John McBeth in South Kalimantan and North Sulawesi – They come equipped with scores of excavators and more than 500 trucks. Their backers have wealth and influence. They have been known to cajole and threaten. Over the past two years they have taken illegal mining to an unprecedented level, pillaging three million tonnes of coal alone from the two South Kalimantan concessions run by Australian mining company Broken Hill Proprietary.
BHP is the biggest but by no means only victim of a phenomenon that has swept Indonesia since the economy nose-dived three years ago. The government estimates there are 62,000 illegal miners across the country, twice the number working legally. Mines and Energy Minister Bambang Yudhoyono told parliament recently that annual losses amounted to 30 tonnes of gold, four million tonnes of coal, 2,800 carats of diamonds and 3,600 tonnes of tin concentrate. Even without tax and royalties, the export value is more than $150 million.
Government officials are frank about the problem. They acknowledge that miners are being funded or backed by local and regional financiers, military officials, bureaucrats and other powerful interests – and supported by a network of international buyers. Organized illegal operations are meanwhile being passed off as "indigenous mining," providing a veneer of legitimacy that distracted environmental activists are willing to accept. Meanwhile, Jakarta seems unable to act against newly emboldened regional power-holders who collude with the illegal operators and criticize central government for siding with foreign mining companies. As with illegal logging, which costs Indonesia $2 billion in lost revenue a year, the benefits are shared by a few.
These developments bode ill for the spread of local autonomy. Short-sighted provincial officials scrambling to line their own pockets ignore the damage to the economy and environment of their provinces. "The political and bureaucratic elite join together with the private elite; they get power and they can do what they like," says the government's director-general for mines, Surna Djajadiningrat.
State-owned mining businesses are also affected. In West Sumatra, coal-miner Bukit Assam recently expelled thousands of industrially equipped miners from its Ombilin mine. In West Java, Aneka Tambang says it has whittled down the number of illegals at its Pongkor gold mine to 1,000. On Bangka and Belitung islands, off Sumatra's southeast coast, tin giant Tambang Timah has a different problem: Singaporean buyers, working for Malaysian smelters, try to undercut the prices the company pays to its 300 contractors.
Elsewhere, authorities in Central Kalimantan have finally cleared illegal miners from Aurora Gold's Mount Muro mine – two months after President Abdurrahman Wahid issued a decree instructing officials to deal with illicit mining "in a functional and comprehensive manner." But another 5,000 miners and migrant ancillary workers still occupy the company's promising gold deposit east of the North Sulawesi capital of Manado. Until the local administration expels them, the mine can't open, executives say.
Government officials, industry experts and researchers agree that illicit mining is most serious in South Kalimantan, where it involves official connivance in everything from the falsification of documents to the protection and sanctioning of the mining and transport of coal.
Researchers say some of the excavators and trucks come from former President Suharto's failed $3 billion rice-growing project in Central Kalimantan. Other equipment belongs to the regional government or to scores of small-time construction contractors whose businesses have been left idle by the economic crisis.
Along the banks of the Barito River, where it flows through the canal-laced South Kalimantan provincial capital of Banjarmasin, mounds of illegally mined coal lie on giant 5,000-tonne barges and in dockside stockpiles. Coal looted from BHP's Satui and Senakin pits is shipped out from Sangai Danau on the eastern coast, and even through a state-owned port lying next to BHP's Pulau Laut coal terminal. Barges lug the coal to South Sulawesi and Java, or transfer it to ships anchored off the coast for delivery to overseas markets.
Officials and experts say the illegal operators use falsified quality and export documents from firms that own barren concessions far away from where the coal is actually mined. Some companies engaged in the illegal trade hold permits that allow them to sell only bulk samples – which in some cases are as big as 100,000 tonnes. Many firms are licensed for exploration, not exploitation.
There's no way to stop it," sighs Satui mine boss Sumarwoto, unfolding a map showing 81 illegal mining sites along the remaining half of BHP's 14-kilometre coal seam. "Everybody shifts responsibility to someone else.
We have enough regulations, but not enough enforcement." Not only has the expected life of the Satui mine been slashed by five years but also the illegal operators are damaging the environment. And they play havoc with the mine by stripping off the top 10 metres of coal – the only part their equipment can reach – and leaving the hole to fill up with water. India, Malaysia, Japan, Taiwan and the Philippines are the main overseas markets, accounting for about 80% of the illegal coal, which sells for as much as $8 less than the market price of $19 to $20 a tonne. Domestic customers include state enterprises, as well as dozens of private companies. Surna, the mines director-general, says he has written to the state-owned Paiton power plant and a South Sulawesi cement factory warning them not to use illegally mined coal. But he and others acknowledge that because of falsified papers, firms aren't always aware of the origins of the coal they buy.
New to the job, Surna is candid in acknowledging the role of the cash-strapped Indonesian military. He recalls being telephoned by three-star generals asking him to go easy on this or that company. Sometimes callers warn him to be careful. "I ask them to come to my office to talk to me face to face, but they never come," he says.
Researchers from the privately funded National Academy of Technical Development say individual military officers protect the enterprises rather than get directly involved. They trace the history of the problem back to the mid-1990s, when illegal miners forced Taiwanese firm Chung Hwa off its deposit near Binuang, across the Meratus mountains from Satui. When that mine started to run out, operations moved into BHP's area and later accelerated.
Thus far there are no answers to the problem. President Wahid's decree calls on the police chief and attorney-general to take "stern legal action" against anyone involved in illegal mining – "both government apparatus and community members." But it also seeks to recognize the rights of indigenous miners and calls on legal mining firms to provide more help to local communities. In South Kalimantan and other areas, however, the hard part is going to be cutting the umbilical cord between the miners and their influential backers.