Sean Barry – Freeport-McMoRan Copper & Gold has hit back at reports that were critical of its financial support for Indonesian military personnel guarding the company's giant Grasberg copper and gold mine.

Freeport has been transparent about providing "logistical support" to the security forces in Indonesia, it said, maintaining that all payments were part of a deal with the government.

It follows a report in the New York Times that alleged Freeport made payments totalling $20 million over the past seven years directly to military and police personnel for protection at the mine.

But Freeport said the government of Indonesia was responsible for providing military and police protection and that under the deal the company provided the security operations with food, housing, fuel, transport and vehicle repairs.

A spokesman for Indonesia's military confirmed the payments on Thursday but said no one personally profited from Freeport's support.

Human rights groups have criticised direct payments by foreign mining and energy companies to the military, saying they were undermining efforts to bring the politically powerful armed forces under civilian control.

According to the Times report and other sources, only one-third of the financing for Indonesia's military comes from the state. The rest comes from "non-transparent sources" such as protection payments, which allow the military to operate independently of the government's financial controls.

About 2,400 government security personnel are assigned to the Grasberg area, including members of the Coast Guard and Air Force, riot control personnel to deal with civil disturbances, and both perimeter and on-site security at the mine and mill.

Freeport spent $7.5 million in 2004 to cover the support costs, it said. According to Freeport, the costs are necessary because of the limited resources of the Indonesian government and lack of development in remote Papua province, where Grasberg is located.

"This article is part of the (New York Times') negative series of articles on the gold-mining industry," a Freeport spokesman said in a statement. "We have been transparent about our logistical support for the Indonesian security forces, which has been public for years and has been detailed the last several years in our annual Working Toward Sustainable Development Report."

In addition to military and police protection, Freeport said it also has an internal security department that protects company facilities, monitors the shipment of goods and provides assistance in rescue operations.

The total cost of running the internal security department was $13.4 million in 2004, the company said. Meanwhile, Freeport has moved back to its headquarters in New Orleans after it was forced to move offices after Hurricane Katrina hit in August.

The company had set up a temporary headquarters in Baton Rouge, Louisiana, after their building in New Orleans was damaged by the Category 4 storm.