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Down to Earth No. 47, November 2000

Rio Tinto: blockades and strikes hit Kalimantan mines

The past months have seen unprecedented direct action by local people and mine workers protesting against injustice at Rio Tinto's PT KEM and Kaltim Prima mines.

In April and May this year, Rio Tinto's Kelian gold mine was forced to shut down after negotiations with local community representatives were broken off. Hundreds of Dayak villagers blockaded access to the mine, preventing supplies of lime (used to treat acid waste) and diesel fuel oil getting through to the mine site on the Kelian river. The blockades continued for several weeks in April, May and June, forcing the company to suspend operations for the first time since the mine started production in 1992. Several community leaders were detained by police and brought downriver for interrogation. One man was imprisoned for several weeks for "initiating a blockade" at Kebut village.

PT Kelian Equatorial Mining, owned by Rio Tinto (90%) and Indonesian partner PT Harita Jayaraya (10%), produces around 13-14 tonnes of gold per year. By the third week in May, the company reported production loss at 700 kg.

In June 1998, PT KEM signed an agreement to negotiate with community organisation LKMTL, following community demands presented at annual shareholders' meetings in London and Melbourne. Rio Tinto and the Indonesian environmental NGO WALHI were parties to this agreement. Government officials (who invariably side with companies) were to be kept out the process. The negotiations - to cover land compensation, human rights abuses by mining staff and Indonesian security personnel, pollution and mine closure plans - reached deadlock in April this year. This was because PT KEM refused to meet community demands for fair compensation for land taken for its operations. The company, which had dragged its feet on this issue for two years, then reneged on the deal with LKMTL by bringing the local district head into their meetings and by opening separate negotiations with a group backed by him. Unlike LKMTL, which was established through a community meeting of 2000 people in April 1998, the government-backed team had no mandate from local claimants.

The blockades were finally lifted in mid-June when WALHI and Rio Tinto mediated between PT KEM and LKMTL. It was agreed that the new group should also be allowed to negotiate, but only on land compensation. PT KEM favoured the new team, led by village heads, who were prepared to settle for much less than LKMTL. The company's tactic successfully divided the community and by August LKMTL was forced to accept terms for compensation for land taken for access roads for the mine site, the river port of Jelemuq and the land used for company housing. Rio Tinto announced that further negotiations would be held on compensation for crops and erosion damage to land near the access road.

Another breach of faith

As negotiations moved onto the next area - human rights - PT KEM continued to undermine LKMTL's position as the community's representative by planning with district officials to settle the matter through a customary ceremony. In October, WALHI issued a strongly-worded statement announcing its withdrawal from negotiations and from the June 1998 agreement on the grounds that PT KEM and Rio Tinto had sought to split the community for its own advantage, had misled and insulted LKMTL and were not genuinely committed to the terms and spirit of the original agreement.

Allegations of human rights abuse against the company include sexual abuse and rape committed by senior company staff against local Dayak women. Contents of a confidential report prepared by a team of people including company and community representatives, chaired by a member of Indonesia's national human rights commission, Komnas HAM, were leaked to an Australian newspaper in June.

(Sources: Jakarta Post 9, 12, 24/May/00; 8,9/June/00; 14/Aug/00; WALHI statement by director Emmy Hafild, 13/Oct/00; CAA 30/Jun/00; Australian Financial Review, 30/Jun/2000)

Mine closure

When Kelian is mined out in 2004, PT KEM says it will carry out monitoring and rehabilitation activities for at least three years after that. According to company director John Vale, PT KEM is in the second of four stages set out in the company's mine closure statement which was issued in 1998. The current stage, says Vale, involves consultation with stakeholders including Indonesian investor PT Harita Jayaraya, the World Bank, central and local government, local people and NGOs. The third and fourth stages cover the preliminary and detailed technical aspects of the mine closure work. Vale said the company would help prepare the workforce for "the transition from working as mine employees to other work, by providing various kinds of training". He said PT KEM had conducted a survey to find out what kind of training was requested and would benefit these employees.

JATAM, Indonesia's foremost mining advocacy NGO, urged the Indonesian government to reject the closure plans, saying that three years were not nearly enough. JATAM says that the monitoring and rehabilitation period should be twice as long as the mine's productive life. It wants PT KEM to fill in the mining pits, replace overburden in its original position, and rehabilitate tailings disposal sites. The company should also provide alternative economic programmes for people living around the mine - and this should have started four years before closure. JATAM argues that these measures are standard criteria for mine closure practice and says there is no reason why Rio Tinto shouldn't carry them out too.
(MinenergyNews.Com 28 & 29/Sep/00)

KPC strike

Rio Tinto's Kaltim Prima Coal mine (PT KPC), also in East Kalimantan, was the scene of a protracted labour dispute from June to August. Around 250 workers from the SBSI union occupied part of the mine site to press home demands for a wage increase and restoration of allowances. Negotiations to end the strike broke down in July when Rio Tinto refused to guarantee that workers who had taken part in the strike would not be dismissed. The strike forced a complete shut down of mining and transportation of coal to the port. According to the company, losses amounted to $58 million.

