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)