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2013/SOM1/IEG/DIA/006 Session 2ª-1

Business-Government Synergy Towards Inclusive Sustainable Growth

Submitted by: Freeport-McMoRan Copper & Gold Inc. (FCX)

Public-Private Dialogue on Investment - Corporate Social Responsibility for Local

CommunitiesJakarta, Indonesia

30 January 2013

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www.fcx.com CONNECTING THE FUTURE®

APEC Public Private Dialogue on Investment 2013

Jakarta

Business-Government Synergy Towards

Inclusive Sustainable Growth

Outline

• Challenges & opportunities faced by business

• Striving towards inclusive sustainable growth through CSR

• Our achievement through SLD & CR programs

• Synergizing with the government: remaining challenges & recommendations

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Top 10 challenges faced by business today:• Regulation & compliance• Cost cutting• Managing talent• Pricing pressure• Emerging Technologies• Market risks• Expansion of gov’t’s role• Slow recovery/ double-dip recession• Social acceptance risk/ CSR• Access to credit

(Ernst & Young survey 2013 on 700 companies in 75 sectors)

Challenges & Opportunities

Added challenges for mining companies

• Identified with destruction of the environment

• Seen as a symbol of capitalism

• Almost invariably involved in clash of cultures• Extracting riches from the ground is emotionally laden with

nationalism views

• Still associated with the excesses of the “New Order”

• The public at large does not differentiate responsible mining practice from illegal mining that is destructive

• Dynamic socio-political environment has direct impact

• Decentralization: regions demand bigger share of wealth

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Top 10 opportunities faced by business today

• Improving execution of strategy across business functions

• Investing in process, tools & training to achieve greater productivity

• Investing in IT• Innovating in products, services & operations• Emerging market demand growth• Investing in clean technology• Excellence in investor relations• New marketing channels• Mergers & acquisitions• Public-private partnership

(Ernst & Young survey 2013 on 700 companies in 75 sectors)

INCLUSIVE SUSTAINABLE GROWTH

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Inclusive growth strategy

• A sharp increase in investment in rural areas

• Development of rural infrastructure and agriculture

• Spurt in credit for farmers/ agribusiness

• Increase in rural employment through a unique social safety net

• A sharp increase in public spending on education and health care

Conditions for inclusive growth

• Access for people to contribute to and benefit from economicgrowth

• Rapid pace of growth necessary for poverty reduction

• Broad-based across sectors & inclusive of all parts of societyto ensure sustainability

• Expanding sources of growth

• Increasing share of labor force included in growth processefficiently

• Constructive public-private-partnership is imperative forsocially responsible growth

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Inclusive sustainable growth approach

social and economic policies that focus onensuring that the growth process bettertargets the inclusion of citizens into thedelivery of growth as workers,entrepreneurs and consumers of publicand private goods.

Inclusive sustainable growth

Corporate Social Responsibility

Business Gov’t

Sustainable development

contributecontribute

through

achieve

OUR STRATEGY

Social Outreach, Local Development & Community

Relations (SLD&CR)

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Four pillars of our SLD&CR

Educ

atio

n

Hea

lth

Com

mun

ity

Econ

omy

Social Outreach and Local Development (SLD)& Community Relations (CR)

Main Focus

• Infrastructure development • Human resource capacity development, in areas of:

• Health• Education

• Increase local SME competitiveness • Stimulate alternative economic sectors outside mining:

• Agriculture & food security: horticulture, fishery, husbandry• Cement industry• Trade service

• Increase local partner capacity• LPMAK• Cultural & religious institutions• Local NGOs

• Collaboration, coordination and integration with local gov’t programs

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Target Program Beneficiaries

COW

Kabupaten

Mimika

Wilayah Papua

Indonesia

Environmental Programs

NemangkawiMining Institute

Public Health & Malaria Control

Community Development(3 Desa, SP9 & 12, 5 Desa

Highland Agriculture DevelopmentSMEs Development)

Papua Knowledge Center

Freeport Peduli

LPMAK (1% Fund)UNIPA UNCEN

CSR Program Implementation Concept

• Community development programs are implemented throughout our operation while supporting government & other stakeholders to work together towards sustainable development

• Community development costs and trust funds are included in PTFI’s operational costs

Mine closureStart operation stage

PTFI role

Other stakeholders’ role

Working towards Sustainable Development

Initial phase

Strengthening & developing

Intermediate phase

Integration

End phase

Monitoring & Evaluation

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CSR Program Implementation Concept

Phase I : Strengthening & Developing

• Basic infrastructure development• Recognition program • Villages development

• Improvement of health service access• RSMM & RWB and other clinics.

• Support community health programs: • Malaria control, TB, HIV/AIDS, clean

water and sanitation, Mother and child

• Improve education access• School buildings, scholarship, training

programs• Economic development• Technology introduction and transfer

• Agriculture, husbandry, fishery, coffee plantation, SME, micro-credit

Phase II: Integration

• Foster cooperation with local government

• Develop and increase capacity of LPMAK:

• Health: Health program alliance with local gov’t

• Education: Increase education quality and learning environment through cooperation with local gov’t

• Economic development: support alternative industry sectors

• Committed to infrastructure development:

• Hand-over developed infrastructure to the community and government

CSR Program Implementation Concept

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Phase III : Evaluation and Monitoring

• Partnering with stakeholders towards sustainable development

• Foster efficiency, transparency and accountability of partnership with stakeholders

• Transfer program implementation to other stakeholders

CSR Program Implementation Concept

Key Stakeholders

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Synergy with Government and CSOs

REMAINING CHALLENGES

Synergizing with the Government

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Inclusive sustainable growth approach

social and economic policies that focus onensuring that the growth process bettertargets the inclusion of citizens into thedelivery of growth as workers,entrepreneurs and consumers of publicand private goods.

Inclusive sustainable growth

Corporate Social ResponsibilityBusiness Gov’t

Sustainable development

synergizethrough

Lessons learned from current programs (1)

There is room for improvement to foster synergybetween PTFI & local gov’t to boost localbusiness growth that support economic andcommunity development in Mimika

Main surmise:

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Lessons learned from current programs (2)

• Revitalize the capacity and roles of local gov’t apparatus as coordinator of development

• Room to improve the good governance of local gov’t apparatus

• Strengthen synergy with government programs

• Enhance gov’t prioritization of community development programs

• Increase local gov’t ownership towards programs

Identified challenges

• Continue increasing human resource capacity & number of local gov’t

• Strengthen local gov’t leadership capability as development program coordinator

• Ensure collaboration between company & local gov’t on programs with shared development objectives to ensure the sustainability of PTFI’s social investments

• Support maturation of local gov’t following the decentralization policy

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THANK YOU