MAC: Mines and Communities

Indonesian update

Published by MAC on 2007-03-16

Indonesia update

16th March 2007

Adding to the long list of his interventions on behalf of Big Business around the world, UK prime minister Bliar has pushed for a new Indonesian law twhich would favour transnationals against the interests of the poor.

Many mining companies don't perform health studies on their operations, claims an Indonesian expert.

Following the recent ban on sand exports, the Indonesian government may now add granite to the list.

Despite its failure to deal with many long-standing associated with its nickel operations in Sulawesi, CVRD-Inco is now planning two new plants with a price tag of a billion dollars.

Intervention of the British Prime Minister, Tony Blair, in the Making of Investment Law in Indonesia

JATAM, Media release, Jakarta

15th March 2007

This week the parliament of Indonesia is going to pass the new law on investment. The contents of the law fully favor the interests of the big transnational corporations. The draft of the law itself was made when Indonesia was still under the supervision of IMF. The President Megawati Sukarnoputri postponed the draft of the law to be issued since the contents of the draft did not indicate at all to protect the interests of the people of Indonesia who were and are still struggling to get rid of poverty, that was mainly caused by the policies imposed by the International Financial Institutions (IMF, World Bank and ADB) and the Consultative Group on Indonesia (CGI that was dismissed by the President Susilo Bambang Yudoyono in January 2007).

Civil society organizations, labor organizations, farmers’ federation and indigenous peoples of Indonesia oppose the draft of the law. The draft of the investment law clearly will bring harms to the labor, farmers, fisherfolk and indigenous peoples. The rights of the labor, farmers, fisherfolk and indigenous peoples will be violated and the sustainable livelihood is under real threat.

The draft of the law gives 100% freedom to the international or foreign corporations to operate in Indonesia while the government of Indonesia is obliged to provide incentives such as: tax holiday, infrastructure facilities, lands and access to domestic finance. While the international corporations are free to move their capital in and out Indonesia, and are free from tax in importing capital goods to Indonesia for their investment needs.

Indonesia has low quality of and even lacks in the infrastructures needed by the transnational corporations: roads, seaports, airports, electricity and water. Most ofthe lands where the natural resources are abundant belong to local communities, whether collectively or individually. To construct the infrastructures the government of Indonesia has to borrow foreign loans, while to provide lands the government has to take lands from the local citizens. The investment law clearly put pressure on Indonesian government to take more debts for the interests of the transnational corporations, while at the same time the Indonesian government has to violate the rights of its citizens particularly the communities who owns the land that have to be cleared.

Because of strong pressures from the civil society, labor movements, farmers’federations, fisherfolk and indigenous peoples, the parliament is planning to postpone the enactment of the law to allow more public debates and inputs from the public.

At the same time the President Director of Jardine Corporation, Lord Powell of Bayswater, accompanied by the Communication Officer of the British Embassy in Jakarta met the Vice President Jusuf Kalla to lobby on the enactment of the draft of the investment law. In his press conference statement on 15 March 2007, Bayswater said that he is sent by Prime Minister Tony Blair to ask the President Susilo Bambang Yudoyono about the enactment of the law on investment.

It is not a coincidence that Bayswater and the British Embassy in Jakarta met the Vice President to discuss about the investment law at the time, when the Parliament of Indonesia agreed to postpone the draft of the law. The civil society, labor organizations, farmers’ federation, fisherfolk and indigenous peoples of Indonesia are convinced that British government is trying to intervene in the law making processes in Indonesia.

Therefore we strongly urge the British government and other European governments:

1. Not to intervene in the law making processes in Indonesia

2. Not to put more burdens to the people who have been poor because of the wrong policies imposed by the donor countries in the past.

3. To respect the sovereignty of Indonesia to make its independent policies.

We also call for support from all civil society organizations and the people of Europe and the Northern countries to persuade the British government and other Northern governments to respect the sovereignty of Indonesia on making its own policies for the benefits of its people.

