Local mining industry remains in the doldrums<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
In this first year of the implementation of regional autonomy,
\nthe country's mining industry remained in the doldrums.<\/p>\n
The autonomy laws were, in the beginning, expected to solve
\nsecurity problems confronting mining companies since the downfall
\nof former president Soeharto in mid-1998.<\/p>\n
As it turned out, this year, mining operations continued
\nfacing problems, ranging from land disputes, labor strikes,
\nillegal mining, blockades and lawsuits.<\/p>\n
The autonomy laws -- consisting of the Autonomy Law No.
\n22\/1999, which gives greater freedom to local legislators to run
\ntheir political and economic affairs, and the Intergovernmental
\nFiscal Balance Law No. 25\/1999, which allows the regions to gain
\ngreater benefits from the development of their natural resources
\n-- came into force on Jan. 1 2001.<\/p>\n
The laws which at first were expected to become a solution
\nhave in fact created multi-faceted problems -- in the sense that
\nthey have been used liberally as an excuse for many locals to
\npressure mining investors to meet their demands.<\/p>\n
Among companies facing such problems this year are coal mining
\ncompany PT Arutmin Indonesia in South Kalimantan, PT Kaltim Prima
\nCoal (KPC) in East Kalimantan, gold mining firm Kelian Equatorial
\nMining (KEM) in East Kalimantan and state tin mining firm PT
\nTimah Tbk.<\/p>\n
Illegal miners have for a long time been causing trouble for
\nArutmin's operation in Kotabaru regency. When the police moved to
\nstop them by confiscating their mining equipment in the middle of
\nthe year, the illegal miners staged protests and forced the
\npolice to return the equipment.<\/p>\n
Arutmin produces 8.7 million tons of coal a year.<\/p>\n
KEM has also been complaining about the troubles caused by
\nillegal miners on its operation in West Kutai regency.<\/p>\n
Last year, the illegal miners mostly harassed foreign mining
\noperations, while most of the operations of the state mining
\ncompanies remained relatively safe.<\/p>\n
But, in this gloomy year, Timah, which was considered the
\nworld's most efficient tin mining company and touted as a model
\nfor all the country's state companies, has been pushed to the
\nbrink of bankruptcy due to the illegal miners.<\/p>\n
The illegal miners which operate around Timah's operation on
\nBangka and Belitung islands in the Sumatra Straits have not only
\nparalyzed Timah but also pushed down the world's tin price by
\nflooding the market with cheap tin.<\/p>\n
The government has actually set up a special team to handle
\nthe illegal miners but the team has yet to prove its
\neffectiveness.<\/p>\n
KPC, a joint venture of Anglo-Australian Rio Tinto and Anglo-
\nAmerican energy firm BP Plc. which produces 15 million tons of
\ncoal per year in Sangatta, East Kalimantan, is facing a different
\nproblem.<\/p>\n
It has been constantly under pressure from the East Kalimantan
\nadministration to sell its 51 percent stake to a joint venture
\npartly owned by the administration at the price set by the
\nadministration, which is lower than the price set by the company.<\/p>\n
Under the contract signed in the 1980s, KPC is obligated to
\nsell a 51 percent stake to the Indonesian government, state
\ncompanies, Indonesians-controlled private companies or Indonesian
\ncitizens after ten years of operation.<\/p>\n
In its latest pressure bid, the provincial administration
\nrecently filed a lawsuit against the company at the South Jakarta
\nDistrict Court on charges of intentionally delaying the
\ndivestment program.<\/p>\n
In addition to harassment, blockage and lawsuits, many mining
\ncompanies had to deal with the local governments imposing new
\nlevies and taxes on them in a bid to boost revenue.<\/p>\n
This is actually a breach of the legal contracts signed with
\nthe central government, but in most cases, the central
\ngovernment, from which the investors asked for help, looks
\nimpotent to force the regions to revoke the taxes.<\/p>\n
Firdaus Asikin, an analyst at PriceWaterhouseCoopers said all
\nthese problems had further deteriorated the country's mining
\ninvestment climate, which has been hurt by the prolonged social
\nand political turmoils.<\/p>\n
He warned no new mining investors would be willing to come to
\nIndonesia in the coming years, if the government couldn't cope
\nwith the problem.<\/p>\n
Indeed, many mining companies have suspended their operations
\ndue to the security problems, while new investors have delayed
\ntheir investment plans.<\/p>\n
The Indonesian Mining Association's executive director P.L
\nCoutrier said it was too early to conclude that the government's
\nautonomy policy had aggravated the mining industry's problems as
\nthe policy has been in place for only a year.<\/p>\n
"The autonomy is a good concept. That many problems remain, it
\nis because it is just one year old," he told the Jakarta Post.<\/p>\n
He was optimistic that in the long run, problems now
\nconfronting the mining industry would be solved thanks to the
\nautonomy policy.<\/p>\n
All stakeholders should work together to make a success out of
\nthe policy rather than blaming each other, he said.<\/p>\n
Director general of geology and mineral resources at the
\nMinistry of Energy and Mineral Resources Wimpy S. Tjetjep agreed
\nthat the autonomy policy was a good concept.<\/p>\n
"The main problems are legal uncertainty and security
\nconcerns," Wimpy said.<\/p>\n
Some people may say the autonomy laws were good enough, but
\nthe government has decided to review them.<\/p>\n
In order to end the chaotic situation in the mining industry,
\nthe government has planned to introduce a new law to replace the
\nexisting Mining Law of 1967, which is considered too
\ncentralistic, thus no longer suitable to the spirit of autonomy.<\/p>\n
According to Wimpy, the government will submit the new mining
\nbill to the House of Representatives early next year.<\/p>\n
The new law would ensure the regional governments's authority
\nover the mining sector, a legal certainty over the existing
\ncontract of work, and give no discrimination for new local and
\nforeign investors, Wimpy said.<\/p>\n
The new law is thus expected to give a stronger legal
\nfoundation for the regions to benefit from their mining resources
\nand for investors to gain protection for their investment.<\/p>",
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