Toguraci minefield for Newcrest: Report

Newcrest Mining does not have permission to operate the Toguraci open-cut gold mine located in protected forest in remote North Maluku, according to officials from the Indonesian departments of mining and forestry as quoted by Australian daily The Age.

Planning division chief at the Indonesian Ministry of Forestry, Boen Purnama, told The Australian the Forestry Law prohibited open-cut mining in protected forest.

"If their plan is to mine in a protected forest, they will certainly not be given permission," he said.

"Right now we are investigating to see whether it is true that mining has begun at Toguraci. We did not permit it."

The Toguraci mine has been operational for some weeks, according to a spokesman.

Bambang Gatot Ariyono, head of the mineral and coal enterprises sub-directorate in the Indonesian Energy and Mineral Resources Ministry, said Newcrest had permission to explore and develop the site, up to the point of actually operating the mine.

Yet he noted the difficulty with the regulations regarding protected forest.

"NHM (Newcrest's Indonesian subsidiary Nusa Halmahera Minerals) is one of 22 companies which have problems with protected forest that will be handled by the Government," Ariyono said.

"We hope that the President's decision will be issued soon. This company has already made a big investment."

The controversy serves to highlight the difficulties that foreign mining firms face in Indonesia.

While stating that Newcrest was mining without permission, the Forestry Department admitted it had neither notified nor penalised the company. Melbourne-based Newcrest is adamant that it has all the correct permissions for the Toguraci mine.

Spokesman Peter Reeve said Newcrest's contract of work was "clearly an agreement for work to proceed".

Reeve confirmed that the mining and forestry departments were at odds over the permits. "We were waiting while the two departments worked it out," he said.

Finally, an Indonesian mining assessment team made a full evaluation of the work at the mine and concluded Newcrest had done everything by the book, Reeve added.

"Newcrest wouldn't do anything it didn't think it was supposed to do."

Purnama said the Indonesian Parliament (DPR) had yet to decide whether mining would be permitted in various protected forest locations across Indonesia, including Toguraci. "Right from the beginning the permission for Newcrest was only for maintenance," he said.

"We still don't know whether the DPR will grant permission. So there is no permit, because mining in protected areas is banned."

Ariyono said that, according to Newcrest's contract, if reserves were found the firm would automatically be given a permit to develop the mine, and then one to operate the mine.

"It is called security of tenure, for the assurance of the law and the continuation of the permit," he said. "If it wasn't like that, investors wouldn't be interested."

Yet he said that as far as he knew, the Toguraci mine had not begun operating, and an operating permit had not been issued.(*)