MAC: Mines and Communities

Appeal to assist campaign against Inco in Indonesia

Published by MAC on 2002-08-21

Appeal to assist campaign against Inco in Indonesia

August 21 2002

Local newspaper reports in Sulawesi, Indonesia, state that Canadian miner Inco is struggling to secure finance for its project in Central Sulawesi. Please find one news article below this email. A recent NGO discussion in Central Sulawesi raised the idea of approaching groups working specifically on ECA (Export Credit Agency) campaigns in order to support their case against INCO especially now that the company is apparently in financial difficulties. We call on those active in ECA campaigns for ideas and suggestions of actions that we can work on together to better support the communities impacted by INCO.

Background on Community Actions and ECA Support

Inco Ltd. from Canada owns and operates the PT Inco nickel mine in Sulawesi, Indonesia. PT Inco’s concessional area covers three provinces - South Sulawesi, Central Sulawesi and Southeast Sulawesi. PT Inco has been operating in the area since the sixties and since then, those communities surrounding PT Inco’s operations have been negatively impacted in various ways.

The community’s lands in Soroako, South Sulawesi, have been seized and the community either not compensated or given inadequate compulsory compensation. Many land rights cases remain unsettled.

PT Inco has also not fulfilled promises to the community of free health care, education, electricity, clean water services and priority in employment. In fact today, August 21, 2002, the Wasoponda community of South Sulawesi are blocking the roads used by PT Inco protesting against discrimination that PT Inco has inflicted upon them. This action of approximately 300 community members began yesterday, August 20th. The community are demanding that PT Inco give similar working opportunities for people in their community like that given to other communities and that PT Inco fulfill other obligations owed to the community like the distribution of community development funds. Members of the Karonsi'e Dongi community live in Wasoponda now. The Karonsi'e Dongi's gardens, rice fields and graveyard have been taken over by PT Inco and no compensation has been provided. Their lands are now part of PT Inco's concession area which includes the company's golf course.

PT Inco’s operations have degraded the surrounding environmen, causing severe air pollution, land degradation, and flooding. The Matano Lake and Larona River ecosystems have been destroyed by dams and waste dumping by the company. No successful reclamation and revegetation has been done on land already mined by the company.

PT Inco has left boreholes where community cashew plantations once thrived while other agricultural crops have been destroyed. PT Inco has also rapidly and vastly destroyed forest resources and lucrative local trade items like damar [a tree resin] and rattan.

The community’s health has also deteriorated as a result of dust and smoke from the PT Inco plant. The community have complained that going to the clinic is. on many occasions futile as the Doctors at the company runned clinic just hand out medicine and do not do a real check-up.

PT Inco’s presence has also caused negative impacts on women. The workload of women in villages has become heavier. PT Inco has taken over lands that once contained local natural resources used to sustain the community’s livelihood and thus women are forced to work harder. The roles of women have also changed where many have become company wives or mining-town prostitutes.

The center of PT Inco’s activities, Soroako, has become a mining town and the cultural landscape has changed with increased incidents of alcoholism, prostitution, rape and other forms of violence against women and an increasing incidence of teenage pregnancy.

Threat to the Bungku

Outside of the Soroako area in South Sulawesi, PT Inco is now threatening to destroy the traditional (adat) system that the indigenous Bungku people lived by in Central Sulawesi. The Bahumotefe and One Pute Jaya communities of Bungku have had their land staked for PT Inco’s expanded contract of work area and many have been relocated despite protests.

At the time of project construction in 1973, the Overseas Economic Cooperation Fund (OECF) provided project funds of US $11,250,000. In addition to OECF, this project was paid for by the Bank of Montreal, the Toronto Dominion bank, BNS International (Hong Kong), Morgan Guaranty Trust, Crocker National Bank, Chemical Bank of New York, Banker's Trust Company, Asia Pacific Capital Corporation, Canada's Export Development Corporation (EDC) and the Export-Import Bank of the US.

PT Inco’s expansion project was funded by the Export Development Corporation, an ECA from Canada, and the Japan Export and Import Bank (JEXIM) from Japan. An agreement was signed on April 18, 1996 that secured $580 million of ECA support for PT Inco’s expansion in the form of loans and guarantees.

The project will expand the annual nickel production capacity of PT Inco’s Indonesian operations by 50%. EDC provided a $200 million loan with $115 million being co-financed by North American banks. JEXIM provided a $140 million loan.

In the 1970s, EDC lent up to $60 million for PT Inco’s massive open-pit nickel mine at Soroako. The mine's first dam caused the flooding of rice fields, coconut groves, and a local mosque, leading local people to launch a lawsuit. It also disrupted the migratory patterns of eels, an abundant and important protein source for local people.

Please read the below news article on PT Inco's financial difficulties. Also for more information on Inco, please visit JATAM's website at:

We look forward to hearing your ideas/suggestions on pressure points and strategies as soon as possible.

In Solidarity,

Tracy Glynn

SKH Nuansa Pos-Rabu, 7 August 2002

Translated from Bahasa Indonesian (versi Bahasa Indonesia berikut ini)

Funding Difficulties of PT Inco Soroako Set Back Exploitation
Mangun: If Not Capable, Back Out of Central Sulawesi

Makassar, Nuansa Pos

The company PT Inco Soroako that up until now has been exploiting minerals in South, Central and Southeast Sulawesi is facing funding difficulties to pay for mining activities in accordance with agreements made in their Contract of Work. The situation in Indonesia - lack of political stability, assurance of security and law enforcement - has very much influenced investors.

