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Indonesia’s miners exploit loopholes to avoid restoring mining sites

Indonesia’s miners exploit loopholes to avoid restoring mining sites

Jessica Jessica
Mine RehabilitationMining & Resources
April 20, 2020

Highlights:

  • Abandoned mining pits litter the landscape across Indonesia, posing both environmental and public health problems
  • Mining companies are required by law to rehabilitate their concessions after operations end, but loopholes and blind spots in the regulatory framework allow them to shirk this obligation
  • A new report by an environmental NGO identifies these loopholes and the specific ways they allow miners to get away without punishment for failing to restore their concessions
  • The problem could get worse with the impending passage of two bills in parliament that seek even further deregulation of the mining sector, including the dismantling of environmental protections
  • Download this free Guide to Mine Rehabilitation in Australia
  JAKARTA — A litany of loopholes allows mining companies in Indonesia to shirk their obligation to restore and rehabilitate their former concessions, a new report says. Spatial analysis of eight big mining companies by the environmental NGO Auriga Nusantara finds they failed to rehabilitate a combined 873 square kilometers (337 square miles) of mining pits — an area larger than New York City — as of last year. Under Indonesian law, companies are required to restore their mining areas to their original state once they have finished operating in the area. Abandoned mining pits are a major environmental and public safety problem, particularly in the Bornean province of East Kalimantan, the country’s coal-mining heartland. There are at least 1,735 abandoned pits in the province; many of them fill up with rainwater, and 36 people, mostly children, have drowned in some of these pits since 2011. Auriga’s report also finds that a quarter of the unrestored mining pits are located in forest areas without the requisite permits, pointing to illegal mining operations. Enabling these violations to occur is a series of loopholes and blind spots in the country’s regulatory framework that give miners plenty of leeway, says Auriga researcher Muhammad Iqbal Damanik. Among these is a mandatory deposit that companies must make to the government for reclamation and post-mining guarantees in order to obtain a mining license, known as an IUP. But the deposit isn’t a prerequisite for approval of their mining plans and budgets, known as the RKAB. And it’s the RKAB, rather than the IUP, that allows them to begin operating, Iqbal says. “RKAB is the first document for companies to be able to operate or to start exploitation,” he said. “It means the law allows companies to mine first before depositing the funds.” Only 282 of 4,726 companies with mining licenses, or just 6%, have deposited both reclamation and post-mining funds with the government, according to the state auditing agency, or BPK. Just 983 companies, or 21%, have deposited only the reclamation fund. That leaves 72% of licensed mining companies that have not yet deposited any reclamation or post-mining guarantee funds.

Little transparency

Even when companies do deposit the money, there’s little transparency about how much they’ve paid and how much is subsequently used for reclamation activities.
“It is impossible to be sure how effectively reclamation and post-mining policies have been applied, and [to assess] the environmental degradation already caused by mining operations,” the Auriga report says.
Herdiansyah Hamzah, a law professor at Mulawarman University in East Kalimantan, says this opacity allows room for corruption.
“The funds are all pooled in one bank account that’s only known by the government and license holders,” he says. “That means that the room for the public to monitor [the funds] is very limited.”
It’s also unclear how much money is actually needed to rehabilitate a specific mining concession, given how greatly concessions and mining pits vary, Herdiansyah says. The report cites the examples of state-controlled miner PT Bukit Asam and privately held PT Tanito Harum. It estimates the per-hectare cost of rehabilitating Bukit Asam’s company’s mining sites at 159 million rupiah ($10,200), and Tanito Harum’s at 37 million rupiah ($2,400). “Who verifies the amount?” Herdiansyah said. “An official in East Kalimantan once said that in order to close one mining pit, 125 million rupiah [$8,000] is needed. Where does the data come from?” And if the deposits are insufficient to cover reclamation and post-mining needs, there are no provisions stipulating what happens next, Iqbal says. “If there are already mining pits, then it means [they] have affected the public,” he says. “But there’s no procedure on [what to do] when the deposited funds aren’t enough.” The government also only considers reclamation planning documents submitted by companies in upgrading their licenses from the exploration to the mining stage. So companies that fail to carry out their rehabilitation obligations during the exploration stage can still have their licenses upgraded based only on their stated reclamation plans. And while companies must report their reclamation performance and progress each year, a mining ministry decree on the matter doesn’t explain how these reports are evaluated. “For instance, there are no standard times for inspections of conditions on the ground, let alone standard costs and public accountability mechanisms,” the report says.
People in East Kalimantan help a drowning child in an water-filled crater that was previously mined for coal. Image courtesy of Jatam.

‘Clean and clear’

The government mandates a “clean and clear” certification for mining companies to confirm that they meet all legal requirements. But carrying out their reclamation obligations is not a requirement for obtaining this certification, known as CnC. As of June 2018, 2,569 mining license holders had secured CnC certification. But 60% had not deposited reclamation and post-mining funds with the government. All these loopholes have enabled mining companies to continue to operate in the country without having to rehabilitate their concessions, with no disincentives for noncompliance, Iqbal says. “The energy ministry already has a mechanism to blacklist [companies that don’t meet their obligations],” he says. “But it’s not open [to the public]. We can’t monitor whether a company has been blacklisted or not, or why it’s been blacklisted.” Muhammad Jamil, a lawyer with the Mining Advocacy Network (Jatam), says that under the mining law the government has the power to impose administrative sanctions on companies that fail to rehabilitate their concessions. “But these are limited to warnings,” he says. “Revocations of permits rarely happen.” The government is now pushing to pass through parliament two bills that could make it even easier for companies to avoid their rehabilitation responsibilities. One is a bill of amendments to the mining law, and the other, a so-called omnibus bill on job creation, calls for sweeping deregulation, including the dismantling of environmental protections deemed to hinder investments. Jamil says the mining bill will allows abandoned mining pits to be used for agriculture and tourism purposes — fish farms or recreational lakes — giving mining companies even less reason to restore the sites to their original condition. “They are corrupting the meaning of reclamation and post-mining activities,” Jamil says.  
Originally published by Mongabay.  

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