House rejects proposal on mining in protected forest

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".