MAC: Mines and Communities

Dragons in the Indonesian mists

Published by MAC on 2009-07-27

Impacts of mining  became an important issue for Indonesians during the state's recent presidential elections.

Siti Mainmunah, of Indonesian mining advocacy group JATAM, has been driving home the message that mineral extraction provides no basis for sustainable development.

Meanwhile, violence has erupted around Freeport-Rio Tinto's mine in West Papua, triggering charge and counter-charge.

Mining threats to the renowned Komodo National Park are under investigation.

2 Police Officers Injured in Indonesian Gold Mine skirmish

By Norimitsu Onishi

The New York times

15 July 2009

JAKARTA, Indonesia - At least two police officers were wounded Wednesday in a skirmish with gunmen near a gold mine operated by an American company in eastern
Indonesia, officials said.

The firefight followed several days of violence, including three deaths, directed at the mining operations of Freeport-McMoran in Papua, an impoverished
province under military control. It came just after Freeport ordered a group of employees to avoid traveling along a road linking a nearby town and the gold

"Because of the violence, we told a couple of hundred of our workers to stay home this morning," said Mindo Pangaribuan, a spokesman for Freeport, adding
that the company's production had not been affected by the violence.

Mr. Mindo said it was not clear who the gunmen were, and the authorities had yet to make any arrests in the recent deadly ambushes. Two Freeport workers, an Australian mining expert and an Indonesian security guard, were killed in skirmishes over the weekend; a police officer fleeing from an ambush also died after falling down a ravine.

Despite a decade of democratization, the Indonesian government still severely restricts access to Papua, especially for journalists. More than 10,000 troops
and police officers, most of them non-Papuan, are stationed in Papua and have been accused by rights activists of frequently committing human rights abuses
against the local population.

It is in that environment that Freeport, which is based in Phoenix, operates the world's largest gold mine and employs 20,000 workers. The company, which has enjoyed close ties to the Indonesian government for four decades, including during the late Suharto's 32-year military dictatorship, has long made a practice of paying the military and the police for protection.

"To many Papuans, Freeport is a symbol of imperialism," said Andreas Harsono, who is an analyst for the Human Rights Watch office here in Jakarta and recently
completed a report on abuses committed in Papua by Indonesia's special forces.

The authorities blamed separatists in the Free Papua Movement for this week's violence. But Papuan officials quoted in the Indonesian news media have denied
the accusations, saying the movement lacked the kind of sophisticated weapons used in the ambushes.

The Indonesian news outlets have speculated that military or police officials, who are paid by Freeport for protection, may have directed the ambushes to
secure their business.

The defense minister, Jowono Sudarsono, said Wednesday that there was no "proof" that active military or police were involved in the attacks. But he allowed that
"rogue elements" or "deserters" from the military or police could be responsible.

In a meeting with foreign journalists, Mr. Jowono also said that the violence may stem from rival groups of illegal miners engaged in gold mining near
Freeport's operations.

Papua attacks blamed on separatists

Al Jazeera

13 July 2009

Police in Indonesia have blamed separatist fighters for a spate of attacks near a US-owned mine in the country's remote Papua region that left three people

An Australian mining expert and a security guard were killed in separate ambushes on Saturday and Sunday close to the Grasberg copper and gold mine owned
by American mining conglomerate Freeport.

On Monday the body of a third victim, an Indonesian policeman, was found in the same area, Indonesia's state news agency reported.

Lieutenant Colonel Nurhabri, a Papua police spokesman told the Associated Press that paramilitary police were scouring the area's dense mountainous jungle on
Monday and had called in reinforcements in an effort to find the assailants.

"We have sent a group of mobile brigade police into the jungle," he said.

They have "not found anything yet and the search is continuing," he said, adding that it was extremely rough terrain.

On Saturday Drew Grant, an Australian mining technician was shot in the neck as he travelled in a car with five other people on a road between the towns of Tembagapura and Timika.

A day later, gunmen opened fire on two Freeport company vehicles, killing a security guard, and then ambushed police responding to the attack.

