MAC: Mines and Communities

Indonesia update

Published by MAC on 2008-01-04

Indonesia update

4th January 2008

Local people in Tutung, East Kalimantan, fear their area will become a "ghost town", following closure of Rio Tinto's Kelian gold mine - an enterprise which has attracted massive criticism for one and a half decades. However, the mine's manager seeks to assure the Jakarta Post that the rehabilitation plan will ""will empower the local community and environment".

There's more controversy over Indonesia's ban on sea sand export, enacted in 2002.

A U.S. federal judge has approved a $15 million settlement in a shareholder class-action lawsuit against Newmont, while an Indonesian court yet again clears the US company on pollution charges connected with its now closed Minahasa Raya gold mine in Batu Hijau.

Survival International reports that two Papuan women were shot dead duringa protest near the Freeport McMoran-Rio Tinto gold and copper mine in West Papua, during last December.

Approximately 120,000 villagers on the eastern island of Lembata face eviction to another island as plans enfold to mine about 70 % of their tropical paradise island home in the new year.

Mine says re-greening soon complete, locals fear ghost town

Nurni Sulaiman, The Jakarta Post, West Kutai

28th December 2007

PT Kelian Equatorial Mining (KEM) has been mining and processing gold in Tutung village, Linggang Bigung district, West Kutai, East Kalimantan, since January 1992.

Since then, it has been carrying out its community empowerment program: As many as 82 percent of its 1,000 employees are locals, including a number of contractors and stakeholders.

KEM mines an area in accordance with a working contract signed together with the government in 1985 and a land use agreement, spanning 6,750 hectares, approved by the Forestry Ministry.

It halted its open pit mining operation in May 2003 and completed its gold ore processing in February 2005, producing an average of 14 tons of gold annually. It later engaged in a sustainable land restoration program, restoring more than 90 percent of the area as of December this year.

It had only exploited 1,192 hectares, or 17.66 percent of the total mining concession area for mining and processing activities, while the remaining 82.34 percent of the total area of 6,750 ha remained in the form of primary forest.

The company has been carrying out environment restoration efforts since it commenced operations in 1992. Up until the end of this year, the process has covered 1,095 ha, or 91.56 percent of the total area used for mining activities.

The remaining 96.66 ha is expected to be restored in 2008.

The restoration process includes replanting the area with endemic trees, such as benuang and agathis, and fruit trees, such as durian and rambutan.

PT KEM is currently working together with the Forest Rehabilitation Center/Tropical Forest Research Center of the Mulawarman University in Samarinda to evaluate the rehabilitation program, ecosystem and diverse fauna.

To facilitate the cessation process, PT KEM had set up the Mine Cessation Committee (KPPT) in 2001, comprising various elements and co-headed by then West Kutai regent and company president director.

Committee members include company representatives, Rio Tinto mining company, the regency, provincial and central administrations, area residents, non-governmental groups and academics. The KPPT discussed four key topics -- dam, environment, location and assets, as well as community empowerment and spatial planning.

Recommendations from the meeting were then presented in the Mine Cessation Plan (RPT), which was approved by the government in 2005.

To restore the quality of water before it is dumped in the river, PT KEM uses the wetland method to reduce dissolved iron contents in the water, such as magnesium and zinc.

"We use this method so the quality of water from the mine complies with standards regulated by law. The method, which resembles rice planting, has been tested since September 2005," said PT KEM site administration manager and spokesman Yudhi Nurcahyana.

Each cell or wet plot is covered with a variety of local fauna.

Yudhi said setting up the wetland method would be one of the company's activities prior to its closure, and it would be monitored by an evaluation team comprised of relevant state agencies.

"The team will inspect, monitor and evaluate its progress each month. So far, the team deems the program is in line with RPT goals. The cessation process is expected to end in June 2008," Yudhi said.

