Indonesian government again pushes parliament to approve 13 mining operations

Indonesian government again pushes parliament to approve 13 mining operations

Miningindo Weekly e-Newsletter

December 18, 2003

The Indonesian government has again requested that the national parliament (DPR) approve the resumption of 13 mining operations in areas that overlapped with the zone of protected forest. Mining permits for those 13 operators should be promptly issued in order that the operators can start again with their activities.

Coordinating minister of economy Dorodjatun Kuntjoro-Jakti after opening a scientific seminar held by the association of Indonesian geologists (IAGI) together with the association of Indonesian geophysicists (HAGI) in Jakarta, Tue (Dec.16) said that the worry on environmental destruction caused by the mining activities should not be exaggerated because only 2% of the mining concession areas overlap with the areas of protected forests in Indonesia. "The DPR should be cooperative with those 13 mining operators," he said.

Environmental destruction in Indonesia was actually not caused by mining activities. Environmental destruction in the country factually occurred in forest concession areas due to lacking efforts of reclamation and re-forestation. It is not wise to make a use of environmental issue for rejecting the issuance of mining permits for those operators.

The recent joint meeting between the coordinating minister of economy, forestry minister, minister of energy and mineral resources, state minister of environment; and the national parliament (DPR) of Indonesia, seems to be unsuccessful and the meeting has so far produced no follows up. At the meeting it was proposed that a credible institution with expertise and scientific capability like the Indonesian Institute of Science (LIPI) was involved in assessment and recommendation for the approval of the mining operations.

It is worrisome that the prolonged controversy over the permits for those mining operators would worsen the investment climate in Indonesia. Minister Kuntjoro-Jakti has asked the Indonesian mining association to explain to the DPR and local governments (Pemda) in regions about the facts such as the good and bad things of mining operations and impacts to environment. Non-governmental groups (NGOs) of environment that have unilaterally rejected the approval of those 13 mining operations should also be given scientific explanation.

Further he explained that in the next five years Indonesia needs additional investment of US$170 billion to develop mining infrastructures throughout the country, particularly in Eastern Indonesia. But over the past years there has yet to be new investments in mining sector, thus then there will unlikely be development in mining infrastructures in the country.

One of solutions to reach the target of investment of US$170 billion is to again allow the resumption of mining operations that have so far been hindered by forestry law no.41/1999. Mining companies that have signed contracts should be allowed to go ahead with their activities.

Indonesia indeed needs investment in mining sector. The fruit of mining operations can be enjoyed in the next 10-20 years. It is closely related to prediction that China will become an industrial giant in the next 25 years. China will need raw materials in bulk. The country has so far imported raw materials from Australia. Indonesia was left behind Australia in negotiating with China to supply the raw materials.

The minister further said, if mining investment is not realized soon, the sector will be left behind for 20 years. If Indonesia cannot keep up with the growth of market, the bulky demand of raw materials in China will gradually decrease and Indonesia will miss a very good opportunity of market for its mining commodities.

The currently existing investment in Indonesian mining sector is insignificant because new investors have hardly come to the country. It is worrisome that in the year 2007 Indonesia will face a big problem in mining sector due to minimal activities of exploration. The low investment has so far been hindered by unfavorable legislation; it is very hard for new investors to obtain permits in the country's mining sector.

Still in the context of overlapping areas between mining and forestry sectors, the minister said that law no.41/1999 on forestry should be complied with. But he continued to call for approval of the projects that had actually been agreed and signed prior to the issuance of the forestry law. "We request that the DPR approve the resumption of those 13 mining operations," he emphasized.

According to him, in years to come whatever the solution to the law should be of the exclusive concern of the mining stakeholders in the country. If the stakeholders consider that the law has to be revised or totally replaced, they can do so and propose a revision or new bill to the new parliament following the general election in year 2004.