Mining group warns all lose in court actions

JAKARTA (JP): The Indonesian Mining Association (IMA) said on Wednesday that seeking court settlements in disputes between provincial governments and mining firms only caused losses to both sides.

IMA executive Paul Louis Coutrier said resorting to filing suit in disputes was ultimately counterproductive.

"Legal proceedings are not only time consuming but costly for both sides," he said during a mining seminar held by the Mines and Energy Society (Bimasena).

Coutrier added that court proceedings fueled legal uncertainty about a company's mining operations and disrupted its production process.

Conversely, a halt in operations caused losses of mining royalty payments to the provinces and regencies, he said.

He was referring to a dispute between Minahasa regency in North Sulawesi, which sued gold mining company PT Newmont Minahasa Raya for unpaid taxes.

The regency's action almost led to the suspension of Newmont's operation, but the central government facilitated an out-of-court settlement.

He said the maintenance of communication between local governments and mining companies could prevent disputes from developing into legal proceedings.

"Communication is important to know the people's demand," he said.

Mining companies have frequently faced demands by local communities and local governments who felt they benefited little from the exploitation of their mineral resources.

Under Law No. 22/1999 on regional government and Law No. 25/1999 on intergovernmental fiscal balance, provinces will have greater authority to manage their own affairs, including the mining industry.

The government plans to implement the two autonomy laws next year, with preparations under way.

Observers have warned the implementation of the laws could trigger disputes between local governments and mining companies because the new regulations could contradict the terms of existing mining contracts.

The senior adviser to the state minister of regional autonomy, Andi Mallarangeng, also said investors and local governments should avoid a legal battle in solving disputes.

He said an out-of-court settlement was the only way for both sides to emerge winners.

"Through negotiations, investors could even accept minor changes in their contracts."

Mallarangeng added that local governments should honor foreign investors' contracts.

South Sumatra Governor Rosihan Anwar said some conflicts with locals during the transition to democracy were to be expected.

"There will be a learning process," he said.

Provinces and investors needed to understand each other's values and expectations, he added.

"The locals' expectations of the autonomy laws are very high," Rosihan said.

He pledged his province would not introduce new requirements for established mining operations because it feared the move would scare off investors.

"Actually, we will offer incentives to these investors, which, without autonomy, we would not have the authority to do so."

The autonomy laws would allow local communities to share in exploitation of their resources, he added.

"This will in turn develop appreciation toward investors and a sense of ownership of their business operations." (bkm)