1. GROUP 2
YIU PAK YIN, VALERIE 11238844D
CHANDRAATMADJA, ANGELINE 11708622D

2. How DIFFICULT
Is It For
MINING COMPANIES
To Conduct CSR?

3. Company Background
• Freeport – McMoRan Copper & Gold
• Headquarter: Phoenix, Arizona
• President: Richard C. Adkerson
• Chairman: James R. Moffet
• Incorporated under the laws of state of Delaware on Nov 1987
• Global Employee: ~ 36100

4. Organizational Chart

5. FCX
• US based natural resource company
• Mineral assets, oil and natural gas resources
• A leading international company in the industry
• The world’s largest producer of molybdenum

6. Operating Mines

7. Personnel
0
5000
10000
15000
20000
25000
30000
35000
US Indonesia South
America
Africa Others
Contractors' Personnel
Employee

8. Financial Status
1910 2212 2371
4179
5790
16939 17796
15040
18982
20880
18010
640 823 704
2177 2869
6555
-12710
6503
9068 9140
5814
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Operating Income/Loss From Year 2002 to 2012
Revenues (in millions) Operating Income/Loss (in millions)

9. Environmental Obligation
• Various law and regulation (e.g., CERCLA, state laws)
• Pollution, Disposal of hazardous wastes
• More than 100 active remediation projects
• Increasing costs ( especially in Indonesia)

10. Corporate Image
• The largest publicly traded copper and molybdenum producer
• Excluded from the investment portfolio of the Government
Pension Fund of Norway in 2006
• The nominee of The Public Eye Award in 2012

11. CASE STUDY
Freeport – McMoRan Copper & Gold
IN
INDONESIA

12. • Good CSR practice
1. Participate in Community investment
2. Assist in Public Health
3. Establish performance target
• Bad CSR practice
1. Bribery in Indonesia
2. Environmental Pollution
3. Low Wages

13. Participate in Community investment
• Invested over $11 million in
STEM education programs
• Established community
foundations or social funds
in Indonesia, Peru, the
United States and the DRC
• Launched
Freeportinmycommunity.co
m to record those good
CSR practice from Freeport

14. Assist in Public Health
• Coordination with local
governments and NGOs to
provide significant resources
to help communities.
• Strictly Prohibited the usage of
Mercury in mining gold or
copper
• Incident rate of Malaria is
reduced with the aid of
Freeport donation and
cooperation of NGOs and
governements

15. Establish performance target
• Set up a list of performance in
CSR with a target date
• Targets focused on different
area like business ethics,
human right, environmental
issue etc.
• Printed on the sustainability
report as an evidence for the
company to follow

16. Bribery
• Freeport paid over 70 million
USD to the police in Indonesia
during 2001 – 2010 for security
reasons
• National Police in Indonesia
claimed that the money is paid
for “lunch meal” for police
• Indonesian Corruption
Organization reported to the US
Department of Justice about
this issue

17. Environmental Pollution in Pupua Province
• Freeport threw dumps over
100,000 tons mine dumps
into river without any
treatment everyday
• Cause caused flooding, re-
routing of the rivers, and
destruction of forests nearby.

18. Long Working hour, Low Wages
• 22 thousand people working in
Freeport
• Average working hour :12-14 hours
per day
• Earn only 3.5 dollars per hour in
2011, (while the lowest wage of Freeport
workers in the world between 30-50 dollars per
hour.)
• Labour strike triggered during 2012
and several people died in the
strike
• Freeport agreed to raise over 20%
of the wages in 2012

19. BABSON FRAMEWORK
1
• Identify Issues (Difficult to implement CSR in Mining Company)
2
• Gather Information
3
• Brainstorm alternatives
4 • Evaluate alternatives from various ethical perspectives
5
• Make a decision and examine your confidence in it from different ethical
perspectives
6
• Prepare to explain your ethic
7
• Reflect on your decision making process.

20. 10 PRINCIPLES
Company Stakeholder Responsibility
1. stakeholder interests
2. stakeholders are real and complex people
3. solutions that satisfy multiple stakeholders
4. intensive communication and dialogue
5. voluntarism
6. Generalize the marketing approach.
7. Never trade off the interests
8. primary and secondary stakeholders.
9. Constantly monitor and redesign processes
10. Act with purpose. Act with aspiration.

21. International Council on Mining and Metals
Sustainable Development Framework
Implement and maintain ethical
business practices and sound
systems of corporate governance.
Uphold fundamental human rights
and respect cultures, customs and
values in dealing with employees
and others who are affected by
our activities.
Implement risk management
strategies based on valid data
and sound science.
Seek continual improvement
of our environmental
performance.

22. International Council on Mining and Metals
Sustainable Development Framework
Contribute to conservation of
biodiversity and integrated
approaches to land use planning.
Facilitate and encourage responsible
product design, use, re-use,
recycling and disposal of our
products
Contribute to the social,
economic and institutional
development of the
communities in which we
operate.
Implement effective and
transparent engagement,
communication and independently
verified reporting arrangements
with our stakeholders.