At least seven others were injured in the three attacks.

'No guns'

Many West Papuans live in poverty despite the region's wealth of natural resources [AFP] Police have said they suspect the Free Papua Movement, a separatist group who
have sought independence for the province since the 1960s, were behind the attacks.

However Damien Kingsbury, a professor of International Relations in Australia's Deakin University, told Al Jazeera that representatives of the Free Papua
Movement had rejected any responsibility.

Kingsbury said he had spokesn to representatives of the movement in the wake of the attacks, which he said were "not consistent with their previous activities".

"They have completely denied responsibility and have laid the blame squarely at the feet of the militias working on behalf of the Indonesian army," he said. Yorris Raweyai, a Papuan politician in the national parliament, also dismissed claims that the separatist movement, known by its Indonesian acronym OPM, was responsible.

"We know the OPM has been labelled as a troublemaker in Papua for four decades,'' he told the Associated Press.
"But we also know that they have no guns and fight for their struggle peacefully.'' Supporters of Papuan independence see the Grasberg mine as a symbol of Jakarta's rule and a reminder that foreign investment in the area has failed to lift their standard of living.

The giant mine, which employs thousands of local workers, is majority owned by Freeport-McMoRan Copper & Gold Incorporated, a company based in the US state of

It posted revenue of nearly $18bn in 2008.

The Indonesian government holds a minority stake in the Grasberg mine, and there is a production-sharing joint venture with the Anglo-Australian Rio Tinto Group.


The insurgency for an independent Papua has been a source of clashes with government troops since the region was transferred from Dutch to Indonesian rule
in the 1960s.

The territory was taken over by Jakarta through a stage-managed vote by community leaders called the "Act of Free Choice" - a process seen as a sham by many critics.

Since then, about 100,000 Papuans - the equivalent of a sixth of the current population - have died in military operations in the resource-rich mountainous

After years of relative quiet, the number of fatal attacks jumped this year ahead of the Indonesia's general elections in April, but it is unclear if there
is a connection.

Australian shot dead at Papua mine

Al Jazeera

11 July 2009

An Australian man working for the Indonesian subsidiary of US-based mining firm Freeport McMoran has been shot and killed in the country's Papua province, local
police say.

The man was shot in the neck as he travelled in a car with five other people on a road between Tembagapura and Timika on Saturday, Nanan Soekarna, an Indonesian
police official, said.

The official identified the man as Drew Grant, a mining technician, the AFP news agency reported.

A spokesman for Freeport Indonesia confirmed a company employee had been shot and killed near the firm's gold-and-copper mine.

Mindo Pangaribuan said several employees were in the vehicle when the incident occurred outside the company's mining operations area.

"Shots were fired at a Freeport Indonesia vehicle, fatally wounding an employee who was a passenger in the vehicle. Other passengers were not injured," he said,
though he did not identify the victim.

Source of controversy

Pangaribuan said it is unclear who was behind the attack and that police are investigating.

"PT-FI is co-operating fully with the police nvestigation and deeply regrets the loss of an employee," he said.

The Papua mine has been a frequent source of controversy, with residents of the province who have criticised its environmental impact and the share of revenue allotted to Papuans.

In 2002, two American teachers and an Indonesian colleague who worked at the mine were shot dead in an ambush near the site.

US and Indonesian investigators identified Papuan separatist rebels as being behind that attack, but local rights groups have long said the military co-operated in the killings.

Ravages of Mining Too High a Price for Economic Development, Activists Say

by Fidelis E. Satriastanti

The Jakarta Globe

9 July 2009

An activist on Wednesday harshly criticized mining as a tool for economic development, saying it should be the last option explored due to the social, economic and environmental upheaval it caused.

"There is no such thing as sustainable mining. It's a myth - there is nothing about mining that is sustainable," said Siti Maimunah, the national coordinator of the Mining Advocacy Network, an NGO.

"Whatever it is that's being mined is a nonrenewable resource and when it dries up, there is nothing left except the misery of people who were evicted from land
then rendered useless," she said.

