FDI: still inflicting damage on communities

Down to Earth No 69  May 2006

The following selection of FDI updates shows how these projects are continuing to spark conflict in Indonesia and to ride roughshod over local people's concerns. While companies now routinely promote corporate responsibility policies on their websites and brochures, on the ground, the business of extracting the most profit at the least expense carries on as usual.

Protests against Newmont in West Nusa Tenggara

Investor:
Newmont Mining Corp of the USA, the world's biggest gold producer.

Investments: 
Sulawesi gold mine, PT Newmont Minahasa Raya (now closed); Sumbawa copper and gold mine - PT Newmont Nusa Tenggara. Both Sulawesi and Sumbawa mine contracts were agreed with the Suharto regime.

Profits: 
Newmont says the Batu Hijau copper and gold mine on Sumbawa island (45% share) is one its lowest cost assets. This operation sold 720,500 ounces of gold and 573 million pounds of copper in 2005. Newmont's overall profits for the first three months of 2006 were more than double the figure for the same period in 2005. Net income was $209 million up from $84 million in the first quarter of 2005.

Revenues and taxes to Indonesia:
Newmont says it paid US$47 million in taxes and royalties to the Indonesian government during the Sulawesi Minahasa Raya mine's development and operations since 1994. The company says direct and indirect benefits to Indonesia over the seven year period of operating the mine amount to the Indonesian economy amount to US$500 million.

Newmont Nusa Tenggara pays around $35.90 million every year in taxes, non-taxes and royalties to the Indonesian government. Newmont says that, on top of this, the company annually purchases goods and services from within Indonesia amounting more than US$183 million, pays US$55 million to national employees and spends US$2.3 million in community development.

Impacts:
Livelihood loss in Sulawesi and Sumbawa mines, contamination of marine resources in Sulawesi, reported health impacts in Sulawesi, loss of water for farming and damage to protected forests in Sumbawa.

Update:
Indonesian NGOs are calling for the release of villagers detained by police in West Nusa Tenggara province, following protests against PT Newmont Nusa Tenggara (PT NNT). The villagers have been held in connection with an attack on PT NNT's exploration base camp on March 19th. A series of protests in the province, culminated in the burning down of the camp operated by PT NNT. No staff were injured as they had been evacuated in advance.

In the police 'sweeping' operation on March 26th, there were four gunshot casualties, as reported by the provincial police chief, HM Basri, all of whom were treated in hospital. The Indonesian mining advocacy NGO, JATAM, later reported that seven people had been shot, including two seriously wounded; thirteen people had been detained, including one of the wounded. The NGO reported that Sumbawa's police chief, AH Musarif, had been removed from his post. JATAM and three other NGOs called for an investigation into his involvement in the March 26th shootings. Basri said the police had been forced to shoot after they were attacked by hundreds of villagers carrying bows and arrows, spears and stones. He said that four police officers had been injured. In the week after the shootings, university students demonstrated in support of the villagers and four of these were detained and questioned by police.


Protected forest
The protests centred on PT NNT's exploration activities in the Dodo and Rinti protected forests (more than 12,500 hectares) around 60km from the company's main mine site on Sumbawa. The company's 96,400 hectare concessions on Sumbawa include the Elang block (25,938 ha) which covers these forests. Local people want the company to leave and say that two years of exploration has brought environmental damage and loss of livelihood. They have been prevented from entering ancestral forests to collect such products as honey, candlenut and palm sugar. The water supply has decreased, and crops such as rice, squash and cucumber have failed due to drought.

A report by JATAM and the Life Management Institute (LoH) points out that mining the Elang-Dodo area would mean an increase in processing at Newmont's Batu Hijau processing plant and increased environmental and social impacts as a result. The existing Batu Hijau mine, which Newmont describes in its 2004 annual report as one of the "lowest cost and largest copper producers in the world", already dumps up to 120,000 tonnes of tailings into the sea each day. Local fisherfolk have reported decreases in income since Newmont began discharging its waste into the waters near the mine.

Newmont hit the headlines last year when the government launched legal action over pollution in Buyat Bay, near its now-closed Ratatotok gold mine in North Sulawesi. The criminal case against company executives continues, but a civil case was settled out of court with Newmont agreeing to pay US$30 million. (See also DTE 67 for more background). In April, the company announced it was selling its Martabe gold-mining exploration project in Sumatra as the deposits were too small.

(AP 20/Apr/06; Newmont Mining Corp Annual Report 2005; Newmont Indonesia website at www.newmont.co.id/Jakarta Post 29/Mar/06; Reuters 6/Apr/06; JATAM urgent action 17/Apr/06;Newmont Seeking to Destroy the Elang Dodo Protected Forests, JATAM & LOH Backgrounder, 20/Mar/06)

The JATAM urgent action appeal is at www.globalresponse.org

 

JATAM's moratorium call

Indonesia's mining advocacy NGO network, JATAM, has once again called for a moratorium on mining in the country. The NGO said that mining was doing more harm than good and called for regulations on mining to be revised.

JATAM accused the industry of failing to prove the "myth" that it sustains the Indonesian economy or brings prosperity to local people. JATAM put tax and non-tax contributions to state revenues at Rp7.8 trillion (US$842 million) in 2004, but said that social and environmental costs were much higher. The millions of tonnes of tailings from mining operations had polluted the country's land, seas and rivers and harmed people's health.

"Therefore, the government needs to declare a moratorium on new mining investment and review the contracts of about 70 mining firms presently operating in Indonesia", said JATAM director, Siti Maimunah. (JATAM press release 13/Jan/06; Jakarta Post 27/Feb/06)