DFAT clearing a path to Indonesia’s forests for Australian miners
By Tim McDonald September 2002
The Department of Foreign Affairs and Trade (DFAT) helped Australian mining companies lobby the Indonesian government for the right to mine in protected forests.
Australian mining companies actively lobbied the Indonesian government to remove a 1999 law prohibiting open pit mining in protected forests, arguing it interferes with contracts of work signed prior to the law’s implementation.
The law is the subject of ongoing intra-governmental debate in Indonesia, with the mining department actively pushing for its repeal and the forestry department insisting on its maintenance.
A DFAT official, who asked not to be named, said the department helped mining companies set up meetings with Indonesian officials to discuss the law and the status of their contracts.
DFAT’s role is in stark contrast to what advocacy groups such as the Mineral Policy Institute (MPI) and Community Aid Abroad (CAA) say is an appropriate role for the government to play in the overseas activities of Australia’s mining companies.
At present, Australian companies overseas operate under voluntary codes of practice, but MPI and CAA contend that these codes don’t go far enough, and should complement rather than replace regulation.
“We have no problem with codes of practice. What is dangerous is when they start to advocate them as an alternative to regulation,” said Ingrid Macdonald, CAA’s mining ombudsman.
Moreover, said Ms Macdonald, if mining companies were actually respecting environmental, labour and human rights standards, government regulation should present no problems.
“If companies say that they are doing all this stuff, then why do they oppose government regulation?” said Ms Macdonald.
But while Australian advocates clamour for tighter rules, industry representatives in Jakarta point to the forest law as an example of how Indonesia’s confusing legal system is stifling economic development. “We cannot work with that act because, as a forestry law, it is an infringement to the mining industry,” said Paul Coutrier of the Indonesian Mining Association.
Mr Coutrier said the legal system, and not the environment, is the real issue because many mining companies had contracts to work in Indonesia’s protected forest areas before they were designated as such in 1999.
Ultimately, Mr Coutrier said, the effect of this law may be that foreign investors will simply take their money elsewhere.
“If that law is not changed, it is difficult to expect foreign investment,” said Mr Coutrier.
Indonesia has become a less alluring prospect for investors since the 1997 collapse of the rupiah and the political uncertainty that followed. According to the Board of Investment of Indonesia, foreign investment has declined from a peak of 39,892 billion rupiah (AUD$8.8 billion) in 1995, to just 9,028 billion (AUD$2.1 billion) last year.
But if Indonesia’s economy is in trouble, so are its forests. A joint report by the World Resources Institute, Global Forest Watch and Forest Watch Indonesia found that Indonesia’s forest cover declined from 162 million hectares in 1950 to 98 million hectares in 2000. The country’s rich lowland forests are almost entirely gone on the island of Sulawesi and will disappear from Sumatra and Kalimantan by 2010.
However the report didn’t cite mining as a major contributor to deforestation and Coutrier insists the mining industry tried its best to minimise environmental damage.
MPI said mining companies are to blame for widespread environmental destruction in Indonesia.
According to MPI, American miner Newmont’s Nusa Tenggara mine dumped huge quantities of waste into nearby coastal waters using a method of disposal that is effectively banned in the US. MPI has also raised concerns over Australian-British company Rio Tinto mining in the Poboya protected area.