Rampant illegal mining in Indonesia is inflicting annual losses of Rp3.3 trillion ($389.38 million) on the state, a government official said Tuesday (16/12/03).
"The losses exclude environmental destruction, pollution and other forms of damage whose impacts are far greater than the material losses," Muzani Syukur was quoted as saying by state news agency Antara.
Syukur, a retired lieutenant general, is the chairman of a government team tasked with implementing Presidential Decree No.25/2001 on the eradication of illegal mining, fuel smuggling and electricity theft.
He said illegal gold mining is taking place in 13 provinces, while most illegal coal mining is centered in three provinces.
Syukur, who is the former president commissioner of state-controlled tin mining firm PT Tambang Timah, attributed the problem to "reform euphoria, weak law enforcement and the poor performance of state officials".
"Reform euphoria" is a euphemism for new taxes and levies imposed on companies by avaricious regional administrations empowered by the introduction of regional autonomy legislation.
Syukur's figure of Rp3.3 trillion in mining losses is far higher than that of Rp1 trillion stated in October by the Energy and Mineral Resources Ministry's director general of energy and mineral resources Wimpy S. Tjetjep.
Illegal mining has caused a drastic decline in foreign investment in the sector over recent years. It has also damaged the environment and caused health problems for locals, largely through the use of mercury and cyanide in illegal gold mining.
Analysts say the government has failed to crack down on the problem due to the complicity of crooked state officials and members of the security forces in the illegal business.
According to Wimpy, investments in the mining sector totaled only $360 million in 2002, well below 1999 when $1.3 billion was invested.
The Indonesian Mining Association (IMA) in August warned that a lack of legal certainty could sound the death knell for the nation's mining industry.
IMA executive director Paul L. Coutrier said that as existing mineral reserves become exhausted, many mining firms are closing their operations and leaving Indonesia for better prospects abroad.
He said that if the situation continues, the only foreign miners left in Indonesia within five to ten years will be PT Freeport Indonesia (gold and copper), PT Inco (nickel), PT Kaltim Prima Coal, PT Newmont Nusa Tenggara (gold and copper), and PT Adaro Indonesia (coal).
In addition to illegal mining and regional autonomy legislation, another major problem facing the sector is a 1999 forestry law banning open-cut mining in protected forests.