's 2004 annual report.
This year, Mining International, a trade journal, called Freeport's
gold mine the biggest in the world.

Social Tensions Erupt

Since Suharto's ouster, Freeport employees say, Mr. Moffett's motto
has been "no tall trees," a call to keep as low a profile as possible,
for a company that operates on an almost unimaginable scale.

But even before then, the new world that Freeport created was growing
smaller. By the mid-1990's, with production in full swing, and the
expanding impact of Grasberg's operations ever more apparent, Freeport
was beset on all sides.

Environmental groups, able to coordinate more effectively with the
Internet, made Freeport a target. Local tribes were more and more
restless at seeing little benefit for themselves as vast riches were
extracted from their lands. And some military commanders in Papua saw
Grasberg's increasing value as ripe for the plucking.

To fortify itself, Freeport, working hand in hand with Indonesian
military intelligence officers, began monitoring the e-mail messages
and telephone conversations of its environmental opponents, said an
employee who worked on the program and read the e-mail messages.

The company also set up its own system to intercept e-mail messages,
according to former and current employees, by establishing a bogus
environmental group of its own, which asked people to register online
with a password. As is often the case, many who registered used the
same password for their own messages, which then allowed the company
to tap in.

Freeport's lawyers were nervous, a person who was at the company at
the time said, but decided that nothing prohibited the company legally
from reading e-mail messages abroad.

Social tensions around the mine, meanwhile, were fast growing, as was
Papua's population. Papua, mostly animist and Christian after long
years of missionary work, is distinct in many ways from the rest of
Indonesia, the world's largest Muslim country.

Almost from Indonesia's independence, the province had rumblings of a
separatist movement. Throughout Indonesia the military, a deeply
nationalist institution, finances itself by setting up legal
enterprises like shopping centers and hotels, or illicit ones, like
logging. In Papua, the Grasberg mine became a chance for the military
not only to profit but also to deepen its presence in a province where
it had barely a toehold before Freeport arrived.

For many years Freeport maintained its own security force, while the
Indonesian military battled a weak, low-level insurgency. But slowly
their security needs became entwined.

"Where Freeport really took it on the chin is the military who came in
had no vehicles, and they would commandeer a Freeport bus or a
Freeport driver," said the Rev. David B. Lowry, an Episcopalminister
hired by Mr. Moffett to oversee social programs. "We had no policies
at that time."

No investigation directly linked Freeport to human rights violations,
but increasingly Papuans associated it with the abuses of Indonesian
military units, in some cases using company facilities.

An Australian anthropologist, Chris Ballard, who worked for Freeport,
and Abigail Abrash, an American human rights campaigner, estimated
that 160 people had been killed by the military between 1975 and 1997
in the mine area and its surroundings.

Finally, in March 1996, long-simmering anger at the company erupted in
rioting when anti-mine sentiment among different groups coalesced into
what was perhaps the biggest threat to the company to this day.

The mine and its mill were shut down for three days. Rioters destroyed
$3 million of equipment and ransacked offices.

The company intercepted e-mail messages that, according to two persons
who read them at the time, suggested that certain military units, the
community and environmental groups were working together.

One e-mail exchange, between a community leader and the head of an
environmental group, was filled with tactical military intelligence,
according to a person who read the messages. In another exchange, an
environmental leader urged the group's members to pull out because the
demonstrations had turned violent.

Freeport told The Times that local leaders later met with company
officials and said "they had provoked the disturbances as a means of
expressing their aspiration to receive greater benefits from our

In recent interviews, current and former Freeport officials recalled
how they were stunned when, among those rioting, they saw men with
military haircuts, combat boots and walkie-talkies. They seemed to be
directing the rioters, at one point, to a Freeport laboratory, which
they ransacked.

It was not long before a worried Mr. Moffett flew out to Indonesia in
the company jet.

