Inco contract questioned

Down to Earth No. 45, May 2000

PT Inco Indonesia, subsidiary of Canada-based Inco Ltd, has come under fire from indigenous communities and the local government over the company's nickel mining operations in Sulawesi.

In March, indigenous representatives and NGOs from the three provinces affected by PT Inco - South, Central and Southeast Sulawesi - met in Soroako, centre of the company's mining operations, to discuss the impact of the mine. They issued the 'Soroako Declaration' which outlined the communities' main grievances against Inco and demanded that:

  • indigenous rights must be recognised
  • the contract be must renegotiated with the company, local government and communities as equal partners
  • environmental damage must be restored
  • environmental and social problems must be solved
  • conflicts over land must be settled

The following month, the South Sulawesi provincial assembly asked the government to renegotiate Inco's contract as it had been made without the participation of the local government or local people.

In Jakarta the argument for reviewing Inco's contract was different. In February, member of parliament Habil Marati said the contract had incurred losses to the community, the region and the state, because it had failed to develop 36,635 hectares of concessions in the neighbouring province of Southeast Sulawesi and had left them "idle" for more than 30 years. (A parliamentary commission later cited a figure of 65,000 ha and called for state-owned mining company Aneka Tambang to take over the concession). Habil also complained that the company had never paid any land or building taxes to the provincial government, but only land rent, which went directly to the central government. Southeast Sulawesi Governor La Ode Kaimoeddin has complained on several occasions about the company's inactivity and suggested that it should hand the concessions over to other investors if it could not do the job itself. Inco is due to develop the Southeast Sulawesi concession area by 2010.

This argument, which focuses on the income from foreign investment for local governments, ignores completely the need to include local communities in negotiations and to consider the serious social and environmental impacts of mining. It confirms fears that regional control could bring just as much harm to communities and resources as the centralised system.

The questions over Inco's Indonesian contract of work come at a time when the company's fortunes in Canada have been stalled over the failure to reach agreement on mining the massive Voisey's Bay nickel deposit. While the provincial authorities in Southeast Sulawesi would be happy to see the company focus more attention on its Indonesian operations as a result, it is clear that the indigenous peoples affected by current operations and expansion plans would not.

In April representatives from local NGO Tanah Merdeka and the Soroako community toured Canada, meeting NGOs and community groups involved with campaigns against Inco there.

(Soroako Declaration 25/Mar/00; Indonesian Observer 17/Feb/00; Kompas 12/Apr/00; Antara/Asia Pulse 18/Apr/00)

For DTE's special reports on Inco see the campaigns page