Mining firms concerned over illegal mining

Mining firms concerned over illegal mining

JAKARTA (JP): Mining associations voiced concern on Thursday
over escalating illegal mining activities and called on the
government to restore order in the affected areas.

The secretary-general of the Indonesian Coal Mining
Association (IMCA), S. Hadiprayitno, and vice president of the
Indonesian Mining Association (IMA) M. Simatupang said separately
that illegal mining activities had taken place for several years
in many mining concessions across the country.

But, they said, the practice had increased significantly since
the start of the monetary crisis to an extent that caused great
concern to mining companies.

"The association understands that the illegal mining
activities are motivated by the need to obtain income. But, the
economic difficulties that have been battering the country should
not be taken as an excuse to violate the existing laws,
regulations and rules," Hadiprayitno said.

Illegal mining activities had left the companies with big
financial losses and hampered their operations, they said.

As the illegal miners do not pay taxes or royalties to the
government as contract holders do, the government is not
maximizing its earnings from mining operations

Under coal contracts, the government receives 13.5 percent of
coal output in royalties.

"Furthermore, the illegal mining activities usually cause
extensive damage to the environment," Simatupang said.

He added the association had sent letters to senior officials,
including Minister of Mines and Energy Kuntoro Mangkusubroto and
Minister of Defense and Security Gen. Wiranto to ask them restore
order in the country's mining areas.

He said many illegal miners were well backed and equipped with
modern equipment by "strong people".

Hadiprayitno noted coal mining companies which were most
troubled by illegal mining activities at present included state
coal mining company PT Bukit Asam in South Sumatra, PT Adaro
Indonesia and Bentala Coal Mining in Central Kalimantan and PT
Arutmin Indonesia in East Kalimantan.

"Adaro has lost two million tons per year or between US$38
million and $60 million at the current international price due to
the illegal mining activities," Hadiprayitno said.

Simatupang said illegal mining activities were also on the
rise in gold contract areas across the country, including the
Pongkor mining field in West Java owned by PT Aneka Tambang.

More than a dozen illegal miners, including members of the
Armed Forces, were recently killed after being trapped in a
mining hole in Pongkor.

Bukit Asam president R.A. Sunardi, who is also IMCA's
president, said illegal mining activities in its coal mining
field in the Sawahlunto area, West Sumatra, involved more than
1,000 local residents, who took about 2,000 metric tons of coal
from the mine every day.

The illegal miners sold the coal to traders at Rp 60,000
(US$5.40) per ton as against the current market price of between
$27 and $29 per ton.

The traders then sold the coal to a state cement producer in
Padang, West Sumatra, for Rp 100,000 per ton.

Sunardi said Bukit Asam was currently trying to stop the
illegal mining activities by persuading the state cement company
to stop buying from the illegal miners.

He added Bukit Asam would permit the illegal miners to
continue mining in its contract area provided they group
themselves in cooperatives so that the company could deal with
them more easily.

Bukit Asam would then take the coal produced by the illegal
miners and reward them with certain fees in exchange for what
they produced.

"We are going to give them some kind of wage for their work. I
hope this will be a good solution and the monetary crisis, which
is one of the main reasons behind the increase in illegal mining
activities, will be soon over," Sunardi said. (jsk)