Naked City

Last December, officials at Freeport-McMoRan Copper & Gold were proudly discussing the latest audit of their mine in Irian Jaya, Indonesia. They said the review by the firm Montgomery Watson -- which determined Freeport's operation was "exemplary and a showcase for the mining industry" -- proved that their mine operates in an environmentally responsible fashion. On May 4, that claim was washed down the mountainside along with thousands of tons of waste rock and waste water. The landslide at the company's Grasberg mine killed four workers and reportedly released large amounts of heavy metals into the valley immediately below the mine.

The landslide has left the company vulnerable to renewed attacks by the Indonesian government, which wants to renegotiate the company's contract, and by environmentalists who have long been critical of the company's operations. Last week, State Minister of Environment Sonny Keraf told reporters that the government might consider suspending operations at Freeport's mine. However, Indonesia is desperately in need of the hard currency generated by the mine, which makes a suspension unlikely. A delegation from the Indonesian government is now investigating the accident -- the second landslide at Grasberg in the last two years.

Shortly after the mishap, protesters in Jakarta forced Freeport to temporarily close its office there. In addition, WALHI, an Indonesian environmental group, said it plans to sue Freeport over the environmental damage caused by the mine. No suit has yet been filed.

The same day the landslide occurred, the company's board of directors held their annual meeting in New Orleans and approved a measure known as a poison pill that will forestall any attempts by an outside company to execute a hostile takeover. Poison pills are generally passed by company directors who fear losing their jobs if their company gets taken over by another company. The uncertainty in Indonesia has hammered Freeport's share price, which began the year at about $21, and currently sells for about $11.

In another Freeport matter, the company narrowly defeated a shareholder resolution put forward by Houston investor Harold Mathis at a shareholder meeting held in the basement of a Wilmington, Delaware, office building. Mathis' resolution would have required Freeport to elect its directors annually. The members currently serve staggered terms. Mathis' measure, needing a majority to pass and facing a large number of proxy votes on behalf of the board of directors, still got 49.44% of the votes cast. Mathis said he will present his proposal to shareholders against next year because "I believe in corporate governance issues. There are guidelines that they should be following and they are violating a lot of those guidelines."

Freeport spokesman Garland Robinette refused requests for comment.