Mining investments worth $200m stuck in legal limbo

JAKARTA (JP): Between US$200 million to $300 million in mining investments remain stuck in a legal limbo caused by a forestry law banning mining activities in protected forests, the Indonesian Mining Association (IMA) said on Monday.

IMA executive director Paul L. Coutrier said around 120 mining firms owned exploration permits in forests, which were now protected under forestry law No 41/1999.

He said the firms were caught between abandoning their investments in these areas, or waiting for a resolution from the government.

"Mining companies are confused about which regulation they should follow," Coutrier told The Jakarta Post after a business luncheon hosted by the Indonesia-Australia Business Council (IABC).

The 120 companies, he said, had exploration investments across the country, mostly located in Sumatra and Kalimantan.

In 1999, legislators passed a forestry bill that restricted mining operations in forested areas, which before had been open to the mining industry.

Coutrier said the government had actually assured mining firms that the forestry law was not binding on firms with exploration permits that had already issued before the year 1999.

But Coutrier said the assurance had had little effect.

"In the field, the situation is different. Many (mining companies) face harassment by government officials who take the law word by word," he complained.

He said confusion on who was in charge of controlling the mining activities in protected forests made it difficult to file complaints.

"Mining companies don't know where to turn to, the local or the central government," he added.

Coutrier said that when the law was drafted, the forestry ministry failed to consult with mining companies.

He blamed the lack of coordination between the Ministry of Forestry and the Ministry of Mines and Energy on the confusion caused by the forestry law.

"At that time (1999) coordination was rare; it was a time of transition," he said, in describing the beginning of the reform era.

The government, he said, had formed an inter-ministerial team comprising officials from the Ministry of Forestry, Ministry of Energy and Mineral Resources, and the Ministry of Home Affairs.

However, he was unable to say how this team could expedite a solution to the issue.

"IMA is not involved in the team so we don't know about the team's progress," he said.

He suggested the government adopt a case-by-case approach to ensure fair treatment for all parties.

Courtier also urged the government to leave out some forest areas open to the mining industry.

Former director general for general mining Surna Tjahja Djadjadiningrat has warned that the government might have to pay compensation if mining firms were told to abandon their exploration areas.

According to him, the contradictory policies would not have emerged if the government had acted as a single entity.

Speaking to participants at the IABC luncheon, Courtier also said that mining firms were deeply concerned about Indonesia's unruly labor movement.

He said workers here had gone from staging peaceful protests to forcing mining companies to suspend operations through blockades.

One of the worst hit companies in Indonesia is coal mining company PT Kaltim Prima Coal (KPC), in East Kalimantan.

KPC has been plagued frequently by worker strikes since last year, causing the company huge production losses.

The company is now producing at 40 percent below its normal rate since striking workers from its contractor took over heavy production equipment. (bkm)