Illegal miners disrupt foreign gold firm

Illegal miners disrupt foreign gold firm

Agence France-Presse, Jakarta

Some 1,000 illegal miners who claim ownership of an Indonesian gold mine have forced an Australian firm to halt operations, officials said on Tuesday.

The miners occupied the Toguraci pit area on Halmahera island in North Maluku province last Friday and started mining gold ore outcrops, said a statement from PT Nusa Halmahera Minerals (NHM), the local subsidiary of Australia's Newcrest Mining.

"A leader of the occupying illegal miners has threatened NHM employees with violence if they interfere with their activities," said the statement.

The firm said the occupiers had already caused "significant damage" and the start of ore production at Toguraci would be delayed until they were removed.

"As one of the legal operating/producing gold mines, NHM is deeply concerned over this security-related incident which has undoubtedly created more uncertainty in the Indonesian business climate," the statement said.

Illegal mining is one of many problems plaguing foreign firms in the sector. Exploration has come to a virtual halt across the vast resource-rich archipelago because of security and legal concerns.

North Maluku provincial secretary Mohajir Albar told AFP the miners -- both locals and outsiders -- had been disputing ownership of the area for a long time.

"They have filed demands to the company such as financial compensation in the amount of Rp 500 billion (US$58.8 million) because they claim that the area belongs to their ancestors.

"This is something that is impossible to be fulfilled," Albar said from the provincial capital Ternate.

He said his office is in talks with local police and military officials and Newcrest to discuss the next steps. "We have tried many times to stop them but violence could take place if we try force to solve this problem."

Earlier this year Anglo-Australian giant Rio Tinto and British-American energy firm BP, joint owners of a huge coal mine on Borneo island, sold out their entire interest to a local firm.

The decision followed years of legal wrangling about the divestment of a 51 percent stake to local investors.

Lex Graefe, president of the Indonesian arm of Rio Tinto, said in July that Indonesia's shaky legal system could destroy much of the country's mining industry.