MAC: Mines and Communities

Indonesia Central Sulawesi

Published by MAC on 2003-10-07

Indonesia Central Sulawesi

Statement of Position - Coalition for Global Justice and Future Earth, Sulawesi

Palu, Sulawesi, Indonesia October 7, 2003

INCO Ltd is one of the world’s mining giants, with their head office in Toronto, Canada. Inco Ltd along with Russian conglomerate Norilsk and the Canadian nickel company Flaconbridge supply almost half the world’s nickel demand and accounts for 25% of the world’s nickel market. In the course of their business, Inco has pushed their way into 14 countries and is fully involved in the industry from exploration, production, marketing and sale of nickel.

Indonesia is one of the countries that Inco has focused on for expansion through PT Inco, whose parent company is Inco Ltd. Since 1968, PT Inco has held a Contract of Work for mining for 30 years (1968-1988) by the Indonesian government in Sulawesi, and then in 1996, when the Soeharto regime modified their permits, Inco was granted an extension of their Contract of Work until 2025 which includes an area of 6.6 million hectares. Inco Ltd controls 59% of PT Inco, while 20% of the shares in the company were sold to Sumitomo Metal Mining, a Japanese outfit, and the remaining 20% were made public. This means that almost 80% of the company is foreign controlled.

Inco Ltd is not only present in Sulawesi, but is the parent company in other mining operations, such as Maluku, under the name PT Ingold Maluku I (85% shares controlled by Inco as Maluku Holding Inc.), which mines tin, copper, zinc with an area of 106,489 hectares. In West Sumatra and Jambi, Inco is in operation under the name PT. Ingold Sumatera Satu (99% shares controlled by Inco as Ingold Holding Indonesia Inc.), which mines for gold in an area of 350,600 hectares. In Wamena, West Papua, Inco is in operation under the name PT Ingold Antarea (88% shares controlled by Inco as Irianjaya Holding Inc.), which mines for gold in an area 1,069,273 hectares. The total mining areas that are used for extraction by Inco Ltd from Sumatra, Sulawesi, Papua is approximately 8,126, 362 hectares, which is the size of the total land area in the province of Central Sulawesi.

Presently, the mining company PT Inco is still in operation in an area as large as 218,528.99 hectares in three provinces, South Sulawesi (54.17 %), South East Sulawesi (29.0%), and Central Sulawesi (16.76%). The centre for nickel extractrion is in Soroako, in the North Luwu district, South Sulawesi and there are other locations that are still in exploration. In 40 years of nickel mining, PT Inco has earned a lot of profits. In 2001, PT Inco earned $9.3 million and their total assets were in the vicinity of $1.4 billion.

Inco activities have resulted in the marginalization of communities and have infringed upon their social, economic, political, and legal rights; and have resulted in the destruction of the environment, violence and the unjust treatment of peoples. The Soeharto government granted mining concessions that have meant the loss of land rights and social conflicts in areas, such as Soroako, Bahomotefe and Onpute Jaya in Central Sulawesi, where the land, forests and water that were traditionally the source of community livelihoods were claimed by PT Inco. Community residents from Soroako still have received no compensation from the company, and many people who have protested the takeover of their land by the company have been arrested.

There have not only been conflicts about land rights as a result of Inco activities, but also very low environmental and labour standards have meant the exploitation of people and their land. Finally, the communities that are the site of an Inco operation have been “developed” but actually face the risks of environmental and social losses. Other countries where Inco is in operation, that have faced similar problems include Canada, New Caledonia, Guatemala, etc.

The benefits of mining operations are economic supports of royalty payments, and taxes, but in reality this is not the case. From the period of 1988-1998, only 4.37% of the total profits earned by Inco were paid to the government as royalties. This amount is insignificant in relation to the amount the company earns. As well, the royalties are unfairly distributed by the central government, and do not go to local governments to help the people in the areas around operations.

Because of this, we the Coalition for Global Justice and Future Earth declare that we:

I. Reject Inco and the political cronies that support this system of injustice and inequality that causes the communities to suffer and threatens the Earth.
II. Call on the government and other organizations to work to find solutions for the problems that Inco has brought to communities, such as forcing Inco to give compensation for lost lands and livelihoods.
III. Call on the government to change the laws that regulate the mining industry. Privatization is not a good policy as it does not integrate the needs of the people and results in low environmental and social standards.
IV. Support the international campaign that protests Inco.

(Statement supplied by ARISTAN,
Coordinator, Coalition for Global Justice and Future Earth)

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