In accordance with the KPPT, the mining concession area will be turned into a conservation forest, which will later be managed by PT Hutan Lindung Kelian Lestari (HLKL). Yudhi said PT KEM would monitor the program until it handed over the concession area to the government in 2013. HLKL will be tasked to supervise the program from 2009 to 2013.

However, residents fear the Linggang Bigung district, where the mine is located, would become a ghost town when the mine closes. However, PT KEM has a number of strategies to anticipate this concern.

"We will empower the local community and environment. We will provide training to residents who have so far depended on the mine for their livelihoods, according to their interests, such as sewing, agriculture or fishing."

Yudhi said since it commenced operating, PT KEM had built 208 facilities for local residents, which included 72 public, 53 clean water, 12 health, 39 education, 22 religious and 10 sporting facilities at a total cost of Rp 32 billion (approximately US$3.5 million).

Since 2000, PT KEM has focussed its community development assistance program through productive and independent community-based enterprises, concentrated in 28 villages around the mining area.

Through a local foundation, it built the first agricultural vocational school in East Kalimantan, under the auspices of the education office. The school is located in Bigung Baru village, Linggang Bigung district, and was named Ave Bungen Tana, meaning beautiful princess in the local tongue.

"Funds for its operational, maintenance and facility costs will be derived from KEM's permanent funds amounting to US$1 million. The school was inaugurated by West Kutai Regent Ismael Thomas on Dec. 22 this year," Yudhi said.

PT KEM managing director Mark Hunter said the school was part of the Hutan Kita Masa Depan Kita scholarship program managed by the Tunas Bangsa Foundation under the supervision of the school committee.

"The goal of this partnership is to ensure long term forest rehabilitation and conservation and sustainable management of the Kelian forest protection program in line with the 2004 Mine Cessation Plan, as well as provide better opportunities for the younger generation in West Kutai through the scholarship program. I hope the school can provide greater benefits for people in general," Hunter said.

Sand export ban remains controversial

The Jakarta Post

27th December 2007

A ban on sea sand exports came into force in 2002 during former president Megawati Soekarnoputri's administration. It was followed by a ban on land sand this year.

A number of regencies in Riau Islands province, by far the biggest sand supplier to Singapore, were severely affected by the loss of revenue, and unemployment levels rose.

The Ministry of Trade imposed the ban on sand, earth and topsoil exports early this year. Many believed the move was motivated by unsettled border issues between the countries and by a desire to accelerate extradition treaty talks. Many of the country's corruption suspects are reported to be harboring in Singapore. Based on data derived from the Riau Sand Exporters' Association (Hipepari), the quota for concreting land sand exports from Riau Islands to Singapore amounted to 300,000 tons monthly, sold at about US$6.16 per cubic meter. The price nearly tripled close to the start of the ban.

By comparison the local demand for sand was only 100,000 cubic meters monthly at a price of Rp 90,000 (US$9.54) per cubic meter at the consumer level.

Sand businessmen were reluctant to focus on the local sand business. They made more money selling to Singapore, since the transactions were done in cash and the transportation was arranged by the Singaporean buyers.

Hipepari chairman Ficky Zulfikar Zaljuli said his group's member companies felt they had been used as pawns in Indonesia's foreign diplomatic policy.

"What kind of political diplomacy is this? If the government really wants to regulate land sand exports in order to protect the environment, it should have done it in a more educational manner, and not shut off people's means of making a living," said Zulfikar.

Based on Hipepari data, at least 30 land sand exporters, employing 3,600 workers, were forced to shut down.

"The provincial administration itself is ambiguous in its stance on the ban. Sand businessmen and workers are the hardest hit by the policy. We certainly hope the government will review the policy," said Ficky.

"Thousands of people seek livelihoods from land sand quarrying, especially when it creates jobs in the informal sector. This is a fact that cannot be denied," added Ficky, saying land sand exports to Singapore had been going on since the 1980s.

