There are promising signs that a long-awaited reformation of the Indonesian mining industry is taking place. The government now is seriously dealing with several issues that have starved the mining industry for 10 years.
When accomplished, these reform policies will produce many winners: government and export revenue will be generated, there will be jobs and training for many thousands, as well as much-needed economic development in remote regions. It could also produce some very positive outcomes for the environment.
First, after years of endless drafts, the House of Representatives is slated to pass a new mining law in the coming months. While its provisions do not yet reflect some key industry concerns, it provides a legal framework within which companies can start to feel comfortable spending the many millions of high-risk dollars that exploration requires.
Second, the Forestry Ministry, which has been perceived as antagonistic to mining, is moving away from "forests or mining" to a "forests and mining" approach. This point was highlighted in a recent letter the ministry sent to a forestry company that had complained about exploration being carried out on its concession.
The ministry's reply included, " ... in the framework of economic development in the country, it is the government's intention to optimize the utilization of all natural resources; therefore, there should be room or opportunity to explore both forestry resources and mineral resources". It is a very welcome change of stance.
Further evidence of the government's commitment is a new regulation allowing mining companies with contracts of work issued prior to protected forest legislation to conduct mining activities, subject to the payment of fees and provided that they operate in an environmentally responsible manner and pay attention to the needs of local people.
The above points highlight what appears to be a distinct policy shift by the government on mining. It has changed from a position of disregard to one of putting in place a regulatory regime supportive of responsible mining. This will enable Indonesia to benefit from the current global boom in mining investment which, so far, has bypassed the country.
However, while the Forestry Ministry is moving toward a policy of "forestry and mining", some in the NGO community are stuck in the 20th century paradigm of "forestry or mining". It is worth taking some time to consider the NGO perspective as it has been very influential in creating a strong anti-mining climate among politicians and the public.
As appeared in this newspaper on Nov. 21 last year, the Indonesian Forum for the Environment (Walhi) and the Mining Advocacy Community Network (Jatam) claimed that mining is destroying Indonesia's forests.
"The groups said that as of 2001, there were 158 licenses for large-scale mining operations that converted 11.4 million hectares of protected forests out of a total 30 million hectares," this newspaper reported.
"Currently, there are 13 mining companies that have obtained operating licenses from the government through a 2004 presidential decree. It is estimated that the companies have released between 185 and 251 million tons of carbon into the atmosphere," The Jakarta Post quoted the two NGOs as saying.
The allegation that the 13 companies given licenses have released between 185 and 251 million tons of carbon into the atmosphere is ridiculous given the fact that none of the areas have gone into production.
The reference to 11.4 million hectares of protected forests being converted to large-scale mining is obviously a reference to exploration areas. But exploration, which has negligible environmental impact, is not mining. While putting them in the same "bag" might be a convenient way to make a point, it is also grossly misleading.
Mining can produce positive outcomes for the environment. Many mining operations take place in remote areas where livelihood prospects for local people are often quite limited, leading to uncontrolled and destructive illegal logging or mining activities. The impact from these activities can be totally devastating to the environment, converting a lush rain forest to a desert in mere decades.
A mining project on the ground creates many more diverse opportunities for local people. The net result for the environment is a substantial reduction or total elimination of those destructive livelihood practices.
Recently, we are witnessing a significant shift from the government, away from the divisive policies of forestry versus mining. It is now time for those outside of government to open their eyes to the real benefits that best practice mining can bring to society and environment.
The writer is CEO of Kalimantan Gold Corporation Limited. He can be reached at