Green light for mining in forests

Down to Earth No 55  November 2002

The Indonesian government is close to approving the resumption of open-pit mining in protected forests - a move that is likely to speed up deforestation and the impoverishment of indigenous peoples.

Six mining companies will be the first to get approval from Jakarta to resume mining operations in protected forests, according to Indonesian press reports. The move is being vigorously opposed by civil society groups. The forestry ministry, which also held out against the change, appears to have buckled under intense pressure from the mines and energy minister and others within the cabinet, who say they want the mines to go ahead to speed up development in eastern Indonesia. They also argue that the move will encourage more foreign investors into the cash-strapped country by ensuring legal certainty in Indonesia. Final approval is expected some time in November.

The companies were named in early October by Bambang Trimulya, head of planning at the forestry ministry, as PT Weda Bay Nickel, PT Nusa Halmahera, PT Gag Nickel, PT Galuh Cempaka, PT Jorong Barutama and PT Barisan Tropical Mining.

The six companies were selected by a joint screening process by officials from the forestry ministry and a parliamentary commission on forestry affairs. The team was set up to study proposals from 50 companies affected by the 1999 Forestry Law which bans open-pit mining in protected forests (see DTE 53/54 for background). Altogether 150 companies are affected by the law, covering a total of 11.4 million hectares of protected forests. A short-list of 22 companies has been put forward, which includes existing conflict-ridden projects such as the Freeport/Rio Tinto concession in West Papua and Rio Tinto's Kelian gold mine in East Kalimantan. The government will get round the 1999 law by changing the status of forests in the companies' concessions from protection to production forests.

Of the six projects, BHP's nickel project on Gag Island, off the western tip of West Papua, is the biggest. The deposit is estimated to be the third largest in the world. Gag Island is part of the Raja Ampat archipelago, famed for its coral reefs and rich marine life. The Gag mine (like the Weda Bay project) will probably use the submarine tailings disposal method of getting rid of its waste - which means dumping the waste under the sea - a clear threat to this unique marine environment and to the livelihoods of the people who inhabit these islands.

Australian-owned PT Barisan Tropical Mining is the only project already in the production phase. Pollution from the mine, which started producing gold in 1997, has caused health problems among the local population. In 1999, local people demanded that the company restore the river to its former unpolluted state, take responsibility for any illnesses and deaths caused by the mine and stop the use of explosives (see DTE 41:7). In 2000, there was a leak from the mine's waste storage pond, sparking protests from local people and environmental groups.

Newcrest's Nusa Halmahera Minerals concession in Maluku has by far the largest area of conservation forest (the strictest level of protection) amounting to 21,060 hectares.

NGOs are warning that the approvals will speed up deforestation, lead to more flooding and landslides and marginalise indigenous peoples living in forest areas.

Mining advocacy groupJATAM and other NGOs are continuing to lobby against mining in protected forests and to collect signatures for a petition - see for details.

The World Bank's Senior Biodiversity specialist, Dr Kathy MacKinnon was also reported by the Jakarta Post to have expressed disapproval of the government's move, by warning that foreign donors may further reduce environmental grants to Indonesia, if the approvals went ahead. (Source: Jakarta Post 7 & 22/Oct/02; 4,5,7,17,21,25 & 30/Sep/02; Straits Times 7/Sep/02)


Rio Tinto mine rejected?

In October, the Jakarta Post quoted forestry official Trimulya as saying that the parliamentary team had decided not to allow further mining activity to proceed in the concession held by PT Citra Palu Minerals (CPM). This gold exploration project in Central Sulawesi, majority-owned by Britain's mining giant Rio Tinto, was rejected because the local authorities did not agree that the mine should go ahead. The decision contradicted a September report in the same paper, which quoted a team member as saying that PT CPM's project was one of four which could definitely resume operations.

The CPM concession is located in an area of forests belonging to indigenous peoples and overlaps with the Poboya-Paneki Forest Park. A gold mine would damage forests that are the basis of local peoples' livelihoods and also put the water catchment area for the city of Palu at risk from pollution. (See DTE 53-54 for more background and information on community opposition to mining on their land.)

In August 2002, DTE wrote to Rio Tinto to raise concerns over the proposed development. In its reply, the company stated it had stopped exploration at the site in 1999 and never had any intention of mining it. Rio Tinto said the project had been sold to "another reputable foreign investor" conditional upon receipt of government approval for continued exploration. If the rejection of CPM's application to resume activities is upheld, this makes the sale of the company (probably to Australia's Newcrest) very unlikely.

The Rio Tinto letter also said that the exploration activities had been conducted "with the informed consent of those we believed to be the legitimate representatives of the people at the time."

(Source: Jakarta Post 17/Sep/02, 7/Oct/02; Letter from J. Hughes, Rio Tinto 14/Aug/02).

The first six companies

Company Location Main shareholder mineral phase total forest
PT Weda Bay Nickel Halmahera, Maluku Strand Minerals, Singapore nickel, cobalt Exploration 90,020 ha
PT Nusa Halmahera Halmahera, Maluku Newcrest, Australia gold Exploration 366,610 ha
PT Gag Nickel Gag Is, W.Papua BHP Australia nickel Exploration 6,060 ha
PT Galuh Cempaka S. Kalimantan Battle Field Mineral, Canada diamonds Construction 3,920 ha
PT Jorong Barutama S. Kalimantan Bampu Public, Thailand coal Exploration 14,720 ha
PT Barisan Tropical Mining S. Sumatra Laverton Gold NL, Australia gold, silver Production 12,160 ha

Source: JATAM database, circulated by FKKM, 2002 and Jakarta Post 17/Sep/02 using figures from Forestry Planning Agency at the Ministry of Forestry