North Sulawesi confronts Jakarta over MSM gold mine plans

Down to Earth No. 72 March 2007

The Toka Tindung gold mine project is now in doubt after strong opposition to Meares Soputan Mining's plans to build an open pit gold mine in a sensitive coastal area and dump mine waste into Rinondoran Bay.

A major blow came when an environmental hearing in August 2006 forced the company to alter its plans to instead use the more expensive option of disposal of tailings on land. This February, North Sulawesi governor, Sinyo Harry Sarundajang, publicly rejected the company's revised environmental impact assessment.

Responding to a request from environment minister Rachmad Witoelarto to make a decision on the environmental impact assessment (EIA), the North Sulawesi governor officially stated on 2nd February 2007 that he was rejecting it for three reasons, namely (1) that the project had been rejected by the community; (2) that the tailings solutions proposed could not guarantee public and environmental safety; and (3) that the proposed mining operation was in conflict with provincial land use planning which designates the area for tourism and fisheries. The coastline is proposed for world heritage status. The governor, who is the highest provincial authority for environmental permits, took his firm stance against the mine to the national parliament in January saying, "We are not against foreign investors, but the people need environmentally friendly investment."

Meares Soputan Mining (MSM) continued to proceed to build the mine, aiming to start operations in early 2007 without waiting for environmental approval. The main construction contract is held by a subsidiary of the Australian company, Leighton Contractors, while Bakrie Construction, owned by the family Aburizal Bakrie - Indonesia's co-ordinating minister for people's welfare, is contracted to supply and pour concrete. It is not clear which company will be building the controversial tailings dam. Another Bakrie company is currently embroiled in the Sidoardjo mudflow scandal (see below).

By October last year, MSM had constructed a jetty on Rinondoran beach, built a 7 km major road to connect the Toka Tindung mine site to the shore and excavated cyanide settling ponds, in addition to diverting the River Maen to supply water for processing. Questions are being asked as to why the local authorities allowed this construction work to go ahead well before a valid EIA or other permits were obtained. The company's private harbour facilities also need a separate EIA, which MSM reportedly does not have. The head of the national police has been asked by parliament to investigate why the company's operations have been protected against legitimate public protest despite a lack of proper project permits.

In many ways the Toka Tindung case is a classic clash between local and central government over foreign investment and the use of natural resources. As Jakarta issued MSM's all-important Contract of Work, the company has paid little attention to local government spatial planning and regulations.

While the Australian-based, British-listed mining company flouts regional autonomy and presses ahead, thousands of villagers have little option but to take direct action. The gold mine threatens the livelihoods of thousands of fishermen and farmers, as well as the tourism potential of the area, because of the problems of disposal of mining waste and the risks to local water supplies.

The people of North Minahasa and Bitung - the two districts most directly affected by MSM's plans - have so far succeeded in persuading local politicians to consider more sustainable development by a combination of peaceful protests, public meetings, lobbying in Jakarta and Manado and letters to investors. The determined campaign has been co-ordinated by community group (AMMALTA - Aliansi Masyarakat Menolak Limbah Tambang) with support from local, national and international NGOs.


A new EIA or a revised EIA?
Minister for Energy and Mining, Purnomo Yusgiantoro, has consistently supported mining company PT MSM and its local subsidiary PT Tambang Tondang Nusajaya (TTN), regardless of local sentiments and a lack of clear authority to issue approvals in the absence of the approval of other branches and tiers of government. In March 2006, he advised that operations could continue even though the company's 1998 environmental impact assessment (EIA) was out of date. This contradicted an earlier ruling from the environment ministry that MSM must halt operations and undertake another environmental study. Under Indonesia's Environment Act, any development which could cause significant impacts on the environment must have an EIA in order to obtain the necessary operating permits (UU 23/1997 clause 18).

The company's attempt to ignore the environment minister's December 2005 ruling and to operate under a revised, rather than a new, EIA triggered widespread protests by communities likely to suffer from the mine's social and environmental impacts (see DTE 70). There was some debate as to whether this EIA process should have taken place at all. The 1992 law on Spatial Planning says EIAs can only be considered for activities which are included in the Local Plan and, reportedly, mining is not included in North Sulawesi's current plan.

