Mines and Energy Ministry prepares regions for autonomy

Petromindo.Com recently talked with Simon F. Sembiring, the director of mining development supervision at the Ministry of Mines and Energy, on various issues in the mining industry. Excerpts of the interview are as follows:

Question: Could you tell us how the Ministry of Mines and Energy prepares the regions for the implementation of autonomy in the mining sector?

Answer: The Minister of Mines and Energy will issue this month a letter on the basic mining concept as temporary guidelines for governors and regents in implementing the newly-released Governmental Regulation No. 25/2000 (on the central government-province rights). This aims to avoid disquiet. Meanwhile, we shall formulate the (permanent) guidelines, which we expect to finalize in November this year.

Q: What is the content of the letter?

A: Delegation of authorities from the ministry to the regions. I can't give you more details because it is being drafted. Simultaneously, we shall also review the Mining Law No. 11/1967 to make it consistent with the autonomy laws. We expect to complete drafting the review this year.

Q: How's about human resources in the regions? Are they already prepared to carry out the autonomy?

A: We are ready to help them. We have skilled human resources to help them. But, we shall not push them to accept our helps, because it may cause a misperception that the central government still dictate them. Instead, we shall wait for them to ask our helps. If they are not capable, they will end up asking for our helps. We don't want to say they are not capable, because that will offend them.

Q: Regarding the future contracts of work, will they need approvals from the regional councils?

A: That's one of the questions that will be answered in the (permanent) guidelines that we are going to issue by November this year. According to the Mining Law No. 11/1967, the contracts of work should be consulted with the House of Representatives. Maybe, (under the future guidelines) negotiations on the contract will take place in the regions. They may ask for our technical assistance for the negotiations. We are ready to help them. The contracts will be probably be signed by regents. There is no problem with that since they will do so on behalf of the Indonesian government.

Q. Investors are worried about the certainty of the contracts that are signed by regents.

A. Why should they be worried? The contracts will be signed the regents on behalf of the Government of Indonesia. The contracts contain the pledges of the Indonesian Government. But, the signatory can be anyone appointed by the President. Today, the President assigns Minister of Mines and Energy to sign the contracts.

Q: So what are the main concerns of the investors?

A: In the first place, the Forestry Law No. 41/1999 that bans open-pit mining activities on the conservation areas. Some investors have done explorations in the areas and spent money for that. Suddenly, there is a law that bans open-pit mining activities in the areas. You know that in the beginning of the exploration activities, the investors don't know what they will find, don't know the (geological) structure. If they someday find deposits in the conservation area and are not allowed to mine the deposits, that will be a bad thing for them, because they have spend money to explore for something that they can't develop.

The second concern is the land disputes with the local people like the ones that have been experienced by gold mining companies PT Kelian Equatorial Mining in East Kalimantan and PT Indo Muro Kencana in Central Kalimantan and PT Newmont Minahasa Raya in North Sulawesi. They have paid a lot of compensations to the local people. The problem is the local people consider the land compensation is not enough. Who is to blame for that? Not the companies because they have paid the compensations in accordance with the bylaws issued by the local administrations. The local administrations should take the blame for issuing bylaws that require the companies pay too small compensations. Honestly speaking, many of our officials still lack capability to determine a fair amount of compensations.

The companies can't be blamed because they have followed the rules. The companies can't pay higher compensations than the ones set in the bylaws. They are all listed companies. They will be asked to account for all their expenditures. If they can't provide the reasons or basis for their expenditures, they will face problems in their respective countries. This is what our people don't understand.

Q: The investors are also worried about the autonomy rights given to the regions.

A: It's understandable. They are worried about the quality of the officials in the regions. They are not sure that the regional administration will provide a good service as they have received from the central government. But, we in the central government will help them.

Q: What is the solution to the Forestry Law No. 41/1999 that bans open-pit mining in the conservation areas?

A: We have established a joint ministerial team with the Ministry of Forestry and Plantations to solve the problem. There is already a talk on the ministerial level, which is followed up with the formation of the team.

Q: Will the law be revised?

A: We don't know. The team just started to work. What is clear is that not only investors but we also complain about the restrictions in the Forestry Law. Mining operation is not like a shoe company. When they start explorations, investors don't know that they will find deposits in the conservation areas. They must be very disappointed in finding out that they are not allowed to mine the deposits after spending a lot of money for explorations.

Q: Environmentalists could not accept any mining operations in the conservation areas.

A: Is there any mining operation that does not change the ecosystem? No. Even the underground mining operation changes the ecosystem. If the environmentalists demand that all mining companies restore their mining areas into its former condition, it's impossible. All mining operations will change the ecosystem.

What mining companies have to do is how to minimize the pollution, manage the tailing and reclaim its mines. But, the mining areas could not be restored into its former condition.

Q: Some environmental groups are now even campaigning for the closure of all mining operations in the country. What do you think about it?

A: Okay. What will happen if there is no mining operation? There will be no aircraft, cellular phones, electronic equipment, spoon, and many other things since all these they are all made of mining products. Mining is the driving force of modernity. Most of things we are using now are made of mining products. Are we ready to live without all these things? (*)