MAC: Mines and Communities

Indonesia: Banning on one hand, permitting on the other

Published by MAC on 2010-02-15
Source: Reuters

A post-Copenhagen update on coal and forests

Indonesia's Forest Minister has revoked many mining permits in forested areas, partly in order to confirm his country's commitments under the much-criticised emissions' trading scheme, REDD.

At the same time the government is boosting its commitments to coal, and speeding up the implementation of mining contracts signed before November 2008.

The announcement has been welcomed by Rio Tinto which had previously been stalled in proceeding with its huge nickel project in Sulawesi.

Indonesia Forest Minister Vows Land Permit Crackdown

Sunanda Creagh, PlanetArk

11 February 2010

JAKARTA - Indonesia's forestry minister on Wednesday said he had revoked the land use permits for 23 mining and other firms operating in forested areas and may crack down further, indicating a tougher stance on environmental protection.

Forestry Minister Zulkifli Hasan, 48, also told Reuters in an interview there were no plans to allow geothermal projects in protected forest areas, contradicting recent comments by other government officials on a key energy policy.

Indonesia is under international pressure to do more to save its huge tracts of tropical forest, which act as carbon sinks and help reduce the amount of greenhouse gas emissions that cause global warming.

Hasan said that he had already revoked the land use permits of 23 companies caught breaching the land permit rules and that he would not hesitate to revoke more in future.

"Not just the small companies, but the big ones too," he said. "For example, if you are given a permit to mine here but you mine over there, your permit will be revoked. We are currently conducting an investigation into this."

A Department of Forestry document obtained by Reuters showed several mining, forestry and other firms were among those affected.

The minister said geothermal production -- a key part of the government's energy policy -- was not allowed in protected forests and he did not see this changing soon, contradicting recent statements by officials in his ministry and by the economic coordinating minister.

"It's true that the majority of geothermal opportunities are in conservation areas, in mountains. We are yet to produce a regulation" allowing geothermal developers to enter those areas, he said. "If, later on, the law changes, I will allow it but until now it is completely not allowed."

However, a forestry official said the government is still discussing ways to accommodate geothermal activities projects in protected forests.

"We are still studying geothermal activities. It is not easy because we have the law that bans such activities," said Darori, the ministry's director general of forest protection and nature conservation.

Indonesia has established two crash programmes to increase power generation by 10,000 megawatts (MW) in a bid to resolve chronic power shortages and frequent blackouts in the country.

The first programme, which is due to be 40 percent complete by the middle of next year, relies on coal-fired power stations, while a second programme, due to start this year, has 3,900 MW of power slated to come from geothermal sources.

Indonesia stands to gain billions from a U.N-backed scheme called reduced emissions from deforestation and degradation (REDD), under which polluters can earn tradable carbon credits by paying developing nations not to chop down their trees.

Hasan said failed global climate talks in Copenhagen last year and problems passing carbon trading laws in the United States and Australia had not dented his commitment to REDD.

Forest fires that cause haze over Southeast Asia are mainly the responsibility of other government departments, he said.

"At least 70 percent of forest and peat fires occur outside of forestry areas," he said. "To tackle this in a more integrated way, a presidential decree on controlling forest fires has been drafted and is awaiting the president's signature," he said.

(Editing by Sara Webb)

Indonesia issues new mining regulations


12 February 2010

JAKARTA - Indonesia has issued two new regulations under its mining law to allow firms to start obtaining mining permits, in a move that should increase certainty and help boost investment in the mining sector.

The new regulations - one covering mining areas and the other on mining business - should allow investors to obtain new mining permits and help speed up issuance for existing investors.

"The regulations were issued yesterday but will be applied retroactively from February 1," Bambang Gatot Ariyono, director of coal and mining business at the energy and mining ministry, told reporters.

"We issued them quickly because of concern about mining licensing," Ariyono said.

The government had stopped issuing new permits ahead of the introduction of the regulations.

Miners who had applied for a contract before a new mining law was passed in December 2008 will be able to continue their application.

The regulations will also allow the government to start tenders in mining areas.

Budi Irianto, a spokesman for the Indonesian unit of global miner Rio Tinto, said the issuance of the regulations could help the firm's nickel project obtain a long-awaited mining permit.

"We have submitted an application for a mining licence. With the new regulations out, we hope we can get the licence this year," Irianto said.

Rio Tinto launched an application for a mining contract of work - a type of mining licence under the previous mining law - in 1999 for its $2 billion nickel project on Sulawesi island.

But when the new coal and mining law was passed the firm was required to apply for a shorter-term mining permit.

The Sulawesi nickel project is expected to have a capacity of 46 000 t/y.

The government awarded the last contract of work to Australia's Indo Mines for its pig iron project in November 2008, a month before the new mining law was passed in December.

Indo Mines was also the first mining firm to sign a mining contract for a decade.

Southeast Asia's largest economy has struggled to lure foreign investment into mining in recent years, compounded by some politicians taking a nationalist line on resource exploitation and also because of uncertainty over regulations tied to a new mining law passed in 2008.

The government has said it expected mining investment to hit $2,5-billion next year, up from $1,81-billion in 2009, supported by greater certainty after the introduction of new mining regulations.

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