Freeport refused to comment on the meeting that followed. But a
company official who was there recounted that Mr. Moffett met with a
group of senior Indonesian military officers at the Sheraton Hotel in
the lowland town of Timika, near the mine. The all-powerful Gen.
Prabowo Subianto, son-in-law of President Suharto and commander of the
Indonesian Special Forces, presided.

"Mr. Moffett, to protect you, to protect your company, you have to
help the military here," General Prabowo began, according to the
company employee who was present.

Mr. Moffett is said to have replied: "Just tell me what I need to do."

The Cost of Security

Each military service drew up its wish list, current and former
company employees said.

In short order, Freeport spent $35 million on military infrastructure
- barracks, headquarters, mess halls, roads -- and it also gave the
commanders 70 Land Rovers and Land Cruisers, which were replaced every
few years. Everybody got something, even the Navy and Air Force.

The company had already hired a former C.I.A. operative, and on his
recommendation, it now approached a military attache at the American
Embassy in Jakarta, and persuaded him to join the company, according
to former and current employees. Two more former American military
officers were hired, and a special department, called the Emergency
Planning Operation, was set up to handle the company's new
relationship with the Indonesian military.

The new department began making direct monthly payments to Indonesian
military commanders, while the Security Risk Management office handled
the payments to the police, according to company documents and current
and former employees.

"They signed a pact with the devil," said an American who was part of
Freeport's security operations at the time, and who agreed with the
company's decision.

Freeport gave the military and the police in Papua at least $20
million from 1998 to May 2004, according to company documents. In
interviews, current and former employees said that at least an
additional $10 million was also paid during those years.

Seven years of accounting records were provided to The Times by an
individual close to the company. Additional records for three years
were provided by Global Witness, a nongovernment organization, which
released a report last July, "Paying for Protection," about Freeport's
relations with the Indonesian military.

Diarmid O'Sullivan, who works for Global Witness in London, criticized
the payments. It may be necessary for a company to help governments
with security, he said, but "they should give the money through the
proper channels, in a transparent way."

Freeport told The Times, "Our books and records are transparent and
accurately reflect the support that we provide."

That support, the company said in its responses, included "mitigating
living costs," as well as "infrastructure, catered food and dining
hall costs, housing, fuel, travel, vehicle repairs, allowances to
cover incidental and administrative costs, and community assistance
programs conducted by the military and police."

The company said all of its expenditures were subject to a budget
review process.

The records received by The Times showed payments to individual
military officers listed under things like "food cost,"
"administrative services" and "monthly supplement."

Current and former employees said the accounting categories did not
reflect what the money was actually used for, and that it was likely
that much of the money went into the officers' pockets. The commanders
who received the money did not have to sign receipts, current and
former employees said.

Asked if there was a reason Freeport would give money directly to
military officers, Father Lowry, who retired in March 2004, but
remained a consultant to Freeport until June, said, "I can't think of
a good one."

The records show that the largest recipient was the commander of the
troops in the Freeport area, Lt. Col. Togap F. Gultom.

During six months in 2001, he was given just under $100,000 for "food
costs," according to the company records, and more than $150,000 the
following year. Freeport gave at least 10 other commanders a total of
more than $350,000 for "food costs" in 2002, according to the records.

Colonel Gultom declined to be interviewed.

Those payments were made to individual officers, current and former
employees said, even though since the riots Freeport had allowed
soldiers to eat in the company's mess and had trucked food to more
distant military kitchens. "Three meals a day, seven days a week," a
former official said.

Freeport also gave commanders commercial airplane tickets for
themselves and their wives and children. Generals flew first or
business class and lower ranking officers flew economy, said Brig.
Gen. Ramizan Tarigan, who received $14,000 worth of tickets in 2002
for himself and his family.