During President Susilo Bambang Yudhoyono's visit to Natuna regency in Riau Islands province on Nov. 17 last year, he raised concerns about land sand mining activities in the province.

The President demanded that the provincial administration curb sand quarries, and the administration responded by asking the customs and excise office to stop issuing permits for land sand export.

Sand exports to Singapore virtually came to a stop, albeit temporarily, on Nov. 26, 2006.

The protests of sand companies were eventually heeded and sand supplies to Singapore resumed.

However, they were stopped altogether following the trade ministry's decree.

Director General of Overseas Trade Diah Maulida expressed confusion over the provincial administration's opposition to the move in a meeting with sand companies in Batam in January.

After all, Diah pointed out, the governor had sent a letter to Vice President Jusuf Kalla in November of last year urging the government to halt sand exports.

"We at the Trade Ministry are unclear over the provincial administration's stance because there are two conflicting letters.

But we want every party to understand the decision because it comes from a team consisting of several ministries," Diah said at the meeting.

Industry members were puzzled by the government's decision. On one hand the provincial administration was determined to respond to the president's demand, while on the other it wanted to appease the people.

According to Ficky, it would be more better to shut off granite supplies to Singapore if the goal was curtailing the city-state's land reclamation projects, because granite is used more for reclamation. Riau Islands is also the main supplier of granite to Singapore.

Ficky said that if the government reopened land sand exports, sand exporters would take certain steps, such as setting a price of at least US$20 per cubic meter and setting a percentage aside for environmental restoration.

The sand quarrying activities have damaged the environment by creating giant cavities. When it rains, these holes act as ponds and become breeding grounds for mosquitoes, which can carry diseases such as malaria and dengue fever.

Sand companies as well as the government have not been serious about curbing environmental destruction in the province. Each of them have reaped the benefits of sand mining but left the damage for others to deal with.

Indonesia Court Clears Newmont in Pollution Suit


19th December 2007

JAKARTA - An Indonesian court on Tuesday cleared the local unit of Newmont Mining Corp. over an environmental group's lawsuit accusing it of polluting a bay near a gold mine.

It was Newmont's second win in an Indonesian court over the pollution allegations, closely-watched cases seen as a test of attitudes towards foreign firms and environmental protection in the world's fourth most populous nation.

"The plaintiff could not prove that Newmont polluted the environment, sickening fish and damaging coral reefs," presiding judge I Ketut Manika told the South Jakarta Court.

The environmental group Walhi had accused PT Newmont Minahasa Raya in a lawsuit filed in March of carelessly disposing of mining tailings, causing environmental problems and endangering the health of people around the US firm's now defunct gold mine in North Sulawesi province. In April, a court cleared PT Newmont Minahasa Raya and its president Richard Ness over criminal charges accusing the company of dumping toxic waste into Buyat bay in a 20-month trial.

An appeal was filed in late May to the Supreme Court in a bid to overturn the ruling. Newmont's Indonesian unit and Ness have asked the Supreme Court to reject that appeal.

Indonesia's Environment Ministry said in 2004 that arsenic and mercury content in waste dumped by Newmont had contaminated sediment and entered the food chain.

But other tests failed to find abnormal pollution levels. Newmont and Ness have denied the charges, pointing to the studies that have found no evidence of pollution.

After Tuesday's ruling, a lawyer for Walhi vowed to fight on. "We will appeal this decision to the high court," Walhi's lawyer Firman Wijaya told reporters.

Newmont's lawyer Luhut Pangaribuan said it was considering a counter suit against Walhi.

"What is important is that the allegation on pollution cannot be proven," he said.

Newmont had previously filed a counter suit in June against Walhi for US$100,000 in damages, which was also rejected by the court on Tuesday.

