Illegal mining in concession hurts Bukit Asam unit
Illegal mining in concession hurts Bukit Asam unit
The Jakarta Post, Padang, West Sumatra
A unit of publicly listed coal mining firm PT Bukit Asam
called for the government's help to crack down on illegal miners
operating in its concession area, saying their activities were
having an adverse impact on its business.
Eko Budhiwijayanto, deputy general manager of PT Bukit Asam
Unit Penambangan Ombilin (UPO), said the firm had been suffering
losses over the past three years due to a steady decrease in
production caused by the illegal mining activities.
Unless the government takes immediate action against the
illegal miners, the firm will have no option but to close down.
"The firm will, in effect, have to lay off all 950 workers it
now employs," Eko said.
The firm has a concession in Sawahlunto, 150 kilometers east
of Padang, the capital of West Sumatra province.
Mining operations in the area date back to the time of the
Dutch administration, but it is still believed to contain coal
reserves in excess of a 100 million tons.
During its peak production between 1995 and 1999, the firm
mined up to 1.2 million tons of coal per year. But, due to the
troubles caused by the illegal miners, the output has been
declining since 2000. This year, the firm targeted its output at
a mere 200,000 tons.
In the first semester of this year, the firm booked a loss of
Rp 58 billion.
According to Eko, the illegal miners sell their output to
Semen Padang, a subsidiary of Semen Gresik, whose coal needs
reach 60,000 tons monthly. Semen Padang, which is the traditional
customer of Bukit Asam, has cut its orders from the firm as
illegal miners offer cheaper coal.
Due to the presence of the illegal miners, in December last
year, UPO stopped open-pit mining operations and started to focus
on underground mining, which it commenced in 1999.
Underground mines need much greater investments than open-pit
mines. Several Japanese banks have voiced interest in financing
the development of UPO's underground mines, but they are still
reluctant to disburse funds due to the illegal miners.
"How could you feel safe extracting coal underground when up
on the ground surface, other people do the same thing," Eko said.
Aside from Ombilin, Bukit Asam also has concessions in Tanjung
Enim and Banjarsari in South Sumatra.
The government controls 83.74 percent of Bukit Asam, while the
remaining shares are held by public investors.
Bukit Asam sold 9.57 million tons of coal last year, posting a
net profit of Rp 177.95 billion (US$21 million).
During a hearing with the House of Representatives in May this
year, Bukit Asam's president Ismeth Harmaini said the firm
planned to dismiss 364 workers of its Ombilion site with
severance pay of Rp 30 billion.