MAC: Mines and Communities

Indonesia and West Papua: community concerns and coal conflicts

Published by MAC on 2008-08-25

Papua tribe questions govt over issued mining licenses

Nethy Dharma Somba , The Jakarta Post

18th August 2008

A traditional tribal community in Waigeo, Raja Ampat regency, in Papua, has questioned the government's decision to authorize nine mining companies to operate in their region.

Members of Maya, a traditional community of the Kawei tribe, said the central government had neglected their rights as traditional people as stipulated under the law on regional autonomy by failing to notify them of the issued mining licenses.

"Their (the companies) presence is not benefiting the traditional community," Christine Ayello of Maya Kawei's women's group told journalists in Jayapura on Saturday.

Christine said companies operating on Manoram Island, for example, were only obliged to pay Rp 1,000 (10 US cents) for every ton of mined produce they transported from the island.

"This is completely unfair," she said.

"Papua has been given a special autonomy, so why are our rights as a traditional community ignored? Who benefits from this special autonomy?"

Christine said her community was able to benefit from the riches of the land without resorting to industrial mining.

"Just from fishing, we can earn Rp 60,000 to Rp 100,000 a day. Our sea is very rich in fish," Christine said.

The community feels that as they live in harmony with their land, neither depleting its natural resources or damaging the environment, that mining companies should have no right to operate in the area.

"So far no company has dared enter Kawei Island as we take very good care of it," said Kawei Maya traditional community leader Korinus Ayello.

Mining companies reportedly entered the traditional region of Waigeo after acquiring licenses issued in 2003 by then Raja Ampat caretaker regent Marcus Wanna.

However, Korinus urged the local administration to review all mining licenses.

He also called on the administration to involve the traditional community in issuing mining licenses, citing that the body was obliged by law to take into account the rights of traditional people.

He said it would be more prudent for the government to develop Raja Ampat regency as a marine industry rather than as a mining site, citing that a fishing industry would benefit from the region's abundance of fish and would not damage the local tourism industry.

Chairman of Conservation International Indonesia for Sorong region Albert Nebora said a marine-based development concept could preserve the environment and create more jobs in environmentally-friendly industries.

"With a mining-based concept, on the other hand, the regency could be rich within 20 years. But after that, we would only be devastated by environmental damages," he said.

Raja Ampat is famous for its natural beauty, and especially its coral reefs, Albert said.

"Seventy-five percent of the world's coral reefs are located in Papua, including in Raja Ampat," he said.

"Just come to Waigeo if you want to enjoy the most complete collections of the world's coral reefs."

That is why, he said, his organization had been providing the local administration with support and input to promote environmentally-friendly developments.

"We do so for the sake of the preservation of nature," he said.

Govt targets unruly coal miners

By Aditya Suharmoko and Nurni Sulaiman, Jakarta, Balikpapan

The Jakarta Post

13th August 2008

The government is gearing up to punish three coal producers found to have been evading royalty payments and income tax over a six-year period, an official says. Finance Ministry's Directorate General of Taxation Darmin Nasution said Tuesday the three companies evaded nearly Rp 2.5 trillion (US$272.12 million) in taxes between 2004 and 2006.

"I cannot name them because it will only worsen the current dispute (between coal miners and the government)," said Darmin.

The immigration office on Aug. 5 banned 14 executives of six coal firms from leaving Indonesia until January 2009 because they had refused to pay royalties worth a total Rp 3.8 trillion between 2001 and 2005. However, the Energy and Mineral Resources Ministry said the value of the evaded royalties may reach Rp 7 trillion if unpaid royalties between 2005 and 2007 are included.

The six companies are PT Kideco Jaya Agung, PT Kaltim Prima Coal (KPC), PT Kendilo Coal Indonesia, PT Arutmin Indonesia, PT Berau Coal and PT Adaro Indonesia. KPC and Arutmin are subsidiaries of PT Bumi Resources, Asia's largest coal exporter, which is partly owned by the family of Coordinating Minister for People's Welfare Aburizal Bakrie.

The companies, represented by the Indonesian Coal Mining Association (APBI), have denied any wrongdoings, saying they held the royalties between 2001 and 2007 as compensation for tax refunds owed to them by the government.

In 2000, the Directorate General of Taxation issued a regulation exempting coal from value-added tax (VAT), meaning companies could no longer claim VAT refunds for goods and services purchased to produce coal.

However, APBI president Jeffrey Mulyono, also Berau Coal president, said the government had violated the first generation contracts of work, under which the six firms are eligible to be refunded. However, Darmin said the firms had never requested the tax refunds.

"There has been no request for tax refunds made by the companies. What do we have to pay?" he said. Darmin requested that the companies seek the refunds from the Energy and Mineral Resources Ministry, citing that the refund claimed by the companies falls under a non-tax revenue scheme managed by the ministry.

The Energy and Mineral Resources Ministry's director of coal and mineral development Bambang Gatot Ariyono said six other coal producers had been banned from exporting coal because they had been selling the commodity at unusually low prices.

