No more mining!

Down to Earth No. 44, February 2000

Indonesian communities and NGOs have called for a moratorium on large-scale mining in Indonesia

The Mining Advocacy Network (JATAM) - an association of community organisations and NGOs - issued a call for an immediate stop to all mining activities in Indonesia at a November workshop in Tomohon, North Sulawesi.

As well as calling upon the Indonesian government not to sign any new contracts with mining companies, JATAM's "Statement of Unity" urges the government to revoke all existing mining contracts and to temporarily halt all active large-scale mining operations.

The group excludes community-based mining from the moratorium in order to protect local livelihoods in places with strong mining traditions, as long as it "fulfils all the necessary requirements of the principles of justice, human safety and environmental quality".

Lastly, the statement demands that the "sovereignty" of and respect for peoples' basic rights serve as the foundation for future investment in natural resources.

JATAM explains its stance as a response to Indonesia's precarious position "on the verge of a massively serious ecological disaster", with the mining industry one of the main causes. According to JATAM, 908 companies have official permits to mine areas throughout the archipelago. Their concessions cover 84,152, 876 hectares of land - around 60% of Indonesia's entire land area.

In the past 32 years, says JATAM, the government has issued over 1,200 mining licences of various forms to the mining, oil and gas industries, to foreign and local companies (see table for details of three types of mining concession.)


Concession type Number of concessions Hectares covered
Mining concession (KP) (domestic) 668 48,363,263.09
Contract of Work (foreign) 116 28,525,595.99
Coal Contract 124 7,264,017.84
TOTAL 908 84,152,875.92

Source: JATAM quoting Dept.Mines and Energy

Costs outweigh benefits

The mining sector, along with other resource-based industries is regarded by the current government as an important generator of foreign exchange. There are currently 32 major mining operations in the country (and West Papua) extracting coal, nickel, gold, copper and other minerals. According to recent figures, the mining industry accounted for 3.7% of gross domestic product in 1998 and more than double that the year before. It also accounted for 18.7% of total non oil-and-gas exports in 1998, up from 14.2% the year before. The industry generated US$4 billion in domestic and export sales in 1998 and last year's contribution to state coffers was around $540 million.

Far less certain is how the income from mining is used. Until now contracts which oblige mining companies to hand over a portion of royalties to local administrations in the areas they operate have been overridden by other rules requiring all income to be channelled to Jakarta. In the past few months regional governments have started demanding their fair share as they gear up for local autonomy under decentralisation measures introduced last year. In November the South Sulawesi government demanded that the central government pay some Rp 6 billion (almost US $900,000) in outstanding royalties from the Inco nickel mine. Under the new law on fiscal balance, the tug of war over royalties and taxes is supposed to stop, with 80% of mining revenues going to regional administrations and only 20% being returned to Jakarta. However, it is by no means yet certain how much real control the mining ministry in Jakarta will devolve to district and provincial level. In December, the new mines and energy minister, Lt Gen. Yudhoyono said the sector should continue to be overseen by the central government because of its strategic nature. Others see the ministry of mines and energy's role as dispensable under decentralisation. According to Herman Afif Kusumo, head of the Association of Indonesian Mining Professionals, the success of the transfer of authority to the regions will largely depend upon Jakarta's "sincerity", predicting that officials would be reluctant to relocate to regional centres.

New bills for both the mining and the oil and gas sectors are still in the process of being drafted. The new mining law is expected to change the royalty system which obliges foreign companies to hand over a portion of their earnings to the state. Nationalists have argued that more profits from the exploitation of the country's natural wealth should be retained in Indonesia.


In defence of people's mining

A people's mining defence team (TATR) has been set up by lawyers and human rights workers concerned over the mining industry and its impacts. The team was established at the offices of mining NGO, JATAM, in Jakarta last October. In November the team carried out investigations into the Aurora gold mine in Central Kalimantan, and its impact on local Dayak communities (see also DTE 43). TATR plans to assist the community take legal action to evict the company.
Address: TATR, Wisma Yakyf Lantai II, Jl. Waung Buncit Raya 99, Jakarta Selatan, Indonesia.

(Source: GALI-GALI 24/Dec/1999)

Is it worth it?

Arguments over levels of royalties and how they should be shared out do not address the more fundamental issue now being raised by JATAM: is large-scale commercial mining really worth it? There are no figures to quantify the social, cultural, health and environmental costs.

JATAM argues that, overall, the industry "does not deliver any significant contribution to state income, either at central level or at the local level," and concludes that the costs of mining far outweigh the benefits.

JATAM has asked other organisations to sign on to the Statement of Unity. Details are available from JATAM .

(Source: "Statement of Unity" A Moratorium on Indonesian Mining Activities 29/Nov/99; Far Eastern Economic Review 14/Dec/99; Jakarta Post 21/Dec/99 & 29/Nov/99).