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.