Mining briefs

Down to Earth No 44, February 2000

Kalimantan: bauxite and uranium

West Kalimantan is being lined up for more environmental damage and social disruption with a new bauxite mine in the feasibility study stage and a uranium deposit under detailed exploration work.

In December a provincial mining department official said a mineable uranium deposit in Serawai sub-district, Sintang district, had been discovered by Indonesia's National Nuclear Energy Board, BATAN, and was currently under further examination.

North Sumatra and West Papua are also considered prospective areas for uranium.

PT Aneka Tambang, 65% owned by the Indonesian government, is developing a 110 million-tonne bauxite mine at Tayan, also in West Kalimantan. The project partners are Aneka Tambang (51%) and unnamed Japanese investors (49%). The development includes a 300,000 tonnes/year aluminium refinery which will produce material for the East Asian market. The project is currently at the feasibility-study stage. On previous experience this means it is more or less certain to go ahead. Plans to start production in 2003 will coincide with the exhaustion of Aneka Tambang's current bauxite supplies from its mine on Bintan Island. (JATAM email posting 16/Dec/99; Kompas 16/Dec/99; Mining Journal 22/Oct/99)

Tussle over Kaltim Prima shares

The provincial government of East Kalimantan is attempting to get control of Indonesia's biggest coal mining operation, the Kaltim Prima coal mine at Sangatta.

The mine is currently owned by UK-based companies Rio Tinto and BP-Amoco with 50% each. Under the terms of its contract, Kaltim Prima is obliged to divest 51% of shares in the company in stages between the fifth and tenth year of commercial production, which began in 1992.

The provincial administration has offered to buy the 30% share-holding currently available, as long as it can buy the remaining 21% in the future. Last year Indonesia's PT Timah withdrew from share-bidding as it considered the price too high. The bid reflects the new-found muscle of regional authorities, but no improvement in decision-making processes - local communities affected by the mine's social and environmental impacts have not been consulted.

The news has not been well received by Rio Tinto, whose president in Indonesia, Noke Kiroyan, has advised the government against agreeing to the request, saying it would violate the company's Contract of Work. Ministry of mines and energy secretary general, Djoko Darmono, said the government was studying the offer, but would require information which showed that East Kalimantan could afford US$175 million for a 30% share in the company. 51% would cost around $300 million, he said. The ministry also wanted details of how the local authority would plan for the future of the company.

The mine, which excavates 15 million tonnes of coal per year and moves 300 million tonnes of earth in the process, is one of the world's lowest cost coal producers. Kaltim Prima has been involved in disputes with local people over land and pollution - it is also located on the edge of the Kutai Nation Park. In 1996 workers at the mine went on strike for better pay as their wages, paid in Rupiah, plunged in value (see DTE 36, Feb,1998).

(Source: Jakarta Post 24/Jan/2000; Mining Magazine, Oct/99)

Inco expands

The Canada-based nickel mining company, PT Inco, has completed a US $638 million expansion project at its Sulawesi smelter, bringing total output capacity of nickel in matte to about 120 million pounds per year and boosting output by 50%. The mine and smelting operations at Soroako, South Sulawesi cause dust pollution and have been at the centre of land claim protests by local communities.

In January parent company Inco Limited announced that the development of the massive Voisey's Bay nickel project in Labrador, Canada - also on land claimed by indigenous groups - had been stalled. This means the company may decide to concentrate more energy on further expansion in its contract areas in Central and Southeast Sulawesi provinces. This is bad news for the indigenous Bungku and settler communities trying to defend their lands and livelihoods in Bahomotefe in Central Sulawesi, the site of Inco's next expansion phase.

NGOs hope that relations between the communities affected by Inco's operations in Sulawesi and Canada can be strengthened in order to better counteract the negative impacts of the company's global operations. A visit by people from Bahomotefe to Labrador is planned this year. A leading NGO mining activist from Sulawesi, Anto Sangadji, recently visited Canada to meet NGO counterparts and academics and to discuss the problems associated with Inco's operations in Indonesia.

(Source: Reuters 9/Jan/2000; CNW 11/Jan/2000. See also DTE's report Inco in Indonesia, May 1999)