Words and deeds

The turbulent months of strikes, blockades and revelations of sexual abuse have not prevented Rio Tinto from continuing with efforts to project a caring image. In July the company's Indonesian director, Noke Kiroyan, told the Indonesian Investment Summit on Mining and Energy in Jakarta, about Rio Tinto's commitment to improving community relations. "The time has come to be more flexible, to allow the smaller voices to be heard, to be more democratic and to be more fair", he announced, urging companies to "embrace change". Quoting Rio Tinto's chief economist David Humphreys, he said that improved community relations are economically beneficial for mining companies. Referring to the years of "favourable working environment" under Suharto, he stated: "As a sector that has benefited so much from the past 30 years, it is not only our responsibility, but also out duty as the current mining leaders in Indonesia to contribute toward playing our role and bringing change into our industry responsibly, fairly and ethically."
(Jakarta Post 17/Jul/00)

Such words indicate that Rio Tinto is more interested in improving its international image than dealing fairly with the Kelian community, or addressing the huge environmental problems at KPC and Grasberg.

The strike was eventually ended in mid-August when KPC, which employs around 2,600 workers, gave a verbal guarantee that striking workers would not be dismissed. The police had also threatened to disperse the strikers with rubber bullets. In a separate press report, KPC said that the workers had agreed to accept disciplinary measures. Police arrested at least one man as a 'provocateur' behind the strike. (MinenergyNews.Com 14/Aug/00; Jakarta Post 19/Aug/00)

The mine, which is Indonesia's biggest coal producer has been under special scrutiny this year because KPC is due to sell a substantial shareholding in the company by the end of 2000, according to its contract with the Indonesian government. At present it is owned by Rio Tinto (50%) and the US-UK merger Amoco-BP (now renamed Beyond Petroleum) (50%). East Kalimantan's provincial administration is mounting an effort to take a controlling stake in the company, and is currently arguing with the company and central government over the size of the stake available. Rio Tinto and Amoco-BP are reported to be against this move, preferring to sell smaller stakes to different investors in order to keep control of the company.

KPC started commercial production at the Sangatta coal mine in 1992 and its 30 year contract expires in 2021. The company currently has contracts with 31 clients from other parts of Asia as well as Europe and the US. Among its domestic customers is PT Freeport Indonesia (part-owned by Rio Tinto - see article on Freeport).

Playing the nationalist card

During the strike, both KPC and the central government expressed frustration and concern at the lack of police action against the workers. After at first claiming that the strike was a local matter which did not concern the central government, director general of mines and energy Surna Tjaha Djajadiningrat then urged the national police chief to take stern measures against the strikers. This was the same month that President Wahid announced he would order the use of force to safeguard mines.
(See also DTE 46)

The strike at KPC and blockades at PT KEM were then used by Mining Minister Susilo Bambang Yudhoyono (now Co-ordinating minister for politics, social and security affairs) as evidence of an "international anti-mining movement" which was stirring up "old disputes" in a "planned and organised" way. Head of Indonesian Mining Association Paul Coutrier played a different version of the nationalist card by claiming that Indonesia's competitors may be behind the trouble. As Rio Tinto's Noke Kiroyan pointed out, buyers would look to Australia (where the company operates another problematic coal mine) as an alternative source of coal - since other mines in Indonesia supplied different coal qualities. Australia has experienced shaky relations with Jakarta since its troops were brought in to East Timor as part of the UN Interfet force.
(Sources: Jakarta Post 1/May/00; 27/Jun/00; 6,11, 21,22,24& 27/Jul/00; 9,18,19/Aug/00; Kaltim Pos 30/Jun/00)

Rio Tinto involvement in drafting Indonesian laws

"Should an Australian legal rights group in "partnership" with one of the world's largest mining companies be involved in helping draft Indonesian legislation on the environment, human rights and corporate governance?".

Writing in the Jakarta Post, Bob Burton, of Sydney-based organisation Mineral Policy Institute explains how Rio Tinto is giving A$50,000 to the prestigious human rights group, Australian Legal Resources International (ALRI), for a project which aims to provide assistance for "legislative drafting and comprehensive legal and judicial reform." Part of the project involves drafting environmental, human rights, constitutional, bankruptcy and corporate law. More funding is being provided by the Australian government aid agency, AUSAID.

Burton describes how the head of ALRI (also serving as an executive member of Australia's human rights and community aid umbrella group, ACFOA) was seconded to Rio Tinto's public relations section last year. ALRI saw no potential conflict of interest, but ACFOA decided it would be better for the person to stand aside for the duration of the secondment - which subsequently became a full-time post. "The whole project raises disturbing questions about the blurring of roles of government, corporations and well-intentioned non-governmental organisations" says Burton. It raises concerns about whether the projects NGOs undertake and policies they advocate "are truly independent or have been shaped by the interests of their sponsors."

(Jakarta Post 25/Jul/00. MPI website is at

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