mine in West Papua, owned by Freeport McMoran. Freeport was the first major foreign investor in Indonesia following General Suharto’ s take-over in 1965. The company’ s investment was initially made on the most lucrative terms, including an extended tax holiday, concessions on normal levies, an exemption from royalties and an exemption from the requirement for Indonesian equity.178 Operation of the Grasberg mine resulted in the displacement of two indigenous tribes, the Amungme and Komoro, from their traditional lands. Human rights abuses of local residents, including torture and killings, were also alleged to have been committed by security and company personnel.179 Currently, a legal action claiming damages from Freeport has been initiated by community representatives in the United States.180
In the Freeport case, the issue of the mine’ s environmental impact has been pursued by several environmental NGOs through political and legal channels. The mine’ s operations, which produce nearly 300,000 tonnes of waste daily, have resulted in the regular dumping of unprocessed tailings, widespread deforestation and the destruction of entire landscapes through open cut mining.181 For the first two decades environmental monitoring of the mine’ s operations was lax or non-existent. The first environmental impact assessment was done more than a decade after the mine commenced operation and the results of this were never made public.182 The environmental impact of the mine is likely to worsen with the increased scale of Freeport’ s operations, following an expansion in the company’ s concession area from 10,000 to 2.5 million hectares covering much of the West Papuan central mountains.183
Conflict over Freeport’ s environmental impact has provided the backdrop for at least two environmental public interest actions in Indonesia. In 1995 WALHI mounted a legal challenge against the approval granted by the Department of Mining and Energy to Freeport’ s environmental management plan. WALHI cited widespread environmental damage and social dislocation caused by Freeport’ s operations, arguing that the Department should have withheld environmental approval.184 A further legal suit was filed by WALHI following an incident in
178 Subsequent renegotiation of the contract in 1976 led to cancellation of the remaining 18 months of tax exemption and purchase by the government of an 8.5% stake in the company’ s operations. Marr, 'LJJLQJ
'HHS 7KH+LGGHQ&RVWVRI0LQLQJLQ,QGRQHVLD, p15.
179 "Court Orders Freeport to Clean up Its Act," 'RZQWR(DUWK 51, no. November (2001).
180 see :HVW3DSXD 2EOLWHUDWLRQRID3HRSOH, 3rd ed. (Tapol, 1988).
181 "Rio Tinto under Pressure," 'RZQWR(DUWK 38, no. August (1998).
182:HVW3DSXD 2EOLWHUDWLRQRID3HRSOH, p78.
183 Marr, 'LJJLQJ'HHS 7KH+LGGHQ&RVWVRI0LQLQJLQ,QGRQHVLD, p71.
184 see further discussion of this case, page 122
May 2000 when a dam holding overburden waste burst, flooding the lands of nearby villagers and claiming the lives of 4 workers.185 In its highly publicised case WALHI argued that the mining company had provided misleading information in relation to the dispute and deliberately misled the company.
Besides the several court cases relating to Freeport’ s operations there has only been one another reported civil mining related case concerning environmental issues, the 0XDUD-D\D case.
In that case a community suffered environmental damage from the installation of a oil pipe in West Kalimantan. After several appeals the community were ultimately successful in obtaining compensation in the Supreme Court. In most cases, the legal or practical obstacles associated with litigation appear to be sufficient to compel communities to adopt more of a ‘direct action’
approach in disputes with mining companies, employing tactics such as blockades and occasionally violence or damage to property. For example, in May, June and July 2000 local Dayak villagers blockaded a gold mine operated by PT Kelian Equatorial Mining in Kalimantan, a subsidiary of international mining giant Rio Tinto, for almost one month. The blockade, which forced a suspension of mining operations, signalled the breakdown of an agreement reached in June 1998 between PT KEM, a community organisation (LKMTL), Rio Tinto and environmental NGO Walhi to address issues of land compensation, human rights abuses and environmental pollution.186 According to local NGOs, PT KEM had refused to pay fair compensation for requisitioned land and had endeavoured to divide the local community by negotiating with local government heads rather than community appointed representatives.187 A mediation process was subsequently resumed and is discussed in more detail in Chapter 4.188
The proliferation of illegal or unlicensed mining, much like illegal logging in the forestry sector, has also contributed to the rise in the number of environmentally related disputes in the mining sector. Unlicenced mining first became prominent in the mid 1980s, and by 1990 the production of unlicenced gold mining was estimated at 10-14 tonne compared to the 2-4 tonnes of
185 see further discussion of this case, page 106
186 Environmental pollution at the KEM mine in Kalimantan have included hazardous levels of manganese and cyanide in water discharged from the mine and excessive levels of suspended solids discharged into the Kelian River. "Rio Tinto under Pressure."
