MAC: Mines and Communities

Indonesia's proposed new mining law comes under attack

Published by MAC on 2008-12-15

Indonesia's Mining Advocacy Network (JATAM) is calling for existing mining contracts to be renegotiated, despite a special committee's recommendation to the contrary. The organisation is also demanding a moratorium be applied on all new mining permits.

An alliance of NGOs has pledged "all out war" against a domestic company planning to mine in protected forests in Banyuwangi, East Java.

[Error: Apologies for last week mistakenly identifying Banyuwangi as being in Bali. ]

All existing mining contracts will be upheld under new Indonesian mining law

Existing mining contracts will be upheld under Indonesia's new mining law, which has been a long time in the making, but it will demand that raw ore and concentrates be smelted/refined in the country within five years.


11th December 2008

JAKARTA - All of Indonesia's existing mining contracts will be upheld after a new mining law is passed, but exports of raw material will cease in five years' time, said committee members tasked with working on the new legislation.

The mining law has been under discussion for years, creating uncertainty for miners such as Newmont Mining Corp. and Rio Tinto eager to take advantage of Indonesia's vast natural resources which include copper, gold and coal.

Much of the delay has been due to a parliamentary special committee which was unable to agree on whether to apply the law only to new contracts or to existing contracts.

"All factions in the house have agreed that existing mining and coal contracts should be honoured until they expire," Agusman Effendi, the chairman of the committee debating the mining law, told reporters late on Wednesday night.

But mining contractors will have to process mining products into metal in Indonesia five years after the new law is passed, he added.

"There will be a transitional period because building smelters takes time. But there won't be exports of raw mining products after five years," Effendi said.

Under the new law, mining investors will be required to process all mining products into metal locally, either by setting up their own smelters or using another smelter for processing, a requirement which investors say would inflate investment costs.

The legislators aim to hold a plenary session to pass the bill into law in Dec. 16 as the committee members have now agreed to most of the sticking points in the bill, Yasin Kara, another member of the committee said.

Indonesia has some of the world's largest deposits of gold, tin, copper, and nickel, but uncertainty over the new mining law has hampered the development of its mining resources.

Some investors question whether the new law will do much to help attract fresh investment due to contentious items such as a provision in the law that will shorten mining contracts to 20 years with an option to extend for an additional 20 years.

The current working contracts are valid for 30 years with an option to extend by a further 20 years.

But government officials argue that the new law will boost revenue from the mining sector as Jakarta is keen to gain greater control of its natural resources.

(Reporting by Yayat Supriatna, writing by Fitri Wulandari; Editing by Sara Webb)

NGOs want miners to quit protected forests

The Jakarta Post

5th December 2008

Banyuwangi, Java

An alliance of pro-environment organizations and residents of Banyuwangi and Jember have pledged to wage an all-out war to oust a gold mining company seeking approval to mine the abundant deposits of gold, copper and platinum in protected forests in the two regencies.

Kappala Indonesia, Green Curve and Street Legislature for Democracy (Derajad) have already had the Banyuwangi regency legislature drop its recommendation of PT Indo Multi Niaga (PT IMN)'s planned exploitation. Now they are joining forces with residents in the two regencies to press Banyuwangi Regent Ratna Ani Lestari to follow suit and prepare a nationwide movement to persuade the government to review the work contract awarded to the company.

"Our movement is still focusing on political pressure on the Banyuwangi regency until its recommendation is dropped and the company's exploration license, which expires in July 2009, will not be extended," coordinator of Kappala Indonesia for the Banyuwangi region, Rosdi Bachtiar Martad, said recently.

The Banyuwangi legislature dropped its recommendation for the exploration of the mining sites at the Gunung Tumpang Pitu protected forest in Pancer village, Pesanggaran, Banyuwangi and at the Meru Betiri National Park in Jember when more than 5,000 residents and activists occupied its building last week. Rosdi said the mining would bring more suffering than good to both the environment and the local people.

"The mining activities will destroy two protected forests, home to several Java tigers and other rare species, and the water catchment areas for the two regencies," he said.

Furthermore, he added, the mercury and cyanide toxic waste that would be disposed of into the Banyuwangi Bay would not just pollute the waters but also threaten maritime resources and people living in coastal regions.

Secretary of the Banyuwangi Green Curve Zaki A.R. said activists and residents of the two regencies were preparing their departure to Surabaya and Jakarta to use the election as an effective political moment to press President Susilo Bambang Yudhoyono to review the issuance of the mining permit.

The President, Zaki said, should evaluate the permit as it had breached the 1999 forestry law -- which prohibits mining activities in protected forests -- and the standard procedure.

"He should also censure Forestry Minister M.S. Kaban, who issued a special ministerial decree just for IMN," he added.

He said IMN was not on the list of 13 mining companies to which the government awarded mining contracts in protected forests under the 2004 government regulation in lieu of law.

After changing the names of his company since 2000, businessman Yusuf Merukh, through PT IMN, acquired a two-year concession in July 2007 to explore more than 11,600 hectares of land in the protected forest. This excluded a further 580 hectares for mining facilities.

The concession met with strong opposition from local people when the company recently applied for an exploitation permit from the local administration.

In 1995, Hakman Group won the contract to explore the two locations but suspended its exploitation and sold the contract to IMN.

According to data collected by the NGOs, the Gunung Pitu protected forest has more than 22,000 tons of gold and 9.6 million tons of ores from which the company could produce 1,577 tons of gold per year for around 14 years. IMN presented its environmental impact analysis (Amdal) to the provincial legislature and government in January, with pledges it would comply with the law in its mining activities and employ local residents at the site.

Ramang Rakasiwi, coordinator of Derajad, criticized IMN's Amdal as misleading the public because the government was not transparent about the negative impacts the mining activities would have on the environment and the people.

IMN president director Andreas Reza said his company would go ahead with the planned exploitation because its underground mining system meant it would not destroy the protected forests. He also said it would use recycled water from the Gonggo river, instead of groundwater, in its processing factory.

"We do understand people's concerns and will take them into account in all our mining processes and activities," he said after meeting with Ratna here Wednesday.

Asked about accusations that the permit broke the law, he said his company had met all the administrative requirements and won the permit from the relevant authorities.

Spokesman of state-owned company Perhutani in Banyuwangi, Asmadi, said many stakeholders, including Perhutani, which constituted the special team for the field study, contributed to the issuance of the permit, which was based on the team's recommendation.

Lukman Hakim, a local coordinator of the Advocacy Networks for Mining (Jatam), said the people and the NGO alliance would continue their campaigning and demonstrations until IMN left the two regencies.

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