Last year Denver-based Newmont settled a civil case without admitting wrongdoing and agreed to pay US$30 million to an environmental foundation in North Sulawesi. (Writing by Fitri Wulandari; Editing by Grant McCool)

Story by Telly Nathalia


Police arrest, torture and kill Papuan tribal people

Survial International (UK)

17th December 2007

Police in West Papua are killing, torturing and intimidating the province's tribal people with impunity. Police shot dead two Papuan women and injured another as they protested on 5 December near the British and American-owned Freeport mine.

Less than two weeks before the shootings, the UN special rapporteur on torture said he had found evidence of Papuan detainees being electrocuted, suffering systematic beatings and even being shot in the legs at close range. He said the police were the main culprits.

There are also increasing reports of 'mysterious' and 'accidental' killings, and abductions and assaults of young Papuan women by military and police forces.

None of the government officials the special rapporteur met in Indonesia could cite a single case in which a police officer had been found guilty and sentenced by a criminal court for abuse of a detainee, despite the practice being widespread and systematic.

Human rights defender and lawyer, Sabar Iwanggin, has been charged with 'insulting the President' in a text message he forwarded to a friend. The message had already been circulated around thousands of Papuans. Sabar Iwanggin worked with the respected human rights organisation, Elsham West Papua. Elsham staff have been repeatedly intimidated and have received death threats.

Survival is concerned for the safety of Sabar Iwanggin whilst he awaits trial, and for the safety of others who stand up for the rights of the tribal peoples of West Papua.

Take action:

Settlement OK'd in Newmont suit

By Gargi Chakrabarty, Rocky Mountain News

12th December 2007

A federal judge on Tuesday approved a $15 million settlement in a shareholder class-action lawsuit against Denver-based Newmont Mining, the world's No. 2 gold producer.

"The court agrees that the lack of material objections to the settlement further demonstrates the reasonableness of the settlement," U.S. District Judge Marcia Krieger said.

Krieger said a maximum of $3.5 million from the settlement should be set aside as attorney fees, and the rest should be allocated to the shareholders. The court will appoint a special master to decide the attorney fees.

One of the several lawsuits that was consolidated into the class-action case was brought by shareholders who bought Newmont stock between July 28, 2004, and April 26, 2005. They sued the company and its top officers for "false and misleading statements concerning the company's operational status and financial expectations."

They said Newmont described its Batu Hijau gold and copper mine in Indonesia as "a hell of a mine" that had "reached a point now where it has turned into one of our real cash registers," when in reality the mine had a major pit failure that had an adverse impact on mining operations.

Also, there were cleanup costs the company didn't disclose until much later.

The company's failure to adequately disclose those issues in a timely manner also allegedly caused Newmont's stock to fall from its April 26, 2005, closing price of $40.25 a share to less than $38 a share on April 27, 2005, after a conference call.

During that call, former Newmont CEO Wayne Murdy said: "Very frankly, we've gone back and looked at this, and I will tell you that we probably should have got the word out sooner - 2 0/20 hindsight. At that time, we felt we could recover and make a lot of it in the quarter."

Company executives were able to sell their personal stock worth about $30 million at higher prices in the months before the disclosure, shareholders alleged.

Newmont has denied those allegations. In a settlement agreement filed Oct. 20, 2006, Newmont said the shareholders had not suffered any damage.

"Although defendants deny any liability or wrongdoing, (they) have chosen to settle and compromise the litigation to avoid further substantial expense and the inconvenience and distraction of protracted and burdensome litigation," the settlement stated.

The shareholders, including UFCW Local 880-Retail Food Employers Joint Pension Fund, Pompano Beach (Fla.) Police & Firefighters' Retirement System and others, said the settlement was in their best interest, given the risks, uncertainty and expense in proceeding with the lawsuit. or 303-954-2976

Destroying paradise


16th December 2007

Indonesian villagers face bulldozers of a mining giant, with up to 120,000 seemingly doomed to life on another island, writes Ivan Broadhead

Gabriel thought he had seen it all. A grandfather of four on the remote Indonesian island of Lembata, he has lived through Dutch colonial rule and Japanese occupation. 'Now it looks like my home is going to be destroyed by a businessman from Jakarta,' he says.

