Press Release: KEM scales back operation due to roadblock

Following is a press release from PT Kelian Equatorial Mining:

West Kutai, March 6, 2003 - A small number of individuals from communities surrounding the Kelian Equatorial Mining (KEM) in West Kutai, East Kalimantan, have established a roadblock on the single access road to the KEM minesite to put pressure on KEM to pay compensation claims falling outside agreed validation criteria.

?The roadblock has forced KEM to scale back its operations and to suspend all non-critical activities until the roadblock is removed and the issue is resolved,? said Charlie Lenagan, President Director PT KEM.

Activities affected by this action, he said, include ongoing compensation payments, local contractor activities, various community support programs and government regional development assistance. ?As a result of the scale back of operations, KEM employees, the majority of whom are locally employed, are also working reduced hours,? he added.

Background

KEM and community representatives established an agreement in 2001, which covers finalisation of all outstanding compensation claims. This agreement was developed with support from the Indonesian Human Rights Commission (Komnas HAM), the Indonesian NGO WALHI, Justice Einfeld from the Federal Court of Australia and others.

Validation and processing of claims has been taking place under the 2001 agreement and KEM has paid total compensation of Rp29 billion to over 6,700 claimants. Payment of grievance claim settlements to approximately 460 claimants is currently in progress. The grievance claim validation process, which is carried out jointly by community representatives and KEM, has established that a number of claims are invalid. An objection process has been developed to enable individuals to appeal where their claims have been rejected.

The individuals behind the roadblock have already received significant compensation and benefits from KEM from their employment and contract relationships with KEM. These individuals have recently been advised by the joint community and KEM validation team that their additional claims have not been accepted. They have chosen to pursue their claims through illegal action rather than through the proper appeal processes.

?KEM is continuing to work with all parties to seek satisfactory resolution to this issue,? said Charlie Lenegan.

KEM operates a gold mine with an annual output of 14 tons of gold and 12 tons of silver. KEM employs about 900 permanent employees and 1000 contractors, mostly locally recruited. KEM spends about Rp15 billion annually on community development programs. (*)

For more information please contact: Kasan Mulyono, Superintendent Communications; Tel: +(62-542) 765861 ext. 265; Fax: +(62-542) 761818; Email: Kasan.Mulyono@ptkem.co.id; Website: www.keliangold.com