A fairer share of Freeport
Last week Freeport McMoRan Copper & Gold Inc (FCX), the parent company of PT Freeport Indonesia, announced that chairman James R. Moffett received a bonus of US$19.4 million last year on top of his US$2.5 million salary. All in all, Moffett made US$21.9 million last year.
Moffett also has 1.5 million stock options with an exercise price of US$37.04 million or US$55.56 million.
Meanwhile President and CEO Richard C. Adkerson got restricted stocks of US$18 million last year. Total compensation for Adkerson last year was US$23.7 million. It's fair for Moffett, Adkerson, and Freeport executives, media reports said, because Freeport-McMoRan's net income for the full year 2005 rose to $934.6 million.
But is it fair for Papuans?
Look at the company's total revenue os US$4.179 billion last year. Most of it was the contribution of Papua operation. With copper sales of 1.456 billion pounds at average price of US$1.85 per pound, Papua gave US$2.69 billion. Gold sales of 2.79 million ounces at US$456 per ounce from Papua gave US$1.27 billion. Plus silver sales of US$30 million. Altogether, Papua contributed to US$3.99 billion.
The company argued that it's total payment to Indonesia government was Rp11 trillion last year or around US$1.2 billion. Is it fair enough? That's the question of protesters against Freeport in the last few weeks, despite the fact that somebody might provoke or take the benefit out of their movement.
"I don't think it's an indication of a rise in antiforeign investment or something like that," Dr Boediono, coordinating minister for the economy told Dow Jones over the weekend as quoted by The Jakarta Post on Saturday.
"It's an expression among the public for a fairer share of (investment) benefits (and) it's legitimate demand that we, the government and the business community can work together to address," he said.
Boediono dismissed fears the protests represented anti-US sentiment or xenophobic sentiment, anti-foreign investment, anti-American, or anti-American investment.
Hope Boediono's right. And I believe Papuans have the chance to get a fairer share out of Freeport's fortune. Renegotiation and rearrangement are always the better than bloody protests. Hope that Moffett and Adkerson aware of the situation. Otherwise they would have difficulties to exercise their sky-high stock options.
On government side, it should be made clear the implementation of Article 34 of the Law No. 21/2001 regarding Special Autonomy for Papua. The article stiputales, among others, that Papua receives 80 percent of the revenue from mining operation.
Central government should announce its total income from Freeport so people knows exactly how much they should get. On the other hand, Papua administration should also disclose to public how they use the money from Central Government amid reports of rampant corruption at the regional administration level.
Freeport is not the only source of wealth that need to be audited comprehensively. Based on the Article 34 of the Law No.21/2001, Papua gets tax sharing as follows:
- Land and building tax: 90%
- Acquisitionn of rights over land and building: 80%
- Individual Tax: 20%
Papua also gets natural resources revenue sharing as follows:
- Forestry: 80%
- Fishery: 80%
- Mining in general: 80%
- Oil: 80%
- Gas: 70%
A comprehensive audit on all the Central Government income from Papua from all business activities in forestry, fishery, mining, oil, and gas would give us an idea how to improve the region's economy and Papuans prosperity.
Moffett also has 1.5 million stock options with an exercise price of US$37.04 million or US$55.56 million.
Meanwhile President and CEO Richard C. Adkerson got restricted stocks of US$18 million last year. Total compensation for Adkerson last year was US$23.7 million. It's fair for Moffett, Adkerson, and Freeport executives, media reports said, because Freeport-McMoRan's net income for the full year 2005 rose to $934.6 million.
But is it fair for Papuans?
Look at the company's total revenue os US$4.179 billion last year. Most of it was the contribution of Papua operation. With copper sales of 1.456 billion pounds at average price of US$1.85 per pound, Papua gave US$2.69 billion. Gold sales of 2.79 million ounces at US$456 per ounce from Papua gave US$1.27 billion. Plus silver sales of US$30 million. Altogether, Papua contributed to US$3.99 billion.
The company argued that it's total payment to Indonesia government was Rp11 trillion last year or around US$1.2 billion. Is it fair enough? That's the question of protesters against Freeport in the last few weeks, despite the fact that somebody might provoke or take the benefit out of their movement.
"I don't think it's an indication of a rise in antiforeign investment or something like that," Dr Boediono, coordinating minister for the economy told Dow Jones over the weekend as quoted by The Jakarta Post on Saturday.
"It's an expression among the public for a fairer share of (investment) benefits (and) it's legitimate demand that we, the government and the business community can work together to address," he said.
Boediono dismissed fears the protests represented anti-US sentiment or xenophobic sentiment, anti-foreign investment, anti-American, or anti-American investment.
Hope Boediono's right. And I believe Papuans have the chance to get a fairer share out of Freeport's fortune. Renegotiation and rearrangement are always the better than bloody protests. Hope that Moffett and Adkerson aware of the situation. Otherwise they would have difficulties to exercise their sky-high stock options.
On government side, it should be made clear the implementation of Article 34 of the Law No. 21/2001 regarding Special Autonomy for Papua. The article stiputales, among others, that Papua receives 80 percent of the revenue from mining operation.
Central government should announce its total income from Freeport so people knows exactly how much they should get. On the other hand, Papua administration should also disclose to public how they use the money from Central Government amid reports of rampant corruption at the regional administration level.
Freeport is not the only source of wealth that need to be audited comprehensively. Based on the Article 34 of the Law No.21/2001, Papua gets tax sharing as follows:
- Land and building tax: 90%
- Acquisitionn of rights over land and building: 80%
- Individual Tax: 20%
Papua also gets natural resources revenue sharing as follows:
- Forestry: 80%
- Fishery: 80%
- Mining in general: 80%
- Oil: 80%
- Gas: 70%
A comprehensive audit on all the Central Government income from Papua from all business activities in forestry, fishery, mining, oil, and gas would give us an idea how to improve the region's economy and Papuans prosperity.
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posted by yosef at 2:46 PM
1 Comments:
Thanks for your perspectives Yusuf.
Although your figures on Moffett's earnings last year are slightly lower than the figures I got, you give my conjectures an integrity that they could otherwise lack.
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