MAC/20: Mines and Communities

Nabiel Makarim Agrees with Mining in Protected Forests

Published by MAC on 2002-06-15

Nabiel Makarim Agrees with Mining in Protected Forests

Koran Tempo Friday, 14 June 2002 (translated by JATAM)

Jakarta- Environment State Minister Nabiel Makarim agrees with allowing mining to go ahead in protected forests where contracts of work established prior to the Act No. 41/1999 about Forestry.

"Based on the agreement, we bring forth the commitment and state that we agree with mining activities to go ahead in areas where contracts of work were signed prior to the establishement of the Act," he stated in Jakarta yesterday.

He clarified that the agreement to allow mining activities in protected forests was given because there was a legal threat. "There were investment activities before the Forestry Act was effective. If shut down, investors demand and Indonesia cannot pay."

According to Nabiel, mining activities in protected forests will only be allowed in areas where contracts were signed prior to 1999. There are only two options, allow the return of investment activities or else leave Indonesia paying fines.

"We have decided to allow mining to go ahead. For new contracts made in protected forest areas, this cannot be disturbed via charges," he stated. To resolve kemelut mining activities in protected forests, Nabiel suggested to the House of Representatives to immediately make amendments to the Forestry Act. If this decision proceeds and mining activities are only based on agreements between the commission of the House of Representatives, it is said that this decision does not have legal power.

Regarding environmental issues, Nabiel recognized that there is already an acknowledgment of the impacts that will be caused if mining activities go ahead in protected forests. But the government has no other choice. He hopes that if environmental destruction does result, the impacts will be minimalized as much as possible.

Before this the Director General of Geology and Mineral Resources Wimpi S. Tjejep stated that laws forbid open-pit mining in protected forest areas. For investors, he stated, evaluating these regulations are not in accordance with mining conditions in Indonesia that are indeed of open-pit nature.

Now, there are 150 mining companies that have signed contracts prior to the Act being effective. From this total, 50 companies are doing operational activities in protected areas.

"All contracts signed, already have the agreement of the House of Representatives and cannot be cancelled just like that by the government," he stated. Wimpie stated that four mining companies have increased their investment in the East Indonesian region at a value of US$ 3.2 billion, up until now cannot be operated because hindred by the Act.

These four companies are PT.Gag Nikel, PT. Weda Bay Nikel, PT. Nusa Halmahera and PT.Citra Palu Mineral. The activities were set to begin in 2001.

Based on data from the Director General of Geology and Mineral Resources, if investment activities in forest areas are forbidden, there are several possible losses that will result. The loss of employment opportunities of 33 thousand people at 22 companies and a potential fiscal revenue loss of as much as US$ 900 million.

Total investment of 22 companies with mining ventures in protected forest areas up until 2001is as large as US$ 12.2 billion. Up until now, production cannot be done because it is hindered by the Act.

Among companies mining in protected forests are Freeport Indonesia (A) with an investment total of US$ 4.9 billion, Freeport Indonesia (B) with an investment total of US$ 198 million, Newmont Nusa Tenggara US$ 2.7 billion, International Nikel Indonesia US$ 2.2 billion and PT Gag Nikel US$ 40 million. (Ali Nur Yasin)

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