Lembata, in Indonesia's far eastern Nusa Tenggara Timur region, is touted as 'the last paradise' by regional government adverts seeking to woo adventurous tourists off the beaten track. Thanks to that same government's policies, paradise, Gabriel believes, will soon be lost to the invading bulldozers and excavators of mining magnate Yusuf Merukh.

Mr Merukh, an innocent protagonist in the Bre-X scandal in 1997 - history's biggest mining scam which saw international investors lose billions of dollars on a hoax gold find in Borneo - holds mineral exploration rights to at least a third of Lembata. He intends breaking ground on the new mine next year, with production starting in 2011.

According to the tycoon, surveys point to extensive deposits of gold and copper on the 1,300 sq km island. At a recent press conference, he was even reported to have spoken about the deposits being large enough to help 'break US dominance' over global metals prices.

Mr Merukh knows his business. With the support of government and working with partners such as US mining giant Newmont, he has spent the years since Bre-X exploiting Indonesia's vast natural resources - and become one of the country's wealthiest men. 'It's not about me becoming richer; it's about sharing the benefits,' he insists. 'I faced 15,000 protesters when we [Newmont and his Pukuafu Indah subsidiary] opened the Batu Hijau mine on Sumbawa.

'But most of the workers and middle managers were hired from the local community. Now they drive Mercedes, not horse carts ... and when I visit they say, 'Our king is coming'.'

There are certainly no Mercedes on Lembata. There are few roads for that matter. But before luxury cars can arrive from Germany, many of the 120,000 population in this predominantly Catholic community look set to lose their homes and livelihoods.

Under existing plans, Mr Merukh, with the Lembata government's support, publicly claimed that families being relocated from their lands to make way for the mine would be housed elsewhere on the island, at his expense. According to NGOs, at least 60,000 people from 49 villages face eviction.

Now Mr Merukh has a grander plan. 'To house the families who need to move, I'm planning to build a city on an adjacent island [of East Flores] and Lembata people will transfer [there]. It's only 30 minutes by ferry and ... I will construct apartments, schools and hospitals, even an international airport to compensate them and serve the mine.'

More startling still, he adds: 'I think the mine will take at least 70 per cent of the island ... perhaps the whole island.'

The revelation has caused outrage among observers. According to Siti Maimunah, national co-ordinator of Jatam, an Indonesian mining advocacy group, the displacement of an entire population would be unparalleled, even in the grubby history of Indonesian mining.

Sonny Keraf, Indonesia's former environment minister, is equally horrified - with good reason. He and his brother Peter, the speaker of Lembata's parliament, were born in Lamalera, a subsistence whale-hunting community on the island's southern shores.

The brothers personify the ideological debate. Sonny Keraf contends it will destroy the environment, and its finite lifespan means that in 20 years both mine and its short-term benefits will be gone.

'There are sustainable businesses we could be developing on the island, like tourism and aquaculture. They might take years to get off the ground, but we can rely on them for generations,' he argues.

In contrast, Peter Keraf sees Mr Merukh as offering an economic lifeline to a poor community. 'I want to believe the project will provide thousands of jobs, a better infrastructure and future,' he says. But even he is sceptical: 'I'm not a disciple of Merukh's. I'm more like Thomas in the Bible. He didn't believe Jesus was the son of God until he saw the proof.'

Although Sonny Keraf exercises considerable influence in Jakarta as the vice-chairman of the national parliament's Committee on Energy, Mining and the Environment, the constitution delegates the right to award mining licences to local authorities.

And according to Mr Merukh, 90 per cent of Lembata's legislature last week voted to proceed with the mine.

In the wake of widespread protests, Lembata's government head, Andreas Duli Manuk, is finding it hard to maintain credibility. He argues that Lembata can support a mine, local traditions and a tourism industry.

