KEM ready to settle land dispute

KEM ready to settle land dispute

JAKARTA (JP): PT Kelian Equatorial Mining (KEM), a subsidiary
of the Australian mine giant Rio Tinto said it was ready to pay
additional compensation to end a land dispute with residents near
its gold mine in East Kalimantan.

KEM's acting spokesman, Anang Rizkani Noor, said the company
had agreed to pay additional compensation for the disputed land
pending the assessment of some 6,000 claims made by the locals.

"We've already verified almost all the claims," he told
reporters at the Jakarta office of mining company PT Rio Tinto
Indonesia.

Anang is the spokesman of Rio Tinto, which owns 90 percent of
KEM. PT Harita Jayaraya, the local partner, owns the remaining 10
percent.

KEM was forced to close down its gold mine last month after
locals blocked the only supply road to the gold mine, located
along the Kilian River.

Locals have occupied the road since April 18, but KEM
continued to operate for 10 days until its fuel and camphor
supplies, both required during production, began to thin out.

Anang acknowledged that KEM's mining area of 1,285 hectares
overlapped with properties owned by the local residents and the
government.

He said that 400 of the land owners received compensation in
1990.

The company, however, is facing 6,000 new claims, exceeding
KEM's mining total areas, he said, adding that the provincial
government formed in 1998 a verification team to assess the
claims.

Anang said that while KEM awaited the results of the
verification team, the company was still in negotiations over how
much compensation it needed to pay.

"We're optimistic that we will reach an amiable agreement," he
said.

Anang, however, declined to explain the size of the disputed
land and the amount of compensation the locals demanded, as well
as how much the company was willing to pay.

"We're still in talks and the amount of the compensation
changes all the time," he said.

Anang added that locals had opened the negotiations with a
price of Rp 100,000 per square meter, which, according to him,
was too high.

He asserted that this price level would ruin the local estate
market of the East Kalimantan province, adding that the even the
local government had urged KEM not to pay higher than the local
market price.

Asked whether KEM would seek the help of the central
government in finding a solution, he answered that at present
there was no reason to do so.

"We just keep reporting to the government on the development
of our situation," he said.

He admitted, though, that the current situation was the worst
the company had thus far experienced since it began operations in
1992.

Anang refused to state how much the mine closure would affect
KEM's production, saying only that it planned to produce 14 tons
of gold this year.

KEM has an average production output of between 13 tons to 14
tons of gold per year, Anang said. Its contract of works on the
mining site will expire in 2004.

He blamed "reform euphoria" for triggering the incident.

After the downfall of former president Soeharto in 1998, many
mining companies saw themselves in conflict with locals over tax,
land and royalty payments.

But Anang said that the company would not evacuate its
employees, which currently total some 1,500 people, of which 34
are expatriates.

He said that while supplies of fuel and camphor had stopped,
food was still available.

"This is because the locals supply our food," he said. (bkm)