MAC: Mines and Communities

The Weekend Essay (2): Indonesian government re-empowers mining

Published by MAC on 2020-05-16
Source: Mongabay

Corona Virus lockdown employed as cover

Indonesia, one of the world's largest nations engaged in mineral extraction - particularly coal - has brazened opposition, and its own previous legislation, in now guaranteeing extended licence to exploit a greater acreage of land than before. Moreover, companies' obligations to rehabilitate existing sites have been totally ignored.

With new law, Indonesia gives miners more power and fewer obligations

by Hans Nicholas Jong


13 May 2020

Indonesia’s parliament has passed a mining bill that activists say will lead to unbridled exploitation by a mining industry that already operates with impunity over environmental and social violations. The new law removes a limit on the size of mining operations and allows automatic permit extensions up to 20 years.

Critics say the law effectively echoes the talking points of the mining industry while shutting out longstanding demands from civil society groups, villagers and others for greater reforms.

The bill failed to pass last year in the face of massive street protests; lawmakers have been accused of exploiting the current period of social distancing restrictions to pass it largely unopposed.

JAKARTA — Indonesia’s parliament has passed a controversial bill that effectively gives miners bigger concessions and longer contracts, with fewer environmental obligations.

Activists have slammed the May 12 passage of the bill, saying it will lead to unbridled exploitation by a mining industry that has already laid waste to large swaths of forest, polluted waterways, and disenfranchised local communities.

Among the biggest changes it introduces to the 2009 mining law is the removal of a limit on the size of mining operations under a single permit, capped by the previous law to 15,000 hectares (37,000 acres).

“This new mining law will allow mining areas to expand, and that will lead to deforestation,” said Pius Ginting, coordinator of the NGO Action for Ecology and Emancipation of the People (AEER). “This will push people to move deeper into the forests to survive and they will interact with wildlife, and these animals bring viruses to humans, increasing the risks of emerging infectious diseases.”

Another contentious stipulation is on the automatic renewal of mining contracts; a key provision in the previous law is that the government may not immediately extend expired mining contracts without offering the concessions to state-owned companies first. Under the new bill, however, contract holders would be allowed to automatically renew their permits two more times for 20 years.

Activists say this provision would benefit seven major private companies whose permits will soon expire. They include coal miners PT Arutmin Indonesia (whose permit expires in November 2020), PT Kaltim Prima Coal (2021), PT Kendilo Coal Indonesia (2021), PT Multi Harapan Utama (2022),  PT Adaro Indonesia (2022), PT Kideco Jaya Agung (2023) and PT Berau Coal (2025).

Muhammad Iqbal Damanik, a researcher at the environmental NGO Auriga Nusantara, said allowing these companies to have their permits renewed automatically is problematic because many of them have not carried out the required rehabilitation of their mining sites.

He said these companies were responsible for 87,000 hectares (215,000 acres) of abandoned mining pits — an area greater than the size of the capital, Jakarta — and should be compelled to rehabilitate these sites before being considered for a permit renewal.

“Just imagine mining pits of that size that haven’t been nevaluated, and where the contracts are just extended,” he said. “Imagine the destructive power.”

Failure to address shortcomings

Lawmakers had previously attempted to pass the mining bill last year, but backed down in the face of massive street protests. There were no protests when it came up to a vote at the May 12 plenary session of parliament, due to physical distancing restrictions imposed in response to the COVID-19
outbreak. The Democratic Party of former president Susilo Bambang Yudhoyono was the only one to vote against the bill.

The minister of energy and mines, Arifin Tasrif, welcomed the passage, saying the 2009 law needed to be revised to tackle current and future challenges in the management of the mining industry. Bambang Wuryanto, who headed the parliamentary committee that deliberated the bill, said it
accommodated environmental concerns by requiring mining permit holders to rehabilitate their concessions after finished operating or risk criminal
charges and/or fines.

But the 2009 mining law and existing laws on environmental protection and forestry already prescribed punishments ranging from warnings to revocation of permits. The problem, said Aryanto Nugroho, the Indonesia advocacy manager for transparency group Publish What You Pay (PWYP), is
the failure by authorities to enforce those punishments.

That’s led to nearly half of mining companies not paying into mandatory reclamation and post-mining funds managed by the government, Aryanto said. A recent report by Auriga shows that a litany of loopholes allows mining companies to shirk their obligation to restore and rehabilitate their
former concessions.