187 "Rio Tinto: Blockades and Strikes Hit Kalimantan Mines," 'RZQWR(DUWK ,QWHUQDWLRQDO&DPSDLJQIRU
(FRORJLFDO-XVWLFHLQ,QGRQHVLD No. 47, no. November (2000).
188 see page 208
licenced gold mines. 189 Unlicensed mining has further spread in the wake of economic instability and political crisis following the collapse of the New Order. In November 2000 illegal mining was estimated to be occurring in over 700 locations throughout the archipelago and to be costing the state in lost revenue around Rp 315.1 billion/year.190 As illegal mining has spread, disputes have frequently emerged between unlicensed and licenced miners over rights to resource extraction. In the vast majority of disputes the position of the larger mining companies is supported by both the legal framework and government agencies.191 Nonetheless, government agencies have struggled to control unlicenced miners, prompting several mining companies to threaten closure of mining operations due to unregulated illegal mining. Yet the matter of so-called “ illegal” mining is a complex one. Advocates for the rights of indigeneous communities have argued that traditional mining carried out by local communities should be protected and allowed by the law.192 In response to such criticisms, the government has directed that only unlicenced miners using sophisticated equipment in large scale operations would be considered
“ illegal” , whilst local residents using traditional methods would not.193 Unlicenced mining on a larger scale is often coordinated by profiteering middlemen who employ unsafe and environmentally hazardous methods. For example, the widespread use of mercury in unlicenced mining in Central Kalimantan has had a grave environmental impact, with some 10 tonnes of mercury being released into the major tributary Kapus River annually.194 The spread of illegal mining is likely to cause further environmental pollution and related disputes. Already in Western Kalimantan a NGO called the Community Forum for the Victim’ s of Unlicenced Mining has been formed to oppose such environmentally damaging methods of mining and seek compensation for victims who have suffered its effects.195
189 Marr, 'LJJLQJ'HHS 7KH+LGGHQ&RVWVRI0LQLQJLQ,QGRQHVLD, p50-.
190 Ibid., p52.
191 Article 26 of the Basic Mining Law requires local communities to surrender their traditional property rights to mining concessionaires. Lynch and Harwell, :KRVH5HVRXUFHV":KRVH&RPPRQ*RRG" 7RZDUGV
D1HZ3DUDGLJPRI(QYLURQPHQWDO-XVWLFHDQG1DWLRQDO,QWHUHVWLQ,QGRQHVLD, p66.
192 Ibid.
193 In practice, however, traditional miners have continued to be displaced and prosecuted by enforcement agencies. Marr, 'LJJLQJ'HHS 7KH+LGGHQ&RVWVRI0LQLQJLQ,QGRQHVLD.
194 "Kalimantan Rivers Highly Contaminated by Mercury," ,QGRQHVLDQ2EVHUYHU, 13 September 2000.
195;"Wilayah Pertambangan Tanpa Izin Mencapai 713 Lokasi," %LVQLV,QGRQHVLD, 24 November 2000. "Tim Terpadu Peti Tak Mampu Atasi Maraknya Penambangan Liar," 0LQHUJ\1HZV&RP, 24 November 2000.