House rejects proposal on mining in protected forest

Sandy Darmosumarto, The Jakarta Post, Jakarta

The House of Representatives rejected a government proposal to allow 13 mining companies to resume activities in protected forests, in what some government officials described as another blow to the country's investment and export activities.

The decision was made on Wednesday by House Commission III on forestry affairs and Commission VIII on mining affairs during a meeting with five related ministers, led by Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti.

The 13 mining firms are among the 22 contractors that appealed to the government to resume operations in protected forests following the implementation of forestry law No. 41/1999, which prohibits open-pit mining in conservation areas. When these firms received contracts from the government several years ago, before the law was enacted, their concession areas were not designated as protected forests.

The contractors that submitted the appeal include Natarang Mining in Lampung, Karimun Granit in Riau, Pelsart Tambang Kencana in South Kalimantan, Interex Sacra Raya in East and South Kalimantan, Sorikmas Mining in North Sumatra and Indominco Mandiri in East Kalimantan.

In the eastern part of the country, Freeport Indonesia and Gag Nickel in Papua, INCO in Sulawesi, Aneka Tambang A (Buli-Malut) and Nusa Halmahera Mineral in North Maluku, Weda Bay Nickel in North Maluku and Aneka Tambang B (Bahulu-Slutra) in Southeast Sulawesi are among the firms hoping to resume their activities in protected forests.

Concerned about the investment environment in the eastern region, State Minister for Eastern Indonesian Development Manuel Kaisiepo said that "the only commodity the east can rely on is its natural resources, including in the mining sector".

"We realize that the eastern region is lagging behind in development. To accelerate the process, we have to optimally explore every potential. One of these potentials is mining," Manuel said.

Made Astawa Rai, deputy for development resources with the office of the state minister, commented that "today's lack of progress at the House further creates uncertainty for mining investors".

Investment from these 13 contractors has the potential to contribute a total of US$379.81 million worth of tax and non-tax revenue, according to a government document. In addition, these mines would absorb 47,269 local workers, with eight of the 13 companies employing an average of over 90 percent local workers. Their total investment in the country up to 2002 reached $7.6 billion.

Another concern is that if the government fails to honor the mining contracts, it could face litigation that could cost it up to $22.8 billion.

Made Astawa added that the shift of status from protected forest to nonprotected forest to allow the 13 contractors to engage in open-pit mining would account for only "2.07 percent of the total protected forest area in the mining industry, and not the total of all protected forests in Indonesia".