23. Freeport Framework

24. Evaluation of Freeport’s CSR Practices
• Implement and maintain ethical business practices and sound
systems of corporate governance
Comply with or exceed the requirements of host-country laws
and regulations
Freeport paid over 70 million USD to the police in Indonesia
during 2001 – 2010 for security reasons

25. • Uphold fundamental human rights and respect cultures,
customs and values in dealing with employees and others
who are affected by our activities
Average working hour :12-14 hours per day
Earn only 3.5 dollars per hour in 2011

26. • Seek continual improvement of our environmental
performance
Implement an environmental management system focused on
continual improvement to review, prevent, mitigate or
ameliorate adverse environmental impacts
threw dumps over 100,000 tons mine dumps into river without
any treatment everyday

27. • Contribute to conservation of biodiversity
Plan operation activities to minimize the impacts on the
ecosystem
flooding, re-routing of the rivers, and destruction of forests
nearby
Destroy the ecosystem and natural habitats of endangered
species
Decrease biodiversity

28. • Contribute to the social, economic and institutional
development of the communities in which we operate
Low wage but long working hours
Labour strike triggered during 2012 and several
people died in the strike

29. • Implement effective and transparent engagement,
communication and independently verified reporting
arrangements with our stakeholders
Under-table transactions with local government
Corruption with invalid data and report
Badly harm the interest of stakeholders

30. ETHICAL MINING
Gold industry added at least USD$210billion of
gross value added to the global GDP in 2012.
26% of exports 36% of exports 75% of exports
GHANA TANZANIA MALI
(AFRICAN ECONOMIC OUTLOOK, 2013)
Papua’s economic dependence on mining is approximately 30%. (Papos, 2013)

31. Quantifying the Impact of Responsible Gold Mining

32. MINING COMPANIES
are GENERALLY UNETHICAL.
TRUE OR FALSE?

33. Expectations from society
• Last year, Freeport-McMoRan invested more than $23 million in Arizona
communities, most of which were in Southern Arizona, focusing on education,
health, environmental improvement and economic development investments.
(Freeport in My Community, 2014)
Why are they unethical?
Why only in Arizona? Why not so much in other areas?
(Government regulations, Education of community, etc.)
Conflicting Shareholder Goals
• It is difficult for companies to conduct CSR practices as a charity.
This is why Gov’t regulations are important – where they act as an excuse to
unwilling shareholders.
Nature of Work
Lack in Mining Technological Developments focusing on safety
• In 2012, investment in technology R&D by the mining industry was a mere
0.2% of revenue. Other industries invest as much as 30%. (Kachan, 2014)

34. Freeport. Are they really unethical?
• The Papuan community led by Governor Lukas Enembe has requested for a 10% shares from
Freeport for the compensation of their many years of operations in Papua and their little
contributions to the community. (Jakarta Post, April 19 2013.) This is despite the fact that
• Freeport has paid USD$955,600,000 in royalties and taxes to the Indonesian government in
2012 (Kurniawan, I. , 5 Feb 2013)
841200000
52800000
34500000 27100000
Breakdown of Royalties and Taxes
Central Gov't
District Gov't
Provincial Gov't
Other Gov't
Bodies
Papuans contested that the money is redistributed as such there were insufficient
developments done in Papua. The request to be a shareholder is one so that they can
obtain direct benefit from their contributions to Freeport.

35. What can you expect and cannot expect from
a mining company.
CANNOT CAN
Be Totally Environmentally
Friendly
• Minimize impact through R&D
• Make recurrent improvements on
existing practices (stop chemical
dumping)
• Prevention and mitigation
Guarantee absolute Safety of
Workers
• Pay better wages to compensate for
risk
• Buy better technologies to aid
mining activities

36. Conclusion
Above all while they are bound to take some things from the community that
they possibly cannot restore, they have the power to build infrastructures
that can help build the lives of the people. It’s all about give and take.
MNCs:
• Double-edged sword.
• They could either hurt communities or help them and both ways it is one
that has significant impact. Hence, they should be carefully approached.
Countries should be aware of their bargaining power
Country > Resource bound MNC

37. Reference
• http://www.thejakartaglobe.com/archive/police-admit-to-receiving-
freeport-lunch-money/#.Uxs6zfmSxoM
• http://www.thejakartaglobe.com/archive/icw-to-report-freeport-to-
us-department-of-justice/484928/#.Uxs6iPmSxoM
• http://www.bloomberg.com/news/2013-10-22/freeport-indonesia-
agrees-wage-increase-deal-to-avert-strike.html
• http://www.bbc.co.uk/news/business-15398639
• http://www.fcx.com/sd/pdfs/WTSD_2012.pdf
• http://www.nytimes.com/2005/12/27/international/asia/27gold.htm
l?pagewanted=all&_r=0
• http://www.earthworksaction.org/files/publications/GoldenRules_FI
NAL.pdf
• http://www.circleofblue.org/waternews/2012/world/global-gold-
rush-the-price-of-mining-pursuits-on-water-supply/

38. Reference
• http://www.thejakartapost.com/news/2013/04/19/papua-
administration-wants-10-freeport.html
• http://us.bisnis.news.viva.co.id/news/read/387791-siapa-penikmat-
terbesar-pajak-dan-royalti-freeport-
• http://www.africaneconomicoutlook.org/en/countries/west-
africa/mali/
• http://www.papuapos.com/index.php/warta-daerah/kab-
tolikara/item/2660-ekonomi-papua-bergantung-oleh-tambang
• http://www.freeportinmycommunity.com/
• http://www.aljazeera.com/news/asia-
pacific/2011/12/2011121442219366287.html
• Kachan 2014 http://www.kachan.com/pressrelease/new-emerging-
green-mining-technologies-report