As a result, international financial institutions have been hesitant to provide capital for loans to PT Inco. Until now, there is yet to be a Bank or international financial institution providing capital loans to us. “This makes us unable to conduct exploitation in Sulawesi,” stated Chief Executive Officer (CEO) PT Inco Edward Hodkin at a PT Inco meeting with the Provincial government of South Sulawesi, Central Sulawesi and Southeast Sulawesi at Hotel Sedona Makassar.

The Director General of Geology and Mineral Resources Wimpie S Tjetjep attended this meeting with South Governor Zainal Basri Palaguna, Central Sulawesi Provincial Secretary Drs Samijono and Southeast Provincial Secretary Drs H Yokoyama Sinapoy.

South Sulawesi Governor Zainal Basri Palaguna was asked about the issue of local complakints against PT Inco. He stated that all problems must be resolved by deliberations, as well as considering the relationship between the state of Indonesia and Canada. Other than the local government, the central government is also involved in this problem., as for example the transmigrant relocation in Central Sulawesi.

Separately, the Head of Commission B of the Central Sulawesi Local House of Representatives Yus Mangun SE clarified that, in accordance with the contract of work, PT Inco must continue their exploitation activities in the Central Sulawesi region between 2003-2005. If they can't then they must back out. “There are still many foreign investors that want to invest their capital in Central Sulawesi,” stated Mangun, a veteran Central Sulawesi politician.

This matter was regarded as important because, up until now, approximately 36 thousand hectares of 'sleeping land' in Central Sulawesi is waiting to be exploited. Also approximately 500 households from transmigrants located in the Bahudopi Block are waiting to be relocated to a new location. Meanwhile, 200 households have already moved to the new location, their security is of much concern. PT Inco must be responsible for them, the poor community,” stated Yus with a tone of concern.

SKH Nuansa Pos-Rabu, 7 Agustus 2002
Kesulitan Dana PT Inco Soroako Gagal Eksploitasi
Mangun: Jika Tak Mampu Mundur Saja Dari Sulteng

Makassar, Nuansa Pos

PT Inco Soroako perusahaan yang selama ini bergerak dalam eksploitasi mineral didaerah Sulawesi Selatan, Tengah dan Tenggara kekurangan dana atau modal untuk membiayai aktivitas pertambangan yang seharusnaya telah dilakukan sesuai kesepakatan dalam kontrak kerjanya. Selain itu situasi Indonesia yang tidak konduktif, stabilitas politik, jaminan keamanan dan penegakkan hukum di Indonesia sangat berpengaruh bagi investor.

Dengan keadaan Indonesia seperti itu membuat lembaga keuangan internasional menjadi ragu untuk memberikan pinjaman modal kepada PT Inco tbk, hingga saat ini belum ada Bank atau lembaga keuangan internasional yang memberikan pinjaman modal kepada kami. “Ini yang membuat kami belum mampu melakukan eksploitasi di Sulawesi” kata Chief Eksekutif Officer (CEO) PT Inco tbk Edwar Hodkin disela-sela pertemuan PT Inco dengan Pemprov Sulawesi Selatan, Sulawesi Tengah dan Sulawesi Tenggaravdi Hotel Sedona Makassar.

Pertemuan itu untuk membahas pengembangan perusahaan itu di Sulawesi berdasarkan kontrak kerja yang pernah ditandatangani. Dirjen Geologi dan Sumber Daya Mineral Wimpie S Tjetjep hadir dalam pertemuan itu bersama Gubernur Sulsel Zainal Basri Palaguna, Sekprov Sulteng Drs Samijono serta Sekprov Sultra Drs H Yokoyama Sinapoy.

Gubernur Sulsel Zainal Basri Palaguna ditanya soal keluhan pihak PT Inco menyatakan semua masalah harus diselesaikan secara musyawarah. Apalagi menyangkut hubungan antara negara Indonesia dan Kanada. Selain itu pemerintah daerah, pemerintah pusat ikut terlibat dalam masalah ini seperti misalnya relokasi transmigran di Sulawesi Tengah.

Secara terpisah Ketua Komisi B DPRD Sulteng Yus Mangun SE menegaskan bahwa sesuai dengan kontrak karya yang ada, PT Inco sudah harus menlanjutkan kegiatan eksploitasinya di wilayah Sulawesi Tengah antara tahun 2003-2005. PT Inco harus melanjutkan eksploitasinya di Sulteng sesuai kontrakan jika tidak mampu mundur saja. “Sebab masih banyak investor asing yang mau menanamkan modalnya di Sulteng,” tegas Mangun politisi kawakan Sulteng.

Hal ini dianggap penting. Sebab hingga saat ini sekitar 36 ribu hektar lahan tidur di Sulteng menunggu untuk dieksploitasi. Disamping itu sekitar 500 KK dari transmigran dilokasi blok bohudopi menunggu direlokasikan ke lokasi baru. Sementara 200 KK yang telah dipindahkan kelokasi baru kesejahteraannya sangat memprihatinkan. PT Inco harus bertanggung jawab dalam masalah ini, kasihan mereka” kata Yus dengan nada prihatin.(Np9)

For further background on the struggles against PT Inco, click here.

Home | About Us | Companies | Countries | Minerals | Contact Us
© Mines and Communities 2013. Web site by Zippy Info