General Tarigan, who held a senior police post, said that police
officers were allowed to accept airplane tickets because their pay was
so low -- as a general, his base salary was roughly $400 a month --
but that it was in violation of police regulations to receive cash

In April 2002, the company gave the senior commander of forces in
Papua, Maj. Gen. Mahidin Simbolon, more than $64,000, for what was
described in Freeport's books as "fund for military project plan
2002." Eight months later, in December, he was given more than $67,000
for a "humanitarian civic action project." The payments were first
reported by Global Witness.

General Simbolon, who is now inspector general of the Indonesian Army,
declined requests to be interviewed.

A former Freeport employee who was involved in making those payments
said the company could not be certain how much of the money General
Simbolon actually spent on those projects.

Unsolved Killings

By 2003, following the Enron scandal and passage of the Sarbanes-Oxley
Act, which imposed more rigid accounting practices on companies,
Freeport began making payments to military and police units instead of
individual officers, according to records and current and former

The company paid police units in Papua slightly under $1 million in
2003, according to the records, listed under items like "monthly
supplement payment," "administrative costs" and "administrative

Freeport told The Times that "company policies take into account the
potential for human rights abuses in determining what types of
assistance to provide."

According to the records received by The Times, the police Mobile
Brigade, a paramilitary force often cited by the State Department for
its brutality, received more than $200,000 in 2003.

In its 2003 annual human rights report, the State Department said
soldiers from the Mobile Brigade "continued to commit numerous serious
human rights violations, including extrajudicial killings, torture,
rape, and arbitrary detention." It cited no specific incidents from

There was another reason for extra care by the company.

In August 2002, three teachers employed by Freeport, including two
Americans, were killed in an ambush on a company road patrolled by the
military that Freeport had paid to protect its employees. Three years
later, the F.B.I. is still investigating and the reasons for the
killings have not been determined. Freeport said that it could not
comment on the investigation.

The United States indicted a Papuan, Anthonius Wamang, in 2004. But it
has yet to receive the full cooperation of the military, several
American officials said.

Freeport employees and American officials said the killings could have
been part of a turf war between the military and the police, each of
which wanted access to Freeport payments.

An initial report by the Indonesian police pointed to the Indonesia
military, and some Freeport and Bush administration officials have
said they suspect some level of military involvement.

The police report suggested that the motivation was that Freeport was
threatening to cut its support to soldiers. Soldiers assigned to Papua
have "high expectations," the report said, but recently, "their perks,
such as vehicles, telephones, etc., were reduced."

Questions of Accountability

Freeport has resisted nearly any detailed disclosure of its payments
to the military, saying they are legal and even required under
Indonesian law.

Marsillam Simanjuntak, who was minister of justice and later attorney
general in one of the first governments after the fall of President
Suharto, said it was a violation of Indonesian law for soldiers or
police officers to accept payments from a company. "Of course, it's
illegal," he said.

But many companies do it, he said. The better question to ask, he
said, was, "Is it allowed by the laws of the United States?"

This year, the New York City pension funds submitted a shareholder
resolution asking Freeport to review its policy on paying the police
and military. They argued that it could violate the Foreign Corrupt
Practices Act, which forbids American companies from paying bribes to
foreign officials. Freeport opposed the resolution.

In 2002, the funds submitted a similar resolution demanding that
Freeport disclose how much it was paying to the military. Freeport
kept it off the ballot.

In later filings with the Securities and Exchange Commission, Freeport
reported that it had paid the military a total of $4.7 million in
2001, and $5.6 million in 2002. The company did not indicate whether
the money was paid into commanders' personal accounts, or what the
money was used for.

Freeport, in its responses, said it was complying with the Voluntary
Principles on Security and Human Rights, a set of guidelines drawn up
by the State Department. They recognize that natural resource
companies "may be required or expected to contribute to, or otherwise
reimburse, the costs of protecting company facilities."

The principles do not address the question of direct payments to
individual officers. Nor do they require companies to account for the

Freeport has also said that the payments were required under its
Contract of Work, its basic agreement with the government of
Indonesia, first signed in 1967 and updated in 1991.

