RIO TINTO UNDERMINES INDONESIAN LAW

RIO TINTO UNDERMINES INDONESIAN LAW

Jatam Press Release

6th February 2007

Jakarta –The UK/Australian-based mining company, Rio Tinto, plans to continue its pursuit to mine in Lasamphala on the Indonesian island of Sulawesi. Rio Tinto is requesting a concession area of 70,000 hectares that covers area in the two provinces of central and southeast Sulawesi (1). Their plans to move ahead are undermining Indonesian law because the Indonesian House of Representatives are currently drafting a new mining bill to replace the 1967 Mining Act No 11. Rio Tinto is trying to fast track approval of their project and thereby intentionally trying to avoid any new legal obligations that they would be required to follow under the new mining legislation. The old contract model is very beneficial to mining companies but allows for numerous adverse impacts to local communities and the environment.

The old contract model has also triggered disputes between regional governments, the central government and the mining companies. The ‘contracts of work’, which were all signed between the mining companies and the central government meant that the regional governments did not have a fair say with regards to the developments in their communities. Problems brought about by the old contract model included low royalties for the region from the extraction of their mineral resources, poor employment opportunities for the local people, and mines left abandoned without clean up or restoration of the environment. The mining contract is long outdated and in need of revision.

The mining bill currently on the table will replace the old contract model with mining permits. Mining permits will strengthen the government’s position as a regulator and not just one party bounded by contract provisions. From the national point of interest, the permit model will benefit the country when problems arise that are caused by the company, and the government must take firm action to address the problem as a regulator. In the past, the Indonesian government has failed to take such firm action when required for fear the mining companies will sue the government for breaching their contract in international arbitration suits. Such suits were recently threatened by mining companies that held contracts over areas that were also designated protected forests.

"Rio Tinto and the Ministry of Energy and Mineral Resources are fishing in troubled waters. They want to catch a contract before mining permits are enacted into law. The Mining Advocacy Network (JATAM) strongly criticizes the plans of Rio Tinto to obtain a contract before the new legislation is passed. The Minister of Energy and Mineral Resources must not sign any such contracts that will only do more harm to local communities and the country”, said Siti Maemunah, JATAM’s national coordinator.

Sapri, a representative from a local NGO in Central Sulawesi stated: “All investments in the form of mining, energy, forest, and plantation that will cause our people to suffer or cause damage to our environment will be rejected in Central Sulawesi.” The South Sulawesi province have experienced the adverse impacts of the foreign-owned PT Inco nickel mining and processing venture for many decades. Locals complain that the company and the government forced them to abandon their lands and livelihoods, destroyed forest, and degraded the environments of Lakes Matano, Towuti and Mahalona.

Rio Tinto is a world-renowned multinational mining company with a bad reputation (3). Rio Tinto has closed one mine in Indonesia, in east Kalimantan. The PT Kelian Equatorial Mining (KEM) gold mining operation caused prolonged horizontal conflict within the community, violated numerous human rights, and degraded the local environment.

Media contact:
Adi Widyanto (JATAM), Tel: 081511655911, Email: campaigner@jatam.org

Notes:
(1) Media Indonesia, 31 January 2007
(2) www.minesandcommunities.org