Indonesia Allows Mining, Other Projects In Forests

Indonesia Allows Mining, Other Projects In Forests

Muklis Ali

PlanetArk

2 March 2010

JAKARTA - Indonesian President Susilo Bambang Yudhoyono has signed a decree to allow projects including mining, power plants, transport and renewable energy deemed strategically important to take place in protected forests.

Yudhoyono has pledged to do more to cut through red tape and prevent overlapping regulations slowing down projects ranging from mining to toll roads in the resource-rich developing nation in his second term in office.

Increasing exploitation of mineral resources and speeding up infrastructure development is seen as key for boosting growth and creating jobs in Southeast Asia's biggest economy.

But the decree, which was obtained by Reuters and came into effect on February 1, will anger green groups given Indonesia already has one of the fastest rates of deforestation in the world.

"The use of forest areas for development activities can be done for unavoidable strategic purposes," said the decree, which cited key development projects as including power plants, renewable energy, toll roads and train lines.

The decree said open-pit and underground mining could take place in production forests, which is a forest area that is considered neglected or abandoned after trees have been cut.

"In a protected forest, mining can be done through underground mining," the decree said.

The decree defined mining activities as including oil and gas, minerals, coal and geothermal.

Indonesia's state oil firm Pertamina has previously urged the forestry ministry to allow geothermal activities in protected forest as most of geothermal reserves are located in these areas.

There has frequently been confusion over whether companies can exploit resources in forest areas, with various ministries requiring permits.

Indonesia's forestry ministry recently asked Freeport McMoRan Copper & Gold Inc to submit a request to use land in a protected forest area, a ministry official said on Tuesday.

Freeport operates the huge Grasberg copper and gold mine in Papua province. Grasberg has the world's largest recoverable reserves of copper and the largest gold reserves.

In 2004, Indonesia allowed 13 mining firms, including Freeport, to continue mining operations in Indonesia after the introduction of a law in 1999 which banned open-pit mining in forested areas.

Last month, Indonesian police temporarily shut the Jorong coal mine in Kalimantan operated by a unit of Thailand's top coal miner Banpu PCL over a land permitting problem.

Banpu said the closure would only have a slight impact on production at its Indonesian unit Indo Tambangraya Mega Tbk.

Indonesia has struggled to attract fresh investment into mining, as well as for developing new oil and gas fields, partly due to uncertain regulations and red tape.

Indonesia has previously said it expected mining investment to hit $2.5 billion this year, up from $1.81 billion in 2009, supported by greater certainty after the introduction of new mining regulations.

(Editing by Ed Davies)