The company declined to provide a copy of the contracts to The Times.
A copy of each was provided by Denise Leith, author of "The Politics
of Power: Freeport in Suharto's Indonesia." They contained no language
requiring payments to the military.

S. Prakash Sethi, head of the International Center for Corporate
Accountability, which recently concluded a report on Freeport's
development policies in Papua, said that the company had told him that
it made "in-kind" contributions to the military, for housing and food,
but that he had not been given access to accounting records.

Any direct payments to military officers would be illegal, said Mr.
Sethi, an expert on business ethics and corporate social
responsibility and a professor at Baruch College. "It's corruption,"
he said. "It's bribery."

Mine Waste in the Rivers

All the while Freeport sealed its relations with the military, the
country's fledgling environment ministry could do little but watch as
waste from the mine piled up.

This year Freeport told the Indonesian government that the waste rock
in the highlands, 900 feet deep in places, now covers about three
square miles.

Down below, nearly 90 square miles of wetlands, once one of the
richest freshwater habitats in the world, are virtually buried in mine
waste, called tailings, with levels of copper and sediment so high
that almost all fish have disappeared, according to environment
ministry documents.

The waste, the consistency and color of wet cement, belts down the
rivers, and inundates and smothers all in its path, said Russell Dodt,
an Australian civil engineer who managed the waste on the wetlands for
10 years until 2004 for Freeport.

About a third of the waste has moved into the coastal estuary, an
essential breeding ground for fish, and much of that "was ripped out
to sea by the falling tide that acted like a big vacuum cleaner," he

But no government, even in Indonesia's new democratic era, has dared
encroach on Freeport's prerogatives. The strongest challenge came in
2000, when a feisty politician, Sonny Keraf, who was sympathetic to
the Papuans, was appointed environment minister.

Again, Mr. Moffett flew out to Jakarta.

Mr. Keraf initially refused to see the Freeport boss, but eventually
agreed, and on the day kept him waiting for an hour and a half. "He
came in so arrogant," Mr. Keraf recalled of the meeting in a recent
interview, "sitting with his legs crossed."

Freeport refused to comment on the meeting. The American ambassador to
Indonesia at the time, Robert Gelbard, said in an interview: "It was a
terrible meeting."

Mr. Keraf said that Mr. Moffett had said that his company had never
polluted. "I told him that he should spend the money he spent on
paying off people not to talk about the mine to properly dispose of
the waste," Mr. Keraf said.

Behind the scenes, Mr. Keraf kept up the pressure, angered that the
company was using the rivers, forest and wetlands for its mine waste,
a process allowed during the Suharto years.

An internal ministry memorandum from 2000 said the mine waste had
killed all life in the rivers, and said that this violated the
criminal section of the 1997 environmental law.

In January 2001, Mr. Keraf wrote to the coordinating minister for
economic affairs, arguing that Freeport should be forced to pay
compensation for the rivers, forests and fish that its operations had

Six months later, one of his deputies, Masnellyarti Hilman, wrote to
Freeport, saying a special environmental commission had recommended
that the company stop using the river as a waste chute, and instead
build a system of pipes.

She also told Freeport to build sturdier dam-like walls to replace the
less solid levees that it used to contain the waste on the wetlands.
That practice has continued.

Freeport says that local and regional governments have approved its
waste management plans, and that the central government has approved
its environmental impact statement and other monitoring plans.

But in a blistering July 2001 letter, Mr. Keraf took the governor of
Papua to task for granting Freeport a permit in 1996 to use the rivers
for its waste. The governor, Mr. Keraf said, had no authority to grant
permits more lenient than the provisions of national laws.

Despite all these efforts, nothing happened. Mr. Keraf was unable to
secure the support of other government agencies or his superiors in
the cabinet.

In August 2001, a new government came to power, and a less aggressive
minister, Nabiel Makarim, replaced Mr. Keraf. At first, he, too,
talked publicly of setting stricter limits on Freeport. Soon his
efforts petered out.