After two weeks talking to residents on the island, it is clear that most do not believe him. With the threat of their lands and homes being razed by an open-cut mine, the people of this tiny outcrop in the Sawu Sea are determined to oust Mr Merukh and his lackeys. At a meeting of activists from Forum Komunicase Tambang Lembata, a local NGO, the frustration is palpable.

'As an organisation we would not condone violence, but we don't speak for everyone. If you look at the track record of mining in Indonesia, it's clear why the people are so vehemently opposed,' says Peter Balawukak, a group leader.

Mr Balawukak points to the damage caused by mining operations around the country.

Data provided by Jatam indicates that Newmont and Mr Yusuf's Batu Hijau mine on Sumbawa is responsible for 120,000 tonnes of tailings being dumped into the sea every day.

Newmont's website argues that this rock waste has no harmful effect on the environment and merely falls into a deep-sea trench. But with the WWF developing marine reserves around Lembata, Mr Merukh is keen to point out that waste from his new mine would be processed onshore.

This fails to even remotely console Mr Balawukak. 'Mining companies have continually failed to fulfill their environmental promises, they have failed to respect cultural identities, and they have failed to pay full compensation on compulsorily purchased property. So why should we give up our homes, family burial sites, fields, forests, fishing grounds and springs? It will be a disaster for the people and for their ancestors.'

University of Bergen anthropologist Olaf Smedal, who has been researching population movements in Indonesia for over 20 years, understands those concerns, particularly over cultural and religious beliefs.

'It's a bit of a misnomer to say they're Catholics on a Sunday and ancestor worshippers for the rest of the week, but they sincerely believe that everything they possess derives from their forebears.'

Mr Merukh appears to underestimate this attachment. In the island's Kedang area, Gabriel is working the fields with sons Orifiel and Sofiel, both in their 30s. Despite the prospect of cash for their two hectares of land and lucrative jobs at the mine, the sons want no part of it.

'Our grandparents are buried in the village and 20 of our relatives live here too,' they say. 'Now the family is very afraid because they do not feel they can refuse the government policy to develop the mine - what options do they have?'

Such pessimism does not surprise Professor Smedal. He sees a fundamental difference between voluntary transmigration and incidences where land is appropriated for causes like mining. 'Because of their values and beliefs, I doubt the community's opposition will be offset by any promises [of compensation],' he says.

Mr Balawukak concurs: 'The people feel let down. No one wants to see their homes and fields lost to this mine, apart from the politicians. You look at what the people will lose, and have to wonder what the politicians will gain.'

While there is no evidence of outright corruption on Lembata, there are tales of procedural irregularity in the due diligence undertaken by the government.

Father Michael Peruhe, a conciliation specialist with the Order of Franciscan Monks' Office of Justice, Peace and Integrity of Creation in Jakarta, recounts how government and civil representatives from Lembata were reportedly sent on a fact-finding mission to another Newmont mine - in Minahasa Raya on Sulawesi.

'The mine is now non-operational and the idea was to come back to Lembata to tell the people how it had impacted the nearby villages,' he said.

'Two weeks later I and two others went to study the same area - only to be told by the Newmont office that no team from Lembata visited.'

On confronting government head Andreas Duli Manuk, Father Peruhe was shown a report on the Minahasa Raya mine that had been put before Lembata's parliament.

'I was shocked. How could the government of Lembata give a false report to the people and present it as truth? I talked to Andreas about this problem of manipulation, and [he] refused to comment.'

Mr Merukh is not so unwilling: 'These [protests], it's a problem generated by the Catholics. If you build the mines it diminishes the church's influence over poor communities so it's an excuse. It's propaganda. ... I can't help it if they refuse to see the economic benefits.'

One way or another it seems Mr Merukh is determined to dig a hole, not just for himself but for an entire community; one that Gabriel and his fellow islanders will have to fight hard to extricate themselves from.

The names of Gabriel and his family have been changed to protect their identities.


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