MAC: Mines and Communities

Indonesia update

Published by MAC on 2007-11-21

Indonesia update

21st November 2007

Workers at Inco's Indonesian operations are on strike demanding better wages and promotion opportunities, while environmental groups are calling on the government to stop issuing mining concessions in the country's protected forests.

Inco workers continue to strike

Ridwan Max Sijabat and Andi Hajramurni, The Jakarta Post

21st November 2007

Thousands of workers of publicly listed PT International Nickel Indonesia (Inco) entered the sixth day of their strike in Soroako, South Sulawesi, on Tuesday.

The workers were demanding a higher share in profits and promotions for local workers, threatening the country's largest nickel producer's operations.

Chairman of the Inco Workers Union Andi Karman said the workers decided to strike after collective bargaining with the management since last May failed to produce a resolution.

"The industrial strike is our last resort; to pressure the management into bowing down to our demands and it will continue until our demands are fulfilled," he told /The Jakarta Post/ by telephone.

Andi said workers had the right to receive bigger bonuses following the company's high profit in this year's first two quarters, which was in line with rising nickel prices on the world market.

"We have demanded a 50-percent bonus increase in the first semester from the current 25 percent," he said.

He added the union had also been disappointed with the management's decision to recruit new management staff, instead of promoting field workers who had worked with the company for more than ten years.

Inco president director Arief Siregar was not available for comment. However, Inco spokesman Jannus Siahaan said his company could not meet the protesters' demands because they were not regulated in the company's collective labor agreement and the 2003 Labor Law.

"The management has shown its strong commitment to profit-sharing by improving workers' welfare, but it is impossible for the management to negotiate matters that are not regulated either in the Labor Law nor the collective labor agreement," he said.

He said the strike had affected the company's production but declined to specify by how much.

On a regular day, the company's nickel production can reach 2.5 million pounds a week.

Director General for industrial relations and social security programs at the Manpower and Transmigration Ministry, Myra Maria Hanartani, criticized the prolonged strike, saying workers and the management should go to the negotiating table to solve the industrial dispute.

She said the government could not interfere in the company's internal affairs since the management had not violated the Labor Law and the collective labor agreement.

She said the workers should initiate a dialogue, rather than continue to strike, as the company had complied with all regulations.

Chairman of the Indonesian Mining Association (Perhapi), Irwandy Arif, concurred and said the dispute could be a bad precedence for other mining companies if Inco's management met the workers' demands.

"Employers have the obligation to respect their workers' rights but workers should be aware of what their rights are, as regulated by the law and the collective labour agreement," he said, adding workers wouldn't get a cut in their monthly salaries if the management suffered losses.

PT Inco: 500 Workers Go On Strike At Sorowako Nickel Plant

15th November 2007

JAKARTA (Dow Jones)--Indonesian miner PT International Nickel (INCO.JK), or Inco, said around 500 workers from its Sorowako mining site went on strike Thursday, partially affecting operations.

"We're still calculating how much of an impact to production the strike will have as operations have been affected," Jannus Siahaan, PT Inco's head of media relations, said in a phone interview.

The striking workers at the mining site in Sorowako on Sulawesi comprise almost 15% of the site's 3,400 workforce.

The workers are demanding higher wages and additional compensation such as bonus payments before resuming work.

"There has been a decrease in productivity (as a result of the strike), but we're trying to proceed with mining operations as best as possible," said Siahaan.

"Negotiations with the workers are still ongoing but we're keen to come to a reasonable compromise that will be acceptable to both the workers and PT Inco."

PT Inco, wholly owned by Brazil's Companhia Vale do Rio Doce through Canada's Inco Ltd., expects to produce 160 million-165 million pounds of nickel matte this year.

Last year, the company produced 157.9 million pounds, or 71,700 metric tons of nickel matte, which is used in stainless steel production.

Green groups want end to mining in forests

Desy Nurhayati, The Jakarta Post

21st November 2007

Environmental groups urged the government Tuesday to stop issuing concessions for mining companies at protected forests, to avoid further forest conversions.

The groups said the government's commitment to participate in global efforts to minimize the effects of climate change, including reducing CO2 emission through reforestation, was dubious because at the same time it continued to give new concessions for mining companies in protected forests.

The groups consist of the Mining Advocacy Community Network (JATAM), the Indonesian Environmental Forum (Walhi) and Indonesian Center for Environmental Law.

"The government has neglected the fact that our country has the world's highest deforestation rate of two million hectares per year and continue to issue new concessions," Siti Maemunah of JATAM told a media conference.

"At the same time, the government tells global forums that it is committed to taking part in any efforts to handle climate change effects including through the reduction of carbon emission resulted from forest destruction."

The groups also criticized the government's plan to implement a policy on allowing forests to be converted into mining areas but obliging the companies to give compensation in form of non-tax revenue.

Torry Kuswardono of Walhi said, "the plan shows the government's weakness to uphold its commitment in environmental efforts when it comes to business interests."

The non-tax revenue policy will replace the current policy of obliging mining companies to substitute the converted areas with other land.

"If the conversion of protected forests into mining areas continues, Indonesia will be condemned by international community for failing to reduce carbon emission since mining is a major contributor of deforestation and carbon emission," Torry said.

Currently, there are 13 mining companies that have obtained operation licenses from the government through a 2004 presidential decree. It is estimated that the companies have released between 185 and 251 million tons of carbon to the atmosphere.

The 13 giant companies mostly operate in provinces across Sumatra, Kalimantan, Sulawesi and Maluku, including in conservation areas, and have received complaints from people living around the mining areas.

The groups said that as of 2001, there were 158 licenses of large-scale mining operation that converted 11.4 million hectares of protected forests out of a total 30 million hectares.

"If the government really commits to environmental efforts, it should take immediate actions to stop the conversion of protected forests into mining areas and conduct a reassessment on mining activities," Siti said.

Separately in Bogor, researchers from the World Agroforestry Center, the Center for International Forestry Research and their Indonesian partners reported the conversion of forests and peatlands had generated very little profit, despite the huge amount of emitted carbon.

The research, conducted between 1999 and 2005 in three provinces -- East Kalimantan, Jambi and Lampung, revealed the provinces emitted 400 mega-tons of CO2 per year from land conversion, but less than 2 percent of the emission resulted in profit of more than US$15 per ton CO2.

Therefore, the researchers said, it is possible to substantially reduce CO2 emission in the country without a major impact to its economy.


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