The Environment Ministry has begun trying to put teeth into its rules
where it can. It brought a criminal suit against the world's largest
gold company, Newmont Mining Corporation, for alleged pollution,
including a charge of not having a permit for disposing of mine waste
into the sea. Newmont has fought the charges vigorously.

But in the case of Freeport, the ministry has had no traction.
Freeport still does not hold a permit from the national government to
dispose of mine waste, as required by the 1999 hazardous waste
regulations, according to Rasio Ridho Sani, assistant deputy for toxic
waste management at the ministry. Mr. Arkin, Freeport's counsel, said
that the company cooperated well with the environment ministry and
that Freeport would not otherwise comment.

"Freeport says their waste is not hazardous waste," Mr. Rasio said.
"We cannot say it is not hazardous waste." He said his division and
Freeport were now in negotiations on how to resolve the permit

'A Massive Die-Off'

The environment ministry was not the first to challenge Freeport over
how it has disposed of its waste in Papua.

The Overseas Private Investment Corporation, a United States
government agency that insures American corporations for political
risk in uncertain corners of the world, revoked Freeport's insurance
policy in October 1995.

It was a landmark decision, the first time that the agency had cut off
insurance to any American company for environmental or human rights

In doing so, two environmental experts, Harvey Himberg, an official at
the agency, and David Nelson, a consultant, after visiting the mine
for several days, issued a report critical of Freeport's operations,
especially the huge amounts of waste it had sent into rivers,
something that would not be allowed in the United States.

The company went to court to block the report from being made public,
and only a redacted version was later released. A person who thought
it should be made public provided an uncensored copy to The Times.

Freeport says the report reached "inaccurate conclusions." The company
says it has considered a full range of alternatives for managing and
disposing of its waste, instead of using the river, and settled on the
best one.

A storage area would not be large enough and would require a tall dam
in a region of heavy rainfalls and earthquakes, it said. A waste
pipeline, rather than the river, would be too costly, prone to
landslides and floods.

To the American auditors, such arguments were not convincing.

Freeport "characterizes engineered alternatives as having the highest
potential for catastrophic failure when the project otherwise takes
credit for legendary feats," the audit noted, like the pipelines more
than 60 miles long down the mountains to carry fuel and copper and
gold slurry.

At the time, the waste was jumping the riverbanks, "resulting in a
massive die-off of vegetation," the report said.

The company threatened to take the agency to court over the
cancellation of its insurance. After protracted negotiations, the
policy was reinstated for a few months, as a face-saving gesture to
Mr. Moffett, according to the head of the agency then, Ruth Harkin. It
was not renewed.

Today, many of the same problems persist, but on a much larger scale.
A perpetual worry is where to put all the mine's waste -- accumulating
at a rate of some 700,000 tons a day.

The danger is that the waste rock atop the mountain will trickle out
acids into the honeycomb of caverns and caves beneath the mine in a
wet climate that gets up to 12 feet of rain a year, say environmental
experts who have worked at the mine.

Stuart Miller, an Australian geochemist who manages Freeport's waste
rock, said at a mining conference in 2003 that the first acid runoffs
began in 1993.

The company can curb much of it today, he said, by blending in the
mountain's abundant limestone with the potentially acid producing
rock, which is also plentiful. Freeport also says that the company
collects the acid runoff and neutralizes it.

But before 2004, the report obtained by The Times by Parametrix, the
consulting company who did the study for Freeport, said that the mine
had "an excess of acid-generating material."

A geologist who worked at the mine, who declined to be identified
because of fear of jeopardizing future employment, said acids were
already flowing into the groundwater. Bright green-colored springs
could be seen spouting several miles away, he said, a tell-tale sign
that the acids had leached out copper. "That meant the acid water
traveled a long way," he said.

Freeport says that the springs are "located several miles from our
operations in the Lorentz World Heritage site and are not associated
with our operations."

