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TAMBANG, August 25, 2008 | 09.44

Irsan Noor

An alarming news suddenly bursted in Jakarta, the source of which came as far as the deep wooded areas of Kalimantan.

Irsan Noor, an Acting Regent of East Kutai, dashed from the eastern part of the island to the country’s capital on Saturday, 26 July 2008 to hold a press conference. He publicly announced an East Kutai Regent’s decree No. 180/130/HK/VII/2008 of 11 July 2008, on the revocation of all mining activities of PT. Kaltim Prima Coal (KPC) in Bengalon and Sangata, East Kalimantan.

Mr. Noor blamed KPC for severe misconducts. He reasoned that based on the findings by the Local Forestry Board, the coal mining giant has illegally conducted mining activities in the wooded areas of East Kutai’s vicinity. This is in violation of the Chapter 50 para 3 of the Forestry Law No. 41 of 1999.

KPC is not the only company sanctioned to halt activities in the said areas. Based on the same decree, The East Kutai government would also revoke the mining licenses of PT. Perkasa Inaka Kerta (PIK) whose mining areas are adjacent to those of KPC’s. The decree was taken into force as of 11 July 2008, on the date of its signing.

The decision invited harsh reactions from the two companies. In an interview with Majalah Tambang, Harry Miarsono, KPC’s General Manager for External Affairs and Sustainable Development, said that his company has conducted mining activities based on an official licence for area exploitation since 1991. The company extended the license in 2000, and it obtained a license for other exploitation applicable to Sengata and Bengalon areas in 2002.

Coordination with the local government, in accordance with a 2002 recommendation of the Minister for Forestry, had always been maintained, Mr. Miarsono was further quoted as saying. KPC had disbursed over 560 million rupiahs for Forest Product Royalties and up to 120 million dollars for Reforestation Funds.

Meanwhile, Mr. Saldy Mansyur, the Regent of East Luwu, South Sulawesi, who was interviewed by Majalah Tambang in April 2008, said that despite lavish mining activities in his regency of several big names, such as of PT. INCO at Konawe, currently up to 60 percent of East Luwu villages are still lacking of adequate electricity.

In May 2008, the State Audit Board (BPK in its Indonesian acronym) reported a setback in the distribution of the Regional Income from Natural Resources Revenue Sharing to the local governments. At times, local governments received their shares only a year after the revenue was initially conveyed to the central government, affecting in the delay of plannings and arrangements of regional programs.

The above cases only add to a long record of objections by local governments to the mining industry at their vicinities. The claims are of no coincidence, said Dr. Faisal Basri, a noted economist. More often than not, the locals should only contend with the excess of the industry, while business-minded investors and the policy-making central government have become the main beneficiaries, Dr. Basri further argued.

The cases also bring about the involvement of mining industry into the development as well as poverty eradication programs at regional levels to almost nothing. Although the 2007 State Financial Report noted that the contribution of mining industry to the gross state income is over 30 percent, what is easy to point out from the public opinion is that the mining industry have only bad impacts to the environment.

Just until when should the existing situation take place?

Inviting to International Investors
In the middle of the never-ending grievances toward the mining industry, the Indonesian mining community was presented with a refreshing breeze. In an Annual Gathering of the Indonesian Mining Professionals (PERHAPI) in Palembang on 24 - 25 July 2008, it was revealed that the country has continuously enjoyed a great advantage from the contribution of mining industry.

The mining sector has participated greatly in encouraging national development programs, whilst its future role is expected to further increase. This was said by Mr. Chatib Basri Ph.D. of the University of Indonesia who is a member of the economic advisory board to President Yudhoyono. Mr. Basri is known for his outspoken approach and the accuracy of his data.

The academician revealed his encounter with foreign investors who are interested to invest in letters of obligation in the country. The reason why they are that attracted is among other the abundance of mineral resources possessed by the country.

He also revealed that the contribution of mining subsector to the Gross Domestic Product in 2007 is 4.04 percent, compared to 2.81 percent in 2000. Export figure in 2007 from mining industry is accounted at $ 15.9 billion or 17.8 percent of the country’s total export.

Thanks largely to mining industry, regional economic growth was accelerated at high rate. The growth of employment rate outside the island of Java was recorded at five percent, whilst it was minus three percent in Java in the same year. Another indicator is from the banking sector. In areas rich with mineral resources, credit rate growth is higher than anywhere else.

According to a study by the Institute of Economic and Social Research (IESR), University of Indonesia which is chaired by Mr. Basri, the mining industry has become a stimulus to the growth of other industry in the areas of PT. Freeport, in the province of Papua. This could be witnessed from an increasing percentage of other sector’s contribution to the regional receipt of tax and fees.

A Debatable Progress
Not everyone, however, is entertained with the positive findings. Mas Achmad Santosa, an observer of the Indonesian Center for Environmental Law (ICEL) is among those questioning the study of IESR.

He argued to Majalah Tambang that the IESR’s data are of mere macroeconomic figures only. He questioned about the real contribution of mining industry to the improvement of surrounding community in the mining areas, those who will initially “enjoy” the excess of mining activities. “There should be a real balanced assessment to sort out the implication of mining industry to the economy as well as to the community welfare”, said the observer who is also a researcher for the UNDP, in an interview with Majalah Tambang on 1 July 2008.

He was further quoted as saying that mining activities in the protected forest areas must be followed by measures to restore the loss of natural resources, since forests of this kind is economically very precious, not only for today’s citizen but also for future generations.

“If every mining company is mandatorily requested to compensate the loss of natural resources, then perhaps no single company would be able to make an adequate payment,” said Mr. Santosa. Furthermore, he put an idea that a social examination be generated to calculate the advantage and disadvantage of mining industry thoroughly and objectively.