The EIA revision process was announced by MSM in the local daily, Manado Post, in mid-June and offered all interested parties the chance to make their views known within one month. Community representatives publicly rejected this 'opportunity', stating that MSM and TTN were only seeking their own advantage while putting local livelihoods at risk. AMMALTA wrote immediately to the ministry of the environment and the North Sulawesi Bureau of Environmental Management (BPLH Sulut) stating its opinion that the companies were, in effect, operating illegally and urging Jakarta to stop them, but to no effect.


Marine or land waste dump options
MSM and TTN eventually presented the 'framework document' for the EIA revision in Manado on 4th August 2006. Their preferred plan, as before, was to dispose of the mining waste by submarine tailings disposal (STD) - basically pouring a slurry of ground-up ore and chemicals remaining from the mineral extraction process onto the seabed over 1 km deep off the coast at Rinondoran. This is the cheapest and easiest option for the company, but the practice of STD is not permissible in most countries due to environmental protection standards, in particular water quality and sediment guidelines.

However, the debate is not simply about the waste from the gold mine; the ecological impacts of open pit mining with the attendant problems of dust, noise, surface water and ground water contamination, overburden and acid rock drainage must also be considered. In addition, MSM plans to divert rivers and affect local communities' water supply.

The public meeting was attended by members of the provincial and district assemblies, the local environment office and a team from the environment ministry, as well as community representatives and NGOs. It was an opportunity for local and national NGOs to submit evidence against the proposed gold mine.

Provincial and district assembly representatives spoke strongly against the proposed Toka Tindung mine. They drew attention to the strong local opposition from local communities and the potential threat to the thriving local fishing industry. They expressed their concerns about the potential environmental pollution from mine tailings, drawing parallels with the impact of the notorious Newmont Minahasa mine on the other side of North Sulawesi which used STD. They also noted social costs associated with the Ratototok mine, including poverty and prostitution.

The environment ministry team too, was highly critical of MSM's submarine tailing disposal (STD) plans, largely due to the controversy over the Buyat Bay case. The criminal prosecution of Newmont mining company and its managing director, Richard Ness, for environmental pollution resulting from its STD operations is still in progress. (see DTE 70 for background). It ordered MSM/TTN to consider alternative options and to carry out further studies, including into the hydrology, biology and local economy of the area. Further EIA meetings were held in September and October, before the revised EIA document was sent to Jakarta. The environment ministry then weighed up the oral and written evidence from the Manado meetings.


Flawed process
Although the EIA process took several months, it was only a revision. Furthermore, the two to three month period between the initial hearing and final submission of the EIA was far too short a time to do the detailed studies needed for the environment ministry to make an informed decision.

After the August EIA hearing, MSM's only option was land-based waste disposal. The company has interpreted this as tailings dams, without any further consultation. This approach carries considerable, if not higher, pollution risks than marine dumping - especially since this area is prone to earthquakes and floods. AMMALTA claims that if 10 million tonnes of mining tailings (a reasonable assumption for 5 years of operations) were released into the environment due to a tailings dam accident, up to 60% of Minahasa Utara district and up to 50% of Bitung municipal district could be irreparably damaged.

MSM and TTN have publicly insisted that neither the tailings nor the overburden will contain metals or cyanide above permitted levels. (Manado Post 7/Oct/07 quoted inPetisi AMMALTA). However, the EIA contained no detailed information about the area of the mine site, the existing vegetation or aquatic life, the composition of waste, the methods of waste treatment or monitoring of pollution levels.

The Commission did not have the time, resources or authority to gather evidence from independent academics and several relevant government agencies, including the department of health, were not included at all.

