Land Use and Customary Rights at PT-FI

LAND USE AND CUSTOMARY RIGHTS AT PT-FI

FCX acknowledges and respects the social, economic and cultural rights of the Indigenous Peoples who have historically occupied areas on or near our operations or have ancestral connections to these lands.

The PT-FI project area in Indonesia is located where Indigenous Peoples of Papua hold customary land rights. Specifically, the Amungme in the highlands and the Kamoro in the coastal lowlands are considered traditional landowners of the area, along with the Dani, Damal, Moni, Mee and Nduga. All land used by PT-FI was legally and formally released by the customary landowners through the local government for use by the company when the company and Indonesia government signed its initial Contract of Work (COW) in 1967. Since then, the Indonesia government has granted PT-FI a new special mining license (IUPK) to replace its former COW, enabling PT-FI to conduct operations in the Grasberg minerals district through 2041. Under the terms of the IUPK, PT-FI has been granted an extension of mining rights through 2031, with rights to extend mining rights through 2041, subject to PT-FI completing the construction of additional domestic smelting capacity in Indonesia and fulfilling its defined fiscal obligations to the Indonesia government. Please see FCX’s 2022 Form 10-K for more information.

PT-FI has entered into several agreements related to customary land rights recognition with:

The "1974 January Agreement" between PT-FI and the Amungme was the first recognition of the Indonesian concept of hak ulayat, or the customary rights of Indigenous Peoples to land they traditionally use for hunting and gathering. Subsequent to that agreement, the Indonesia government formally recognized the right to compensation for hak ulayat (customary rights) which is a communal land right. Compensation in the form of rekognisi (recognition) is paid to communities for a release of their hak ulayat in the form of support, access and other activities that facilitate ongoing, productive livelihoods and higher standards of living. Over the years, PT-FI has provided such recognition through community programs that have been selected during consultation with Indigenous Peoples and guided by the laws of the Indonesia government.
In 1997, PT-FI signed a Memorandum of Understanding (MOU) for implementation of the Kamoro Five Villages Recognition Program (Lima Desa DSKAMM) for the five villages of Nayaro, Koperapoka, Nawaripi Baru, Ayuka and Tipuka. The Lima Desa, or Five Villages Program, recognized the Kamoro’s hak ulayat in both lowland areas and the coastal zones where PT-FI developed its tailings deposition area, cargo dock facilities, port and electrical transmission line corridor. Under the program, PT-FI has constructed over 400 houses as well as roads, bridges, churches, schools, clinics, government buildings, clean water facilities, power installations and drainage systems. PT-FI fulfilled its commitments under the MOU in 2009, and most infrastructure and facilities have been handed over to the Mimika government, local churches and the Kamoro communities.
Along with the 1974 January Agreement, the Amungme’s hak ulayat is recognized by PT-FI through another MOU signed in 2000 for the implementation of the Program Tiga Desa, or Three Villages Program, for the villages of Wa’a Banti, Aroanop, and Tsinga, which surround the PT-FI highland project area. Under the 2000 MOU, PT-FI committed to constructing housing and public facilities such as bridges, airstrips, roads, churches, sewage systems, and markets. The 2000 MOU also provides for the joint monitoring of the socioeconomic development of resources, human rights, land rights and environmental issues. In 2021, PT-FI contributed $2.9 million to the Program Tiga Desa for infrastructure renovation/remediation, clean water facilities installation and micro-hydro maintenance. More than $101 million has been invested since the program was first established in 2000.
Additionally, following the signing of the 2000 MOU, PT-FI created land rights trust funds for the Amungme and Kamoro that provide voluntary special recognition as the holders of the hak ulayat. The company contributes $500,000 annually to each of the trust funds; since inception, contributions have reached nearly $60 million. These funds and the programs they support are also jointly monitored by representatives of the Amungme and Kamoro Indigenous Councils and PT-FI through an established forum.