“So the problem is not in the amount of fines, but in the implementation,” Aryanto said.

The new law also doesn’t address the cases of abandoned mining pits that have already claimed the lives of 36 people, mostly children, since 2011,
or the responsibilities of the companies that failed to rehabilitate those sites, said Merah Johansyah from the watchdog group Mining Advocacy
Network (Jatam).

Accommodating mining interests

Mining companies have welcomed the new law. PT Indika Energy, the parent company of PT Kideco Jaya Agung, said the law gave legal certainty to a
coal industry that is inherently high risk and needs a lot of capital.

“With the passing of the bill, this will give certainty to the application process of Kideco’s contract extension which is good until March 13, 2023,
in accordance with existing regulations,” said Aziz Armand, the CEO of PT Indika Energy.

Garibaldi Thohir, the CEO of Adaro Energy, said his company would apply next year for a permit extension covering 31,380 hectares (77,540 acres)
and due to expire in October 2022. He said the extension was not related to the new law, but guaranteed in its current contract.

Hindun Mulaika, an energy campaigner at Greenpeace Indonesia, said these companies had financial reasons to want government guarantees for contract extensions, given that many of them have issued bonds and taken out loans that are due soon.

Citing a 2019 report from Moody’s, she said these companies didn’t have clear refinancing plans because of the uncertainty over the future of their mining contracts. The report singled out Adaro, Indika and Bumi Resources as companies whose mining licenses will expire before their
debts mature and face higher regulatory uncertainty.

“So these companies are in crunch time and they’re hoping for refinancing,” Hindun said. “And that needs a certainty in permits.”

Indonesia Corruption Watch (ICW), an NGO, said many mining companies are owned by businesspeople closely affiliated with politicians or top
government officials. Adaro’s Garibaldi, for instance, is the brother of Erick Thohir, the minister of state-owned enterprises and campaign manager
for President Joko Widodo in the 2019 election.

“This shows that the coal industry is filled with the interests of many parties, especially the rich elites who are looking to profit from the exploitation of coal,” ICW said in a statement. “The passing of the mining bill will perpetuate the exploitation of coal so that various negative impacts will keep appearing, such as environmental destruction, the threatening of the lives and health of the public, and social conflict.”

Jatam’s Merah said Garibaldi’s statement showed the mining law clearly accommodates the interests of mining companies whose contracts are about
to expire.

“The content of the mining bill is merely copied from the mining contracts [of these companies],” he told Mongabay. “What’s the content of the mining
contracts? Automatic extension. So parliament isn’t passing a law, but a guarantee card for mining companies, whose content is copied from their
mining contracts because it’s filled with guarantees.”

Merah said the new law failed to regulate all aspects of the mining industry, including how to mitigate its impact on the environment and
local communities. He added it doesn’t include a freeze on the issuance of new mining permits, which President Widodo had promised in 2016.

“Mines occupy 44% of Indonesia’s lands,” Merah said. “How much more mines do we want to have?”

Don’t like it? Sue

Activists have criticized parliament for rushing to pass the new law while effectively blocking the participation of civil society groups in the deliberations also criticized the bill for being rushed to be passed by lawmakers.

Aryanto from PWYP noted that on Jan. 20 the parliamentary commission on energy and mines had declared the bill wasn’t ready for final
deliberations. Just two days later, however, it was deemed ready.

Merah said with the COVID-19 outbreak, the public couldn’t properly participate in the discussion of the bill at parliament.

“People in villages who have aspirations couldn’t convey them [to parliament],” he said. “No matter how much we write [our thoughts] in the
comments section [of online platforms], they won’t be accommodated.”

Bambang, the committee head who ushered the bill through passage, said lawmakers were flooded with messages from the public opposing the bill.
But rather than take that as an indication of its unpopularity, he blasted the outpouring as a “terror” campaign.

Anyone not happy with the new law, he said, should challenge it in court.

Merah criticized Bambang, saying it was parliament that had terrorized the public by insisting on passing the bill while everyone else was told to stay at home during the pandemic.

“They were broadcasting arrogance [by livestreaming the lawmaking sessions],” he said. “No matter how long you deliberate a bill, if the quality is bad, then it’s bad. And I challenge [parliament] to show me, which villagers, which victims of mining operations were ever invited to discuss [the bill]. There were none.”


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