Jakarta, 15 Maret 2007

The signatories:

1. ABM (Aliansi Buruh Menggugat – Indonesian Labor Alliance)

2. Debt Watch

3. E Law

4. FSPI (Federasi Serikat Petani Indonesia – Indonesian Farmers’ Federation)

5. INFID (International NGO Forum on Indonesian Development)

6. JATAM (Jaringan Advokasi Tambang – Mining Advocacy Network)

7. KPKB (Kelompok Perempuan untuk Keadilan Buruh – Women’s Group for Justice for Labor)

8. KoAge (Koalisi Anti Globalisasi Ekonomi – Coalition of Anti- Economic Globalization)

9. KPA (Konsorsium Pembaruan Agraria – The Consortium of Agrarian Reform)

10. LBH Apik (Women’s Justice Legal Aid Association)

11. PBHI (Perhimpunan Bantuan Hukum dan Hak Asasi Manusia Indonesia – The Association of Legal Aid and Human Rights of Indonesia)

12. Aji (Aliansi Jurnalis Independen – Independent Journalist of Indonesia)

13. WALHI (Friends of the Earth of Indonesia)


15. KPI (Koalisi Perempuan Indonesia – The Coalition of Women of Indonesia)

16. KAU (Koalisi Anti Utang – Anti-Debt Coalition)

17. UPC (Urban Poor Consortium)

18. Sekretariat Bina Desa

19. SP (Solidaritas Perempuan – Women Solidarity)


21. Aliansi Perempuan untuk Keterwakilan Politik (Women’s Alliance for Political Representation)


23. STN (Serikat Tani Nasional – National Farmers Alliance)

24. SPOI (Serikat Pekerja Otomotif Indonesia – Automotive Labor Federation of Indonesia)

25. Lapera Indonesia

26. The Institute for Global Justice

27. Perkumpulan “Boemi”

28. FPPI (Front Persatuan Pemuda Indonesia – Indonesia Young People’s Front)

Many Mining Firms Skip Health Studies

Jakarta Post

9th March 2007

Many mining companies operating in the country are yet to conduct studies on health risks for nearby residents despite an official requirement to do so before they commence operations, an environmental health expert said Thursday. Haryoto Kusnoputranto from the University of Indonesia said the absence of health risk assessments would make it difficult for residents to blame mining companies for the emergence of related medical conditions in the future.

"This is a complex situation. Residents often claim that the presence of mining companies is to blame for their health deteriorating. On the other hand, the companies blame the residents due to the poor condition of their environment, such as problems with sanitation," Haryoto told reporters after a seminar on mining and environmental health.

The assessment is part of a requirement to conduct an environmental impact analysis (locally known as Amdal) before being granted a mining license. Such studies would specify the risks of mining activities to nearby residents, including pollutants that could harm their health. "The studies should be conducted as a minimum requirement for companies to inform residents as to whether or not their activities can potentially affect human health," he said. -- JP

RI considers ban on granite exports

Abdul Khalik, The Jakarta Post, Jakarta

March 2007

After banning sand exports, Indonesia is discussing the possibility of prohibiting granite exports, a step that could further sour ties with neighboring Singapore, which depends heavily on Indonesian sand and granite for its construction sector.

Foreign Minister Hassan Wirayuda said here Monday that so far the government has only banned sand exports, but added that discussions on the possibility of expanding the ban to include granite were taking place in the Cabinet.

"According to a decree from the trade minister, exports of granite chips are not banned ... (but) discussions on the possibility of banning granite chips are taking place in the Cabinet," he said.

Hassan's remarks echoed those of State Minister for the Environment Rachmat Witoelar and the Navy, who both hinted at a possible ban on granite exports.

Rachmat said Sunday his office was studying the environmental impact of granite mining and exports to determine if an export ban, similar to the earlier one slapped on sand, was necessary.

