Rio Tinto wraps up Kelian mine operation

Rio Tinto wraps up Kelian mine operation

Urip Hudiono, The Jakarta Post, Balikpapan

"Elephants die leaving nothing but their ivory tusks, tigers
their shadowy stripes, men their reputation."

London-based mining giant Rio Tinto perhaps had this local
saying in mind when it prepared a comprehensive program -- taking
into account its environmental and social responsibilities -- for
the closure of its PT Kelian Equatorial Mining (KEM) subsidiary
in February, after a decade of extracting the earth's riches from
the mine in East Kalimantan.

The mine closure program will include converting KEM's 6,670-
hectare concession into a protected forest, and conducting
sustainable community development programs through its Anum Lio
Foundation (YAL).

Rio Tinto has prepared US$80 million for the program, which
includes $11 million for the forest's environmental management
program and $2.4 million for the YAL programs.

"We ceased all mining activities in May 2003 and are now only
processing our remaining ore stockpile," Rio Tinto Indonesia
deputy director for external relations Anang Rizkani Noor said.

"Concurrently, we have started our mine closure program."

Explaining the reforestation program, Anang said the company
would fill the mine's two 133-hectare pits and 455-hectare
tailing dump dam with water, turning them into lakes. The mine's
processing factory site, meanwhile, will be converted into a
wetland, to filter the lakes' water discharge through a natural
bioremediation process.

"We will continue to monitor the water's pollution level until
2013, when we officially hand over the forest to the government,"
he said.

Upon discovering the Kelian deposit in 1976, Rio Tinto set up
KEM with local partner PT Harita Jayaraya, and signed a 30-year
contract with the government in 1985. The company began
commercial production in 1992, producing an average of 14 tons of
gold and 10 tons of silver per year.

Meanwhile, of the local community development program, Anang
explained that the company has provided entrepreneurship training
programs for its employees -- including farming, fishery and
technical skills -- which they can use after the company releases
them. KEM had hired 1,200 employees and 2,000 contract workers,
80 percent of whom are locals.

For the local community itself, the company will continue
various development programs it had conducted through YAL,
including a food security program to boost farmer's rice
production and a tuberculosis eradication program in the West
Kutai regency, where the Kelian mine is located.

The mine closure program is particularly important for Rio
Tinto to improve its image, as it has been dogged by allegations
of environmental destruction and human rights violations.

The company, however, asserted that it had resolved the
problems and paid compensation of up to Rp 49 billion ($5.4
million) as of 2004 for all such claims.

Despite the closure, Anang affirmed that Rio Tinto would still
do business and make investments in Indonesia, citing an
assessment from global research agency Fraser Institute which had
put Indonesia among the top countries in terms of mining
investment opportunities.

Rio Tinto, Anang said, is now registering permits for initial
surveys of copper and gold in Central and West Kalimantan, and of
nickel in Central and Southeast Sulawesi.

However, the lack of clear regulations for the mining sector
was still viewed as a major obstacle for future investments.

"Legal certainty is a must for high-risk businesses that
require long-term investment like mining," he said.