16 mining companies delay exploration activities
16 mining companies delay exploration activities
JAKARTA (JP): At least 16 foreign mining companies have
delayed their activities due to uncertainty in security or
financial problems, a senior government official said on Monday.
Simon Sembiring, the director of mining development at the
Ministry of Mines and Energy said the 16 companies, which
obtained their contracts of work (COWs) between 1996 and 1998 to
explore and produce mineral resources other than coal, were
mostly in the exploration stage.
Some companies, which are mostly from Canada and Australia,
temporarily stopped their exploration due to security reasons
while others quit mining operations due to financial difficulties
suffered by their parent companies.
"With Indonesia's current uncertain social and economic
situation, it's understandable if people hesitate to invest
here," Simon said, declining, however, to name the mining
companies.
He said Indonesia's newly founded democracy had resulted in
outbursts of regional discontent over mining and timber
operations, which have so far only benefited the central
government. The dissatisfaction has often led to conflicts
between the local community and mining companies, he said.
Unlike others, gold mining operator PT Kuta Raja, which
operates a mine site in Aceh, delayed exploration activities due
purely to security reasons in the troubled province where armed
conflicts between military and proindependent movements continued
unabatedly, he said.
He said the delay in the 16 companies' projects would result
in a sharp decline in investment spending in the country's mining
sector because each company generally spends about US$5 million
to $10 million a year on exploration activities.
"There is no particular loss for Indonesia," Simon said, but
he added that the delay directly affected local workers who were
forced to leave their jobs.
He said some companies also quit their projects because most
of their concession overlapped with protected forests.
"Why bother exploring if the land is prohibited for mining?"
Simon said.
Director General of General Mining Surna Tjahja Djajadiningrat
said 19 companies and village cooperatives were found to have
conducted illegal coal mining activities in South Kalimantan.
Surna said the illegal miners operated in some 238 locations
of areas totaling about 1,000 hectares.
He said the government had yet to calculate losses in taxable
or nontaxable revenue and environmental destruction caused by the
illegal miners.
Illegal miners have reportedly encroached upon the concessions
of giant coal mining companies PT Adaro Indonesia and PT Arutmin.
The findings were based on the Ministry of Mines and Energy's
two-week investigation into identifying illegal mining in South
Kalimantan.
"This is what we can do: now that we know who they are, the
next step will be prosecution," Surna said in a news conference.
He said illegal mining violated Law No. 11/1967 on mining and
Law No. 23/1997 on environment.
Under Law No. 11 and Law No. 23, miners could face
imprisonment of up to six years and ten years respectively if
convicted.
While the maximum fine for illegal mining in Law No. 11/1967
is Rp 600,000 (about $78), charges of environmental destruction
could cost up to Rp 500 million.
Surna said the ministry had revoked some of the companies and
cooperatives' mining licenses on charges of improper use of their
permits.
He said cooperatives were often used by illegal mining
companies to obtain mining licenses, because of the former's
easier requirements.
Surna could not guarantee that once the licenses were revoked
that miners would stop operating, saying that was a matter for
law enforcement.
He urged mining companies to cooperate with traditional miners
to prevent them from turning illegal.
He said mining companies could provide locals with land to
mine, from who companies could buy their coal.
"It's basically like paying the locals to become the
companies' coal workers," Surna said. (bkm)