New team set up to settle mining concession disputes

A'an Suryana, The Jakarta Post, Jakarta

The Indonesian government established a joint team on Thursday to seek solutions to problems faced by 22 mining companies that cannot continue their operations due to a law that bans open-pit mining in protected forests.

The joint interdepartmental team, established by President Megawati Soekarnoputri during a Cabinet meeting on Thursday, was given three months to resolve the problems, said Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

Purnomo said the team, which comes under the auspices of the Coordinating Minister for the Economy, would meet with each of the 22 mining companies.

"We hope to find solutions in three months," Purnomo told The Jakarta Post at his office.

The formation of the joint ministerial team came after the Ministry of Energy and Mineral Resources and the Ministry of Forestry failed to bridge their differences over the issue.

The Ministry of Energy had initially proposed that the 22 mining companies, whose concessions are mostly located in the eastern part of Indonesia, be allowed to resume their operations.

The Ministry of Forestry, however, rejected the proposal on the grounds that the concessions were located in protected forests. Under the 1999 Forestry Law, mining companies are not allowed to conduct open-pit mining in protected forest areas.

Last year, both ministries brought the dispute to the House of Representatives for resolution. But, months of discussion in the House has thus far failed to settle the problem.

Purnomo said the new team would sit down with each of the mining companies at the negotiating table, and that solutions would very much depend on the negotiating process.

"Most likely, some companies that started production in 1999 but had to halt their operations due to the forestry law, will be allowed to resume operations," said Purnomo.

Purnomo asserted that the final outcome must seriously reflect the government's commitment to respecting the mining contracts that had been signed both by the government and the mining companies before 1999.

If the government allowed the 22 mining companies to resume operations, it would give a positive signal to investors that Indonesia respected the sanctity of contract, he said.

Purnomo added that if the projects were allowed to start up again, it would have a good impact on the Indonesian economy considering that the projects involved large sums of money. The 22 projects were valued at US$12 billion, and could provide employment for 33,000 workers, he claimed.

However, environmentalists have strongly objected to the goverment's plan to allow the 22 mining companies to start their operations, saying the mining industry was one of the main culprits behind the rapid depletion of Indonesia's forests.