Freeport Mc Mo Ran: A Pit Of Trouble

Gabrielle K. McDonald is the first African American woman to serve as a U.S. District Court judge. For six years, she served on the Bosnia war-crimes tribunal at The Hague. She's the last person you would expect to meet on a jungle airstrip in West Papua--Indonesia's half of the island of New Guinea. But on a steamy June day, here is McDonald, in one of the remotest spots on earth. And she's here on official business. In November, McDonald was named special counsel on human rights by Freeport-McMoRan Copper & Gold Inc., the New Orleans company mining the world's largest deposits of recoverable gold in this mountainous region. She has landed in West Papua to figure out how Freeport can make its peace with the 150,000 Papuans who live and work around the mine, Freeport's most valuable asset.

McDonald's presence speaks volumes about all the changes that have come to Indonesia--and to Freeport itself. James R. "Jim Bob" Moffett, Freeport's combative chairman and CEO, knew how to protect the lucrative Freeport concession during the long years when Suharto ruled Indonesia. But Suharto no longer rules Indonesia: He's a disgraced old man fighting a government investigation into allegations that he pilfered billions from the country. An unstable democracy clings to power in Jakarta, while much of the rest of the archipelago is being rocked by secessionist movements and ethnic unrest. Suddenly, foreign companies that had negotiated cozy contracts decades ago are finding themselves subject to new financial demands, public scrutiny, and calls for drastic change.