Petition against World Bank support for new nickel mine

DTE 84, March 2010

Indonesia's mining advocacy network JATAM is campaigning to stop World Bank support for a nickel and cobalt mine which will destroy forests and livelihoods on Halmahera Island, eastern Indonesia. The following report is extracted from a petition opposing Bank support, and other JATAM sources.

The controversial nickel and cobalt mining project is being developed by PT Weda Bay - a venture involving French, Japanese and Indonesian companies.

Twenty-one per cent of Weda Bay Nickel's mining area is part of Indonesia's protected area system and includes the Lalobata and Aketajawe National Park. The mine will clear cut 35,155 hectares of protected forest.

Approximately 17 million tonnes of rock will be extracted each year from this small and fragile island in North Maluku, which is rich in biodiversity. Of this, 5 million tonnes of ore will be processed to produce 60,000 tonnes of nickel and 4,000 tonnes of cobalt. Exports of the nickel and cobalt from the mine are expected to reach 65,000 tonnes each year.

PT Weda Bay Nickel plans to use the controversial sulphuric acid heap leaching process, and develop a sulphuric acid plant that will need 1 million tonnes of sulphur each year.

Besides adversely impacting land and water and consuming large amounts of energy, the mine's waste will be dumped into Weda Bay.

An international petition, sent in March to Multilateral Investment Guarantee Agency (MIGA), the insurance arm of the World Bank, rejects the role of the Bank and other financial institutions that provide insurance and funds to dangerous projects such as the PT Weda Bay Nickel mine.

MIGA was due to conduct a feasibility assessment of this mine From 1st to 10th March to determine whether it should provide political risk insurance for construction of the mine. If it goes ahead, the mine will be the second largest nickel mine in Indonesia.

PT Weda Bay Nickel is owned by the France-based company, Eramet (56.5%), Mitsubishi of Japan (33.4%) and Indonesian company PT Aneka Tambang (Antam) (10%).

The petition also draws attention to the climate change impacts of the project:

"We reject this project because it compromises Indonesia's commitments to reduce greenhouse gas emissions by 26% by the year 2020. This project is fossil fuel intensive and will compromise the forest resources found in the Lalobata and Aketajawe protected area, an area of 35,155 ha."¹  

One among thirteen

PT Weda Bay was one of the thirteen mining projects given special dispensation in 2004 to develop open-pit operations in protected forests.

Others include the Freeport-Rio Tinto mine in West Papua and two coal mining projects in Kalimantan.² Freeport was recently issued a second warning by the forestry ministry, because it had failed to apply for a permit to use the forest area.³

Other projects

PT Antam operated another nickel mine on the island of Gebe, to the southwest of Halmahera Island, which started its operation 25 years ago and was closed in 2004. According to a joint CSO press release, the operation left behind a huge amount of environmental damage, and also devastated the economy of local people who mostly live as farmers or fishermen. On 23-27 February 2010, local people and students conducted a peaceful protest demanding that PT Antam close the mine responsibly. But this action was countered with violence and shooting from Central Halmahera Brimob (police mobile brigade) unit.⁴

Gebe Island is close to Gag Island, off West Papua, where a major nickel mine was planned by BHP-Billiton, until it withdrew in late 2008.⁵

Another notorious mining operation on Halmahera Island itself is run by PT Nusa Halmahera Minerals. In 2004, this Australian-owned company faced protests by the local community after clearing the Toguraci protected forest. One man died after being hit by a bullet from Brimob police, hundreds were arrested, and in the end 7 people were detained without due legal process. The shooting was never properly investigated either by the government or the Indonesian Police Force.⁶

Nusa Halmahera is 82.5% owned by Newcrest, with Aneka Tambang holding a minority 17.5% share.⁷

Concern over renewed interest in Toka Tindung gold mine, Sulawesi

A group of CSOs has written to three international banks asking them not to invest in an open-pit gold mine in North Sulawesi, which is vigorously opposed by local communities.

PT Meares Soputan Mining (MSM) owned by Australia and UK-listed mining company, Archipelago Resources, want to develop the gold mine on the northernmost tip of the island. The project has a long history of opposition from local communities whose livelihoods are threatened by the mine. In the past, the local authorities have also been against the development, but last year, the project's Environmental Impact Assessment was finally approved.⁸

The three banks targeted by the CSO letter are ANZ based in Australia, Standard Bank (South Africa) and BNP Paribas (France).

The letter from the group - which includes Banktrack, Friends of the Earth France, Minerals Policy Institute and North Sulawesi group, AMMALTA - calls on these banks to completely withdraw from this project, to terminate their due diligence processes and to refrain from considering any financial support to the project or any of its sponsors on the grounds that:

• the project continues to face strong resistance by the people of North Sulawesi;
• the project is surrounded by suspicions of bribery and corruption;
• issuing the EIA violates two Indonesian laws;
• the history of mining enterprises in Indonesia is laden with human rights violations;
• the project will cause severe economic damage for the people of North Sulawesi;
• the project holds multiple environmental threats and
• Archipelago is a small start-up company, which might cause severe financial risk to the banks.

The letter notes that the all three banks have adopted policies that publicly commit them to social and environmental responsibility standards, such as the Equator Principles. It states that their consideration of the Toka Tindung project is seriously putting into question the sincerity of such commitments and creating damage to their reputations.⁹

Other banks have withdrawn from the project, including the German bank WestLB in December 2007, after strong pressure from international campaigners, led by German NGOs Urgewald and Watch Indonesia.¹⁰

More information is on Banktrack's website at www.banktrack.org/  

Notes

¹ Petition to MIGA, circulated by JATAM, March 2010
² See DTE 76-77 for more details.
³ The Jakarta Globe 23/Feb/2010.
⁴ 'World Bank Must Stop Plan to Finance the Second Largest Indonesia Nickel Mine' JATAM, WALHI, KIARA & KAU Press Release, english.jatam.org/content/view/129/1/
⁵ See DTE 79, November 2008
⁶ Press release as in Note 2, above. See also DTE 60
⁷ www.newcrest.com.au//operations.asp?category=4
⁸ For more background see DTE 76 and DTE 72
⁹ Letter signed by Banktrack and a number of other CSOs, February 22, 2010.
¹⁰ see DTE 76