Local NGOs point out that the Toka Tindung site is located in a hilly water catchment area above the heavily populated subdistricts of Likupang Timur and Bitung Utara. The excavation of a huge pit which will intersect the ground water table will require the pit to be continuously pumped out, with the likely result that the surrounding water table will be lowered. This will reduce water supplies for some 20,000 people. Also, the gold processing plant requires huge volumes of water, with the potential to result in water shortages for local agricultural communities.


Letter to investors
The Indonesian mining advocacy network, JATAM, wrote to the leading investors behind the Toka Tindung project in July 2005. These include Archipelago Resources Plc (Australia), ANZ (the Australia and New Zealand Banking Group), NM Rothschild & Sons (UK), Societe Generale (France) and WestLB (Germany). It asked the banks and investment funds to explain their reasons for investing in the gold mine and urged them to ensure that MSM and TTN comply with social and environmental safeguards in their operations.

"Investing in the project risks damaging the marine environment with mining waste and will cut off the forest of Tangkoko Dua Saudara Nature Reserve, constituting serious violations of several Indonesian laws on environment, water pollution prevention, forestry, and protection of biodiversity and natural habitats. It is not responsible investment to continue with an extractive project that threatens the livelihoods of the local community, is leading to violence and human rights violations, and risks devastation of the environment."

West LB and ANZ have signed up to the Equator Principles and West LB, ANZ and Societe Generale are also signatories to the UN Financial Institutions Statement on the Environment and Sustainable Development - initiatives intended to ensure that financial investment does not go into projects that are socially and environmentally damaging. West LB was apparently unaware of the large scale community opposition to the mine until informed by the German NGO, Watch! Indonesia.

(Source: JATAM, WALHI, AMMALTA letter to investors, 21/Jul/06.)


Where is the money?

The Toka Tindung gold project is 85% owned by Archipelago Resources through PT Meares Soputan Mining and PT Tambang Tondo Nusajaya. The deposit is known to contain about 48.2 tonnes (1.7 million oz) of extractable gold and is expected to last around six years. Archipelago intends to explore further at Toka Tindung and four nearby locations. Archipelago is registered as an Australian company, but is listed on the Alternative Investment Market (AIM) of the London Stock Exchange. AIM: the cowboy exchange Archipelago raised a syndicated loan of US$38.5 million from four international banks in March 2006 and a further US$11 million through AIM two months later to finance the Toka Tindung operation.

Indonesian NGOs have asked: what accountability does the London Stock Exchange (LSE) demand from AIM members on investments with high social and environmental risks? The answer is none. Even within financial circles, concerns have been raised about the lack of oversight, transparency and accountability in the AIM, particularly in the 10% of the market that represents mining companies. So the LSE has set out a number of technical and financial guidelines for AIM members which are intended to make sure that the reported mineral deposits actually exist and that investors' money is safe. The only reference to environment and land issues is to 'necessary economic conditions' for working the deposit and that the admission document should include 'risk factors'.

(Source: 19/Mar/06; Guardian 27/Nov/06; Dow Jones 13/Feb/07)


Challenging MSM's activities
While MSM continued to press ahead to build the mine despite local community and government opposition and while its permissions were still in dispute, local people took action into their own hands. As a ship carrying building materials for the Toka Tindung site approached the shore in November 2006 and again in February this year, Rinondoran fishermen formed a blockade with a flotilla of small boats and fishing platforms to prevent access. Women and children guarded the beach. Paramilitary Brimob police who receive financial and logistical support from MSM threatened protestors with rifles and confiscated the knives they use for preparing bait and ordinary household activities. MSM has built a jetty specially to bring ashore the plant and heavy equipment which the company has purchased second-hand from Barrick Gold's El Tambo mine in Chile.

The ship tried for three days to dock, but was forced to anchor at a nearby island. On 12th November, as villagers from Kalinaun, Rinondoran and Batuputih villages were coming home from church, they saw the ship approaching the jetty once more. Feelings were running high as they tried to protect their livelihoods by driving the ship off with their fragile craft. The crowd of a hundred people burnt down a hut on Rinondoran beach that belonged to MSM.

