Wednesday, 22 April 2009

Protected forests facing underground mining threat

Alfian , The Jakarta Post , Jakarta | Wed, 04/22/2009

The government is soon to issue a presidential regulation allowing mining companies to mine underground in protected forest areas, despite a recent report by the Supreme Audit Agency (BPK) highlighting poor management of mining operations by some mining companies.

Bambang Setiawan, director general for coal, minerals and geothermal at the Energy and Mineral Resources Ministry, said Monday evening that the presidential regulation was important as it would bring new legal certainties to underground mining operations.

"This regulation will not violate the existing law *the Forestry Law*, which only forbids open-pit mining in forests, not underground mining," Bambang said.

Energy and Mineral Resources Ministry Purnomo Yusgiantoro said that underground mining might be very costly, but would be worth the investment. "No problems with the higher cost as long as it provides higher profits," Purnomo said.

He added several protected forest areas were predicted to contain high reserves of coal and minerals. "Take the example of forests in Kalimantan, *where* the areas are estimated to contain huge reserves of coal."

Purnomo and Bambang did not specify when the regulation would be issued, saying only that this was under the president's authority.

Separately BPK lambasted the management of some mining operations in its audit report on coal mining management during the 2006-2007 fiscal years.

It found as many as 212 cases of irregularities in coal mining management with potential state losses reaching Rp 2.69 trillion, along with another US$778.8 million, in total.

Losses reflected halts in reclamation collateral payments by 60 mining contract (KP) holders in Kutai, East Kalimantan; 30 KP holders in Tanah Laut, South Kalimantan; and Coal Contracts of Work (PKP2B) holders PT KJA and PT MSJ.

The total amount of the halted payments reached $3.18 million and Rp 127.25 billion in total, with BPK claiming this would burden state budgets if the contractors failed to fulfill their reclamation obligations.

The audit found that 61 KP holders and 5 PKP2B contract holders did not properly manage the top soil and overburden in open cast mining areas, which could cause landslides, or erosion and reduce soil fertility.

BPK said all these irregularities were caused by a combination of policy weaknesses along with non-compliance by mining companies.

In response, Bambang said that most of the irregularities were found in KPs that were issued by regional governments. "We are conducting an internal evaluation on the BPK's findings," he said.