Referring to mining activities at Batugosok, West Manggarai district, on the island of Flores, Siti said small islands should not allow mining because of
their geographic vulnerability.

"Mining eats up large expanses of land, requires huge quantities of water - an important issue in areas already experiencing water shortages - and uses environmentally dangerous chemicals which pollute the air and water," she said.

"The local people will also be faced with social issues such as conflicts resulting from an influx of immigrants, price increases, prostitution and health problems."

Since June, local residents and environmentalists have been protesting the activities of a gold mine seven kilometers from Labuhan Bajo, the capital of West Manggarai district, which serves as the gateway to the famous Komodo National Park.

Siti said it was not the mine's proximity to the national park that had sparked the protests but the high-risk nature of such activities for small islands.

"It takes at least 105 liters of water to clean just one gram of gold, so you can imagine the effects in areas that are already having trouble with water,"
she said.

She added that other locations such as Central Kalimantan, Buyat Island in South Sumatra and Papua also were struggling with similar problems.

Environmental expert Emil Salim noted that industrial mining was a major source of tax revenue but questioned how that money was being spent.

"These companies do pay taxes, but the next question should be, are some of those funds being returned to these poor areas to eradicate poverty or are they
just being used to build another tall city building," he said.

Emil said local governments must play a role in trying to alleviate the unwelcome effects of mining on local communities. He said they needed to attract or develop substitute industries to replace mining once the mines ceased to be

"[Local governments] need to introduce renewable industries - such as agriculture, fisheries or plantations - and urge the companies to rehabilitate
the mining sites if they are no longer productive," he said.

Emil added that he had asked the Ministry of Energy and Mineral Resources to investigate the case on Flores Island.

"Another problem is that mining is usually located in isolated areas and the use of advanced technology produces a strong cultural contrast with the poor rural
or traditional people usually found in these areas," he said.

Mining expert Ryad Chairil said the central government often failed to consider the complexities of the problems created by mining in local communities.

"The central government holds a very important role in these matters because while mining, especially gold mining, is a strategic and vital product for this
country, there are many consequences that need attention, such as the widespread environmental damage caused by chemicals used in gold mining," he said.

Ryad said that ultimately the problem was that economic interests always trumped
ecological concerns.

Q+A-Indonesia mining sector faces election risks


7 July 2009

JAKARTA, - Indonesia has struggled to lure foreign investment to its mining sector in recent years, and the nationalist line on resource exploitation taken
by politicians ahead of Wednesday's presidential election has hardly helped.

The mining industry is also awaiting details of regulations in a new mining law passed last year which was aimed at squeezing more from the country's rich
mineral resources.

President Susilo Bambang Yudhoyono, who is widely expected to be returned to power, is seen as more open to foreign investment than his challengers, Megawati
Sukarnoputri and Jusuf Kalla.

Here are some questions and answers on mining and the election.

Megawati has said she would take a tougher stance in contract negotiations with foreign resource firms if elected, singling out the Grasberg copper mine in
Papua run by a unit of Freeport McMoRan Copper & Gold (FCX.N) for criticism.

Kalla has also said that "unfair" contracts with foreign resource companies should be re-negotiated.

The Yudhoyono administration, however, has previously said it would respect contracts.

Analysts say a more nationalistic stance on resources is no surprise during an election period, but it could mean Indonesia loses out on investment later on,
particularly given the current scarcity of global capital.

What are the risks over the new mining law?

The government is currently drafting regulations on the law for presidential approval and has said it plans to issue them by October before a new government
takes office.

Issuing the regulations is seen as crucial to give certainty to investors. In the case of an oil and gas law passed in 2001, it took three years to issue the
implementing regulations.

The new mining law means that investors will be put on shorter-term mining permits rather than longer-term contracts of work, while they will also have to
process minerals in Indonesia and to set aside some of their coal for the domestic market.

Foreign investors will also have to divest to local players some of their shares in a mining project after a period.

Investors want clarity on all of these issues, particularly to ensure that previously agreed contracts of work are respected.

