Bill Guerin, Jakarta – Amid claims of human-rights violations and accusations it is paying paramilitary forces to silence locals, Australia's biggest independent gold producer, Newcrest, is once again on the sharp end of a dispute over its troubled gold operations in the "Spice Islands", where Indonesia's worst religious conflict started four years ago.
The Newcrest mine is located in the Toguraci forest on remote Halmahera Island in North Maluku where 500 people were killed in less than one week in January 2000 when some of the fiercest fighting between Christians and Muslims erupted.
In this latest dispute, hundreds of people vandalized the mine's office buildings after allegations by locals that Newcrest was taking sides in the conflict, and protesters have engaged in a sit-down demonstration at the Newcrest mine, asking for Australian help to "bring Newcrest under control".
According to some claims, a helicopter leased and used by the company had supplied ammunition to the residents of one district in the area before an attack on Muslim neighbors. Newcrest was also accused of flying people involved in the conflict.
While the company denied any involvement in the clashes, it did concede that the helicopter was used on occasions by Indonesia's military forces, the Tentara National Indonesia or TNI. Newcrest said it has been paying both the TNI and the elite Mobile Brigade paramilitary police (Brimob), which has a poor human-rights record and a history of killings at Australian-owned mines, to guard the Toguraci mine. The TNI has also guarded a neighboring Newcrest gold mine, Gosowong, since the inter-religious tensions erupted.
Payments from resource companies to the security forces for protection are commonplace in Indonesia, though the Brussels-based International Crisis Group (ICG) described in a 2002 report what it termed "predatory" behavior of the Indonesian security forces.
ICG has warned that resource companies should, "as far as possible, keep the Indonesian military and police away from projects". Meanwhile, Jakarta is about to expel Sidney Jones, ICG's Indonesia director, for writing a series of reports critical of the country's security policies.
Last year, for instance, Freeport-McMoRan, partly owned by the mining giant Rio Tinto, disclosed that it had paid US$10.3 million in 2001 and 2002 to the military for security at its huge gold and copper mine in West Papua. Shortly after, however, TNI chief Endriartono Sutarto said he planned to withdraw his troops from such tasks.
Violence has also resulted from such security deals. After being asked by Perth-based Aurora Gold to keep local people off its Mount Muro mine lease in Kalimantan, Brimob forces fatally shot two people and injured another five in three subsequent incidents in June 2001, August 2001 and January 2002.
A large number of Brimob troops are monitoring the latest protest, but so far have acted with restraint, apart from reportedly detaining one protester, whom they forced to sing the Indonesian national anthem, Indonesia Raya. The man reportedly left out the word tanah (land) from the chorus "tanah air", explaining that Australians have stolen his people's land.
Locals have been calling for Brimob's removal from the mine since an incident this year when scores of protesters were beaten and one was shot dead. At that time, the company said the presence of Brimob forces was the only way it could defend its $100 million project from hundreds of unauthorized miners. It denied any responsibility for the man's death and said it was a matter between local activists and Brimob. Brimob said it was merely firing warning shots.
Igor O'Neil from the Mineral Policy Institute argues that payments to Brimob give it an incentive to repress legitimate community opposition to mining projects. "Mining companies shouldn't be paying the security forces. It's no substitute for proper community relations," he said.
Indonesia's state-owned mining company PT Aneka Tambang owns 17.5 percent of the project, which holds an estimated 260,000 ounces of high-grade deposits of gold. Newcrest was forced to shut down the project altogether last year after 2,000 protesters occupied the site and illegal miners began removing ore, forcing the company to halt pre-mining work for five weeks and delay gold production.
According to local tribes and several Jakarta-based environmental and anti-mining groups, the Toguraci mine is operating illegally and is denying local ancestral rights to the land without paying compensation.
Activists have demanded that 10 percent of the future profits from the site be spent on local community projects. They also have demanded that Melbourne-based Newcrest distribute Rp500 billion ($80 million) in profits from the Gosowong mine to the local people.
Newcrest, however, disputes the land-rights claims and points out that it already shells out large sums in taxes and royalties to the central government, which is then supposed to redistribute the royalties back to the region. O'Neil says protesters have asked for Australia's help to "bring Newcrest under control" and prevent violence by Brimob.
