MAC: Mines and Communities

Indonesia update

Published by MAC on 2008-03-07

Indonesia update

7th March 2008

Indonesian environmental groups are concerned that the government has approved a decree allowing mining companies to pay a derisory "fee", to operate in tropical forests. BHP Billiton has announced plans to develop two mining projects, in Halmahera and West Papua.

Indonesian mining rules alarm green groups


7th March 2008

JAKARTA (Reuters) - An Indonesian conservation group said on Friday the government should be ashamed for approving a decree allowing mining companies operating in tropical forests to pay as little as $200 a hectare to rent more land.

Under a presidential decree issued on February 4, mining firms, including open-pit miners, will be able to pay between 1.8 million and 2.4 million rupiah ($200-$265) per hectare (2.5 acres) for forest land used for activities such as housing, roads, mine sites and waste dumps.

Indonesia had the fastest pace of deforestation in the world between 2000-2005, according to Greenpeace, with an area of forest equivalent to 300 soccer pitches destroyed every hour.

"Indonesia should be ashamed of itself," said Siti Maemunah of the Mining Advocacy Network, a conservation group [JATAM].

She said the decree left open the prospect of more firms getting permits to operate in forests, adding that President Susilo Bambang Yudhoyono appeared not to recognize the huge environmental problems facing the country.

She called for the decree to be revoked and also noted it was issued weeks after Indonesia hosted a U.N. climate change conference in Bali at which curbing deforestation was a top issue.

Indonesian green group Walhi has also protested the move.

Since Monday, the Jakarta-based NGO has collected donations from almost 600 people to buy more than three million square meters of protected forest before mining companies get to it.

The money has been presented to the government and the campaign will open to international supporters next week, said Walhi forest campaigner Rully Syumada in Jakarta.


Previously, firms had to provide new land to compensate for the use of forest areas, at twice the scale of the mining area for operations in Java and the same elsewhere in Indonesia.

But under the new decree, mining firms, during their contract period, pay into a compensation fund that would be used to replant forests, forestry ministry spokesman Ahmad Fauzi said.

"It's impossible to find new land to replant the forest that they have taken (for mining). We can't make rules which are not applicable. It may spark protest from the public," Fauzi said.

The decree applies to 13 mining firms that, four years ago, were allowed to resume operations in forest areas -- including Freeport McMoRan Copper & Gold which operates the massive Grasberg mine in Indonesia's remote Papua province that has been a frequent source of controversy over its environmental impact.

Indonesia's forestry law issued in 1999 prohibited open-pit mining in protected forest areas. But in 2004, Indonesia's fourth president, Megawati Sukarnoputri, issued a decree to allow the companies to resume operations in protected areas.

It was not clear whether the new decree will be extended to allow other mining companies to apply for permits to operate in protected forests.

The decree also applies to oil and gas companies, as well as companies involved in power transmission, hydro and geothermal power, and toll road operators.

"Permits will depend on the energy and mines ministry. But as long as they use our forest, they have to pay," Fauzi said.

The Indonesian Coal Mining Association said the latest decree could help spur flagging investment in the mining sector.

"It would not immediately spur new investment but it will increase appetite," association chairman Jeffrey Mulyono told reporters late Thursday.

Indonesia has some of the world's largest deposits of coal, copper, tin, nickel and gold, and is keen to earn more from the sector, particularly as strong demand from China and India has been driving prices up for many commodities to record levels.

(Reporting by Muhammad Al Azhari, Fitri Wulandari and Sally Pranowo; Editing by Ed Davies and David Fogarty)

BHP Billiton to invest $2.5billion in nickel projects

Desy Nurhayati , The Jakarta Post

29th February 2008

BHP Billiton of Australia, the world's third-largest mining company * [see editorial note], is set to develop two mining projects in Halmahera and West Papua with an estimated investment of more than US$2.5 billion.

Chairman of the Investment Coordinating Board (BKPM) M. Luthfi said Thursday the company would open nickel mines and refineries in the two provinces.

Although the company declined to cite the exact figure of the investment, Luthfi estimated it would reach more than $2.5 billion based on previous projects of mining firm Rio Tinto of Australia.

"BHP Billiton will cooperate with (state-owned) PT Aneka Tambang (Antam) on the two projects. The two companies will sign the agreement within the next two weeks," said Luthfi after accompanying visiting BHP Billiton president [of its stainless steel materials division] Jimmy Wilson in meeting President Susilo Bambang Yudhoyono.

Luthfi said Antam would hold 50 percent interests in the two projects, which are expected to be among the largest mining investments in the country.

Lutfi said the mining and production process would take about five to seven years, and would be conducted in three phases.

* Editorial note: BHP Billiton is, in fact, the world's biggest mining company


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