MSM was quick to respond: Likupang police summonsed 18 local fishermen for questioning and detained two. However, the community took heart from a statement by North Sulawesi's governor to the local press the next day. "I will not allow MSM to continue operations. They must wait until the EIA is legal", Sinyo Harry Sarudanjang said. On November 15th, ten representatives of the community went to North Sulawesi's police head office to hand in a document listing what they describe as MSM and TTN's environmental 'crimes'.

In February, villagers started another blockade to stop construction materials being landed at the jetty.

MSM has also taken an aggressive approach to procuring the land it needs for the mine site and associated infrastructure. In June 2006, the company reported that "all land purchases necessary to commence production have been completed ahead of schedule". Not all the landowners were prepared to give up without a struggle: NGOs report there are currently at least five land dispute cases between local people and MSM.

One of these cases has running for years. The Dedeng family initially refused compensation and took legal action to force MSM to return its 30 ha of land. The case eventually went to Indonesia's Supreme Court which, in April 2005, decided in favour of the local landowners. The company refused to release the land and mobilised a crowd of its workforce and paid youths to protect their interests. Unsurprisingly, the court in Manado decided in October last year that the judgement from Jakarta could be deferred. AMMALTA immediately urged the Supreme Court and Indonesia's Anti-Corruption Commission to investigate the local court's intervention. Meanwhile, MSM stepped up the intimidation against the family by suing them for Rp100.2 bn (approx US$10 million) for "ruining the company's good reputation in North Sulawesi and the international business community."

Intimidation by the company and the police is not new. Back in 2003, the North Sulawesi Assembly (DPRD) formally wrote to the provincial governor recommending that all local police be withdrawn from the MSM/TTN area and any police, including the paramilitary Mobile Brigade, who intimidated or used force against the local people should prosecuted.

A peaceful demonstration against the gold mine by over 3,000 local inhabitants in mid-July 2006 (in the run up to the first EIA hearing) provoked a violent backlash. A group allegedly backed by the mining companies, bombarded the protestors with stones and beat some of them up causing injuries to 54 people. The communities pressed the police to take legal action against the instigators of the violence. But although police initially said they would investigate the incident, they subsequently released the main suspects.

People living in the mine concession area are reported to have been threatened by the company's security guards. Villagers from Kalinaun were prevented from joining the above protest by a gang of thugs led by a MSM worker who stopped their truck and subjected them to violence. This MSM worker was subsequently arrested by police.


A sustainable future for North Sulawesi
It is not surprising that the Jakarta government remains keen to expedite the EIA process and approve the mine. MSM has in the past made much of the fact that it had invested tens of millions of dollars in the Toka Tindung mine and expects to invest many more in future. For Jakarta to reject the project at this stage would risk a large compensation claim and more bad publicity driving away potential investors.

Against this background, the North Sulawesi governor's strong position against the mining plans, comes as some surprise, but is nonetheless welcome. The communities and NGOs opposing this project must now hope that the governors opposition will prompt the Jakarta government to take another look at the long-term costs and benefits to the communities of Minahasa Utara and Bitung of sustainable development compared with the six-year 'get rich quick' scheme now being promoted.

For further information on the campaign to stop the Toka Tindung mine, see


Natural disasters in North Sulawesi
The Toka Tindung gold mine is in an area which, like many parts of Indonesia, is highly geologically active. This increases the risks of the collapse of tailings dams and the fracture of waste disposal pipes. Earth tremors are common in North Sulawesi. On 21st January, the province experienced a 6.7 Richter earthquake from an epicentre 178 km south-east of Manado. Mount Soputan erupted in November and December 2006, pouring out millions of cubic metres of lava and dust.

(Source: Vulcanology Survey of Indonesia,

WALHI Sulut statement to EIA Commission 20/July/06; JP 5/Oct/06; Petisi AMMALTA 12/Oct/06; MinergyNews.com18/Oct/06, Berita Sulut 19/Oct/06; JATAM news14/Feb/07; Dow Jones 13/Feb/07; Archipelago Resources press release 13/Jun/06; additional information from AMMALTA, JATAM and WALHI. For information on banks and responsible investment see and