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

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