The geologist agreed that the springs probably were in the Lorentz
park, and said this showed that acids and copper from the mine were
affecting the park, considered a world treasure for its ecological

In the lowlands, the levees needed to contain the waste will
eventually reach more than 70 feet high in some places, the company

Freeport says that the tailings are not toxic and that the river it
uses for its waste meets Indonesian and American drinking water
standards for dissolved metals. The coastal estuary, it says, is a
"functioning ecosystem."

The Parametrix report shows copper levels in surface waters high
enough to kill sensitive aquatic life in a short time, said Ann Maest,
a geochemist who consults on mining issues. The report showed that
nearly half of the sediment samples in parts of the coastal estuary
were toxic to the sensitive aquatic organisms at the bottom of the
food chain, she said.

The amount of sediment presents another problem. Too many suspended
solids in water can smother aquatic life. Indonesian law says they
should not exceed 400 milligrams per liter.

Freeport's waste contained 37,500 milligrams as the river entered the
lowlands, according to an environment ministry's field report in 2004,
and 7,500 milligrams as the river entered the Arafura Sea.

Freeport would not comment on the measurements. The company says it
spent $30 million on environmental programs in 2004, and planted
50,000 mangrove seedlings last year as part of its reclamation
efforts. It says cash crops can be grown on the waste with the
addition of nutrients, and has begun demonstration projects.

An Uneasy Coexistence

If the accumulating waste is the despair of critics, for Freeport it
signals expanding production. To keep its mine running, the company
has increasingly had to play caretaker for the world that it has

After the 1996 riots, Freeport began dedicating 1 percent of revenues
annually to a development fund for Papua to pay for schools, medical
services, roads -- whatever the people wanted.

The company built clinics and two hospitals. Other services include
programs to control malaria and AIDS and a "recognition" fund for the
Kamoro and Amungme tribes of several million dollars which, among
other things, gives them shares in the company as part of a
compensation package for the lands Freeport is using.

By the end of 2004, Freeport had spent $152 million on the community
development fund, the company said.

Mr. Sethi, of the Center for Corporate Accountability, commended
Freeport for commissioning the report on the company's development
programs, saying that it was the first mining company to do so.

The report, which was released in October, concluded that the company
had successfully introduced a human rights training program for its
employees and had doubled the number of Papuan employees by 2001. The
company was poised to double the number of Papuans in the work force
again by 2006, the audit said.

Still, Thom Beanal, the Amungme tribal leader, says the combined
weight of the Indonesian government and Freeport has left his people
in bad shape. Yes, he said, the company had provided electricity,
schools and hospitals, but the infrastructure was built mainly for the
benefit of Freeport.

Mr. Beanal, 57, a vocal supporter of independence for Papua, has
fought the company from outside and inside. In 2000, he decided that
harmony was the better path, and joined the company's advisory board.

In November, he and other Amungme and Komoro tribesmen met with Mr.
Moffett at the Sheraton Hotel in Timika. In an interview in Jakarta
not long afterward, Mr. Beanal said he told Mr. Moffett that the flood
of money from the community fund was ruining people's lives.

When the company arrived, he noted, there were several hundred people
in the lowland village of Timika. Now it is home to more than 100,000
in a Wild West atmosphere of too much alcohol, shootouts between
soldiers and the police, AIDS and prostitution, protected by the

Still more soldiers are on the way. Having negotiated an end to a
separatist insurrection this year in another province, Aceh, the
government is redeploying soldiers to Papua in a move to defeat the
growing enthusiasm for independence, once and for all, and to watch
over the province with the world's biggest gold mine. Freeport says
its gold ore has 35 years to go.

Mr. Beanal said he was increasingly impatient with the presence of the
soldiers and the mine. "We never feel secure there," he said. "What
are they guarding? We don't know. Ask Moffett, it's his company."

Evelyn Rusli contributed reporting for this article.

Copyright 2005 The New York Times Company