The companies are PT Antang Gunung Meratus, PT Tanjung Alam Jaya, PT Sumber Kurnia Buana, PD Baramarta, PT Kadya Caraka Mulia and PT Bangun Buana Persada. They have a combined production capacity of around 10 million tons per year. The ministry has said it will not lift the ban until the firms raise their prices.

East Kalimantan police questioned Tuesday three KPC officials over an allegation the company has been illegally operating in a forest concession owned by the government. KPC lawyer Neorius said the officials were still being questioned by the police and that the firm could not make comment. PT Thiess Contractor Indonesia and PT Pama Persada Nusantara are KPC's contractors operating in the disputed area. KPC's output reached 38.9 million tons last year, or 18 percent of Indonesia's total production.

Forest rangers block KPC's coal delivery in E. Kutai

The Jakarta Post

11th August 2008

An ongoing conflict between PT Kaltim Prima Coal (KPC) and the East Kutai administration has reached new levels, with a team of forest rangers now turning back coal trucks from disputed parts of the company's mining areas.

The team was assembled from rangers of the Forestry Ministry and East Kutai regency.

Interim East Kutai Regent Irsan Noor recently ordered KPC and PT Perkasa Inakakerta to halt operations in some of their mining concessions in East Kutai, claiming the two had violated the Forestry Law by operating in a forest area without a proper license.

"I ordered them to cease their operations only within the specific areas in which a breach of the law occurred," Irsan said at that time.

The two companies have denied any wrongdoing, saying they obtained all the necessary licenses from the Energy and Mineral Resources Ministry. But the row has now reached another level, with Antara reporting that the team of rangers is closing down roads that connect parts of the mining areas and Lubuk Tutung port in Bengalon.

"PT KPC has allegedly violated the 1999 Forestry Law," team chairman Harris Sri Kuncoro said as quoted by Antara on Sunday. "This action is a follow-up to an East Kutai regency letter ordering KPC to halt operations in parts of their mining areas." Harris added that his team had stopped three trucks full of coal. "The closing down was witnessed by the National Police and the East Kalimantan Police."

The regency earlier said KPC had conducted illegal activities, including mining and constructing roads and buildings, across 2,200 hectares of forest areas. According to the administration, Perkasa conducted similar activities in 69.6 hectares of forest.

KPC is a subsidiary of PT Bumi Resources, the nation's biggest coal producer and under the control of the Bakrie family, while Perkasa is a unit of PT Bayan Resources, also one of the country's top coal miners. KPC's mining concessions in the regency amount to 90,960 hectares of land, while Perkasa's amount to 10,110 hectares for construction and 14,610 hectares for exploration.

When contacted by The Jakarta Post on Sunday, Dileep Srivastava, head of investor relations at Bumi, acknowledged the rangers' actions.

"I've heard about it. It took place in Bengalon," Srivastava said. He added, however, that overall the incident would have little impact on KPC's operations and that production would remain relatively normal. Srivastava also said the company remained hopeful that the ongoing dispute could be resolved soon.

"It's for the best interests of not only our company, but for the industry as a whole, that this issue is resolved sooner rather than later," he said, adding that the company was "working together with the Energy and Mineral Resources Ministry".

As for Perkasa, it is unclear whether some of coal transports from the Bayan subsidiary have also been disrupted.

Papuan tribal chief takes on US mining giant: report

Staff Writers, Jakarta (AFP)

11th August 2008

A tribal chief in Indonesia's West Papua launched a campaign Monday to get compensation from US mining giant Freeport for environmental damage to his homelands, a report said.

Fabianus P., chief of the Kapiraya tribe, said tailings from Freeport's huge gold and copper mine in Indonesia's easternmost Papua province were causing more widespread ecological damage than was known, Antara news agency reported.

He said several rivers in his tribe's Kaimana district had been polluted, killing wildlife and poisoning water sources for local people. Mine waste was also fouling parts of the Etna Gulf coastline.

"The local village communities were now facing water shortages as their rivers were contaminated by the chemical pollutants from the company," the Antara report said, quoting the tribal chief.

Fabianus said he had hired lawyers to file a law suit against PT Freeport Indonesia over the alleged environmental damage.

Freeport Indonesia is 81 percent owned by US-based Freeport McMoRan. The remaining stakes are shared equally between the Indonesian government and Indocopper Investama.

Environmentalists say the Papua mine pollutes the World Heritage-listed Lorenz National Park and dumps copper-rich ore around the edge of its operations.

The firm disputes the claims.

Freeport Indonesia is believed to be one of Indonesia's most significant taxpayers and paid the government 1.8 billion dollars last year.

Critics accuse Freeport of not giving enough to the people of Papua in return for the mine. They also allege that the military's protection of the site leads to human rights abuses.

Freeport operates concessions totalling 3.6 million hectares (8.9 million acres) stretching from the coast to the central mountain range at Timika, with its copper reserves estimated at 2.6 billion tonnes.


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