The Navy said Saturday it had proposed the government ban granite exports because granite mining was causing environmental damage in a number of areas in Riau Islands province, including on Bintan and Karimun islands.

Riau Islands Governor Ismeth Abdullah, however, said the province would oppose any restrictions on granite exports, which would further slash provincial revenue following the central government's ban on sand exports.

"However, a ban would not affect the border negotiations with Singapore, because from the beginning I have said that the sand export ban, for instance, is more motivated by environmental damage," Foreign Minister Hassan said.

Meanwhile, Singapore's Foreign Ministry has summoned Andradjati, charge d'affaires ad interim at the Indonesian Embassy in the city-state, to seek clarification on a recent report in the Batam Pos that quoted the environment minister as saying Indonesia would ban granite exports to Singapore.

""We are baffled. It is all rather perplexing. Just a week or so ago Foreign Minister Hassan Wirayuda and Trade Minister Mari Pangestu categorically told us that there was no ban on the export of granite. Now Minister Witoelar directly contradicts them," the ministry said in a statement.

This was the second time that Singapore has summoned Indonesian diplomats, after last week seeking clarification from Ambassador Wardana over remarks by Maritime Affairs and Fisheries Minister Freddy Numberi that the ban on sand exports would continue until Singapore settled its border disputes with Indonesia.

Jakarta's ban on sand exports applies to all countries and came into effect in early February. Singapore was hit the hardest by the ban, being by far the largest importer of Indonesian sand for use in its booming construction sector.

Because of the sudden rise in sand and granite prices, many parties have attempted to smuggle the materials abroad. The Navy says it has detained 18 barges carrying sand, covered by granite, to the city-state. Singapore has questioned moves to detain the barges, saying granite exports are legal.

The country said it was releasing some granite aggregate from its stockpile to make up for any immediate shortfall in the supply of granite to the construction sector while seeking alternative sources of granite.

Inco plans to invest $1 billion to build two nickel plants

Ika Krismantari, Jakarta Post

15th March 2007

PT International Nickel Indonesia (Inco), the country's biggest nickel miner, said Wednesday it would build two new nickel plants by 2010 at a total cost of US$1 billion.

President director Arif S. Siregar said the two plants would be built at the company's mines in Bahodopi, Central Sulawesi, and Pomalaa, Southeast Sulawesi.

However, the company would first prioritize the construction of the Bahodopi plant, Arif said. As for the Pomalaa plant, PT Aneka Tambang has already built two ferronickel smelters to which Inco must supply about one million pounds of ore per year.

"We are still conducting the feasibility studies on the two plants," Arif said, while declining to give details on their production capacities.

Inco also plans to build a third hydroelectric power plant in Karebbe, South Sulawesi, so as to boost its annual production capacity to 200 million pounds of nickel in matte by 2010 from 157.9 million pounds in 2006.

The power plant, which will be built on the Larona river at a cost of between $275 million and $280 million is expected to increase existing power-generating capacity by 33 percent to 90 megawatts (MW) annually.

Currently, Inco operates the 165-MW Larona and the 110-MW Balambano hydro plants to power its nickel plant in Soroako, South Sulawesi.

This year, Inco hopes to produce between 155 and 165 million pounds of nickel in matte. In its latest unaudited report, Inco booked a 154.8 percent increase in 2006 fourth quarter sales to $589.6 million from $231.4 million in the same period of the previous year. Its net profit jumped significantly by 368.3 percent to $265.5 million in the fourth quarter of 2006, or $0.27 U.S. cents per share, from $56.7 million, or 0.06 U.S. cents per share, in the same quarter of 2005.

Over the entire year, Inco's sales increased by 51.1 percent to $1.33 billion from $885.1 million in 2005, making its net profit soar by 97.1 percent to $513.4 million, or 0.52 U.S. cents per share, from 2005's net profit of $267.8 million, or 0.27 U.S. cents per share.


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