What a difference five years makes. The mining industry, which
\nprospered during the Soeharto administration from the late 1960s
\nuntil the authoritarian leader's resignation in 1998, is now
\nlanguishing in a mire of new government policies, opposition from
\nenvironmentalists and hostility of local communities.
\nIn the first years after Soeharto's downfall, many firms were
\nforced to suspend operations for many months due the blockage of
\ntheir sites by locals, who claimed they were denied a fair share
\nof mining revenues, most of which went to the central government.
\nOther firms faced villagers who, claiming rights over mineral
\nresources in their native lands, conducted illegal mining
\nactivities on the firms' contract areas.
\nToday, the protests have decreased, but many companies are still
\nstruggling to cope with the illegal miners.
\nThe industry is also caught in the middle in problems arising
\nfrom the government's autonomy policy, which gives greater power
\nto the local governments to manage their own political and
\neconomic affairs.
\n Several firms have decried the new taxes imposed by local
\ngovernments, now enthusiastically searching for new sources of
\nrevenue.
\nChairman of the Indonesian Mining Association (IMA) BN Wahyu said
\nsome regions obliged mining companies to pay vehicle taxes on
\ntheir heavy equipment, although they were exempted the tax in the
\npast.
\n\"Vehicle taxes belong to regional administrations. Thus, they
\n(regional administrations) issued bylaws obliging mining
\ncompanies to pay taxes on their heavy equipment as it is
\nconsidered as a kind of car,\" Wahyu said, noting Indonesia's
\ndubious distinction as the only country in the world to impose
\nvehicle taxes on mining equipment.
\n\"And the tax is very burdensome because mining heavy equipment is
\nvalued 100 times higher than a car.\"
\nBenny said the most serious problem confronting the industry at
\npresent was Forestry Law No. 41\/1999, which bans open-pit mining
\nin protected forests. Mining companies can still operate in
\nprotected forests as long as the mines are developed underground.
\nEnvironmentalists, who cite the mining industry as one of the
\nmain culprits behind the rapid depletion of the country's
\nforests, have championed the law as a prime means to curb
\ndeforestation.
\nMany mining companies were shocked to find that the law barred
\nthem from proceeding with their activities despite the fact they
\nmade considerable investment and located mineral resources in
\ntheir areas.<\/p>\n
A total of 22 mining contracts were suspended by the ministry
\nfollowing the issuance of the law.
\nThe Ministry of Energy and Mineral Resources has sought solutions
\nfor the companies to continue their activities. Thus far, its
\nefforts have been in vain, with the Ministry of Forestry
\ninsisting the companies cannot work in protected forests.
\nPresident Megawati Soekarnoputri recently formed a joint
\ninterdepartmental team to negotiate with each of the 22 mining
\ncompanies, with Minister of Energy and Mineral Resources Purnomo
\nYusgiantoro promising to find solutions to the protracted dispute
\nwithin three months.
\n\"Most likely, some companies that started production in 1999 but
\nhad to halt their operations due to the forestry law will be
\nallowed to resume operations,\" Purnomo said.
\nChairman of the Mining Advocacy Network (JATAM) Chalid Muhammad
\ncontended that profit was the main reason behind the industry's
\nopposition to the forestry law, because an open-pit mine is much
\ncheaper than an underground one to develop.
\nChalid insisted that banning open-pit mining activities was
\ncrucial to protect the country's forests.
\nAlthough Wahyu agreed that open-pit mines were cheaper to
\ndevelop, he denied that profit was the reason behind many mining
\ncompanies' insistence on using open-pit mines. In many cases,
\nmining companies have to remove land surface to find mineral
\nresources because it is technically impossible to exploit the
\nresources from an underground tunnel.
\nHe said mining companies should not be the scapegoat for
\ndeforestation as the sector exploited a small area of forest
\ncompared to timber concessionaires.
\nCiting the Clive Aspinall 2000 report, he said the total land
\nused for the existing 38 mines amounts to less than 1,350 square
\nkilometers -- less than 0.1 percent of the country's total land
\nof 198,000 square kilometers - and represents a smaller area than
\nthat covered by Jakarta and its surrounding suburbs.
\nIn comparison, timber companies have deforested some 66,000
\nsquare kilometers, about 33 percent of the country's land mass.
\nHe contended that all multinational mining companies reclaim
\ntheir areas and show concern for the environment. The real
\nculprits, he said, were illegal miners who move on to new areas
\nwithout cleaning up the environment.<\/p>\n
Table (22 contracts which have been suspended (ada pada rendi)
\n1<\/p>",
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