The plan to oblige coal-mining firms to set aside coal for local consumption has also sparked concerns among buyers over the long-term availability of coal from
the world's top thermal coal exporter.

Details are still sketchy on the percentage coal producers must set aside, the price they will receive, and arrangements for producers who do not mine coal
that is suitable for domestic use.

What is the outlook for new foreign mining investment?

The government has frozen new mining permits until the regulations are finalised and if they are not implemented by October there is a risk of further delays under a new government.

Either way, mining firms and experts say the mining law in its current form may not offer enough certainty to attract major new investment. The previous contract of work system was seen as more secure than the new licences, while the new law also limits the size of mining areas, also less attractive for big miners.

However, more smaller projects, which often run for a shorter period and need less capital, could go ahead under the new law.

The Indonesian Mining Association has said mining investment would fall below $1 billion this year due to uncertainty over the new mining law, although the
government says investment from mining -- including geothermal -- could surpass $2 billion.

Some foreign companies have shelved investment plans since last year. BHP Billiton (BHP.AX) scrapped a study to develop an integrated nickel project in eastern Indonesia and also decided it would not go ahead with a coal mine in Central Kalminantan. Tsingshan Mineral Company Ltd had scrapped a $500 million nickel project in North Maluku in Indonesia.

What about legal certainty for mining?

Legal certainty is a key issue for investors in Indonesia's mining sector and the government has been involved in a number of disputes with foreign mining

PT Newmont Nusa Tenggara, an Indonesian unit of Newmont Mining Corp. (NEM.N), and the government went to arbitration over a dispute on divestment.

The two sides are still negotiating over price after the government ordered Newmont to sell 17 percent of its shares to the Indonesian government within six
months. (Editing by Ed Davies and John Chalmers)

Officials Check Mining Near Komodo

Fidelis E. Satriastanti

Jakarta Globe

7 July 2009

Environmental authorities are looking into mining activity near the Komodo National Park in East Nusa Tenggara, which local activists are saying will have
a negative impact on the tourist attraction, an official said on Tuesday. Since June, local environmentalists have been protesting the activities of a gold mine in Batugosok, West Manggarai district, on the western tip of Flores Island, saying that it threatened the existence of the park.

The Environment Ministry's deputy minister for spatial planning, Hermin Roosita, said that although the gold mine project was still in the exploration stage,
heavy machinery were already involved and ground work had already started. "If there is any violation, it should be cancelled," Hermin said of the project.

She added that an officer of the ministry's regional office in Denpasar, Bali, had been sent to check on the project. The exploitation stage, where heavy
machinery and digging are already involved, could only proceed once the project's environmental impact analysis (Amdal) was approved by the government, she said, adding that so far, no such analysis had been submitted for the
Batugosok area.

"As seen from the use of the heavy machinery and the ground work, that looks like exploitation," Hermin said. Meanwhile, Tamen Sitorus, head of the Komodo National Park, said that the mining activities were conducted on the mainland of Flores Island and were too far to affect the park.

"[The mine] is located outside the national park and is still in the exploration stage," said Tamen, adding that the mining operation did not fall under the park's jurisdiction, but under that of the local government.

"The activities are just at the stage of exploring the potential for gold in the area. So, it won't do any harm to the national park yet," he added. The Komodo
National Park, which covers several large and small islands between Flores and Sumbawa to its west, is the only place in the world where Komodo dragons - the
world's largest lizard - can be found in the wild. "We are not actually affected by the mining activities but by the media reporting on it because it could lead
to false opinions since [the company] has not started any exploitation yet," Tamen said, adding that he understood the concerns of local people.

However, he said they would want to be included in the discussions if the mining activities turned to exploitation. "We need to examine the waste management very closely even though it is far away, as once it goes out into the sea it could affect the whole environment," he said.

Meanwhile, Ratna Suranti, head of the electronic promotion of the Ministry of Culture and Tourism, said they were aware of the local people's protests. "We
have information that the activities were being done on an uninhabited island where there are no Komodos or people," Ratna said.

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