NGO says open-pit mining causes Rp 70t loss a year
Tony Hotland, The Jakarta Post, Jakarta
The country may lose at least Rp 70 trillion (US$8.7 billion) annually in environmental costs and declining regional revenue as a result of the government's recent decision to allow 13 mining firms to resume operations in protected forests, a non- governmental organization warns.
Greenomics Indonesia executive director Elfian Effendi said that the open-pit mining method used in over 925,000 hectares of forest would bring much greater losses financially compared to the tax revenue from the firms.
"The calculation was based on a benefit transfer approach in which values of elements of the environment per hectare were converted into figures. The approach is widely used by many economic experts across the globe," Elfian said on Thursday.
Elfian said that the government's move would inflict an environmental cost of Rp 46.4 trillion at the very least. The cost is calculated from the economic value of ecosystem services (water, erosion, soil fertility), biodiversity (animal and plant species), the environmental cost of rivers destroyed by deforestation, and the sustainable use of forest (the loss of non-timber forest products).
Another Rp 23.1 trillion, Elfian added, was the loss in regional revenue in the affected areas.
"The regencies where the firms are located will also lose 56 percent of their current Rp 42 trillion annual revenue due to the possible poor performance in the agriculture, fisheries, and trade sectors," he said.
The total cost, said Elfian, was 70 times bigger than the revenue generated by the mining sector, which recorded Rp 1.07 trillion last year.
Furthermore, he said that the country's annual 7.1 percent national growth that occurred in the period between 1971 and 1984 was actually only 4 percent after the environmental cost was subtracted.
"A study by the World Resource Institute in the United States shows that environmental costs are incurred in the mining, forest and land-use sector," said Elfian.
The government issued a regulation in-lieu-of-law last month to allow 13 mining firms to resume operations in a bid to draw foreign investment. The firms had to freeze their operations after the government enacted Law No.41/1999 that banned open-pit mining.
Among the firms are PT Freeport Indonesia in Papua, PT Aneka Tambang Tbk and PT Inco Tbk in Sulawesi, PT Sorikmas Mining in North Sumatra, and PT Nusa Halmahera Mineral in North Maluku.
Siddharta Moersjid of PT Freeport Indonesia said that he would need to discuss the calculated environmental losses and make his own calculation to be able to give an adequate response.
"I can't comment because I don't know in detail where and how they get these figures. I admit that mining activities do have negative excesses, but we're also taking measures to reduce them," he told The Jakarta Post.
He said that his company was exercising the right mining method and was also replanting grass and bushes to prevent deforestation.