Alleged human-rights abuses at the site have prompted a visit by a team from the Human Rights Commission (Komnas HAM). The sit-down is expected to continue until the team has reported its findings and the company agrees to negotiate over the demands made by locals.
Claims also are being made by environmentalists who say that Newcrest gold mining operations violate a 1999 forestry law that prohibits open-cut mining in some of Indonesia's conservation areas. But in March President Megawati Sukarnoputri belatedly recognized the validity of mining contracts signed before the law wentinto effect.
Article 38(A) of Perpu No 1/2004, signed by the president, is a transition ruling, enabling the country to move toward full protection for the forests, while recognizing pre-existing contracts. The ruling initially applies only to 13 mining companies, including Newcrest, with existing operations and allows them to conduct open-cut mining in some forests deemed to be protected. A further nine companies with exploration contracts are to be allowed to proceed.
A group of environmental activists and economists have called on the House of Representatives to revoke the regulation, claiming that allowing the mining operations would also cause more economic losses and environmental damage. Environmentalists say an estimated 35 percent of Indonesia's land mass has been lost to extractive industries, including mining, logging, and palm oil, as well as other industrial plantations. Some of the most sought-after mineral resources are in protected areas and on small islands.
Mining occupies the largest land area of these enterprises. Data from the Indonesian Mining Advocacy Network (JATAM) show that at the end of 2001, 3,246 mining permits had been issued, 893 of which were mining permits covering 32.76 million hectares, 105 contracts of work covering 25.71 million hectares, 110 coal contracts covering 8.4 million hectares and 2,138 local mining permits issued by local governments.
Environmental groups and activists have argued that all companies should be barred from mining in protected forest areas and consider the regulation as a green light for further deforestation. Mining companies, however, claim that illegal logging causes most of the deforestation and argue that Indonesia must revive the mining industry to provide jobs in areas most affected by unemployment and poverty.
Meanwhile, government officials have argued that the move was necessary to prevent mining companies from suing the government for up to $31.5 billion for breach of contracts. The long-awaited decision on the regulation is also expected to free up an estimated $2.5 billion in mining investment that has pending for the past five years.
The legal uncertainty had forced mining companies either to freeze or scale down their operations. Now, mining giant BHP Billiton will go ahead with its $2.1 billion nickel project on the remote, 600-strong population Gag Island in Papua. The project, another "victim" of the ban on open-cut mining in protected forests, had already cost about $45 million before being put on hold.
The timing is opportune, with nickel prices at a 10-year high and few new projects being developed. But the project faces opposition from environmental groups that object to BHP Billiton's plan to dump tailings into the sea.
Paul Coutrier, president of the Indonesian Mining Association, points out that the mine will benefit Gag Island and the people there because BHP Billiton would need to build a harbor, new roads and other infrastructure for its project. BHP Billiton has also revealed a new coking-coal discovery in central and east Kalimantan.
Anglo-Australian miner Rio Tinto is another that will benefit from the regulation, as it owns a share of the Freeport gold and copper mine in Papua, as well as the Citra Palu gold deposit in South Sulawesi.
Unfortunately, the newfound enthusiasm by Australia for digging deep into Indonesian soil may be somewhat reduced after the latest developments on the security front.
Only days after the latest protest started in Maluku, security was shored up outside the Australian Embassy in Jakarta following extremist death threats that Australian officials in Jakarta described as "credible".
The threats were mostly aimed at PT Inco, a huge Canadian-owned Soroako nickel mine in South Sulawesi just 150 kilometers south of Poso, the scene of deadly religious violence and communal clashes in recent years.
Canada and Australia have issued travel advisories on potential terror threats in the province. Reports said the threats were a combination of warnings by locals and extremists, who had become involved in a prolonged dispute with Inco over alleged evictions and unresolved land rights and compensation cases.
Six Australians are part of the 3,000-strong Inco workforce, which includes some 80 expatriates, many of whom have decided to leave the site. In response to the threats, a joint task force of 230 soldiers and Brimob police has been deployed from Jakarta to protect the operations and staff.