Indonesian Constituional Court Prevents Oz Mining Companies Destruction Of Protected Forests

In a recent decision of the Indonesian constitutional court, a number of Indonesia’s sensitive forests have escaped devastation from proposals for open cut mining operations by foreign companies that include Australian mining giant BHP Billiton.

The decision could signal the final nail in the coffin of BHP Billiton’ Gag Island project which had been subject to significant shareholder concerns over the issue of mining in protected forests as well as proposals to dump the mine waste in the marine environment within the Raj Ampat Archipelago, an area recommended for World Heritage Listing.

"This Court concurs with the opinion of expert witness Prof. Dr. Emil Salim ... that the six companies which are still at the stage of exploration or feasability studies, at such time as they enter the exploitation stage must comply with the requirements in Clause 38 (4) of the Forestry Law (41/1999) [which prohibits open pit mining in protected forests] as long as their licences for exploration and exploitation are not a combined licence" (quoted from the conclusions at pp 414-415 of the Judgement of the Constitutional Court).

Under the Indonesian mining law framework, a Contract of Work (CoW) is granted to a mining company to exclude others from mining in a certain area, however a CoW holder only gains a licence for exploitation once their mining plan and Environment Impact Assessment recieves government approval. The practical outcome is that the six companies prohibited from open pit mining in protected forests are those which have not had reached that exploitation stage through submitting a plan and having their EIS approved:Weda Bay Nickel (Canada), Gag Nickel (BHP Billiton from UK/Australia), Pelsart Tambang Kencana (Australia), Aneka Tambang (Indonesia), Sorikmas Mining (Aberfoyle from Australia), and Interex Sacra Raya (Indonesia).

The Australian government was subject to criticism in both Indonesia and Australia after questions in the Australian parliament revealed it had been lobbying and pressuring the Indonesian government to grant a number of Australian operations exemptions to Indonesia's environmental protection laws banning open cut mining in protected forests.

The Constitutional Court decision handed down on 7 July 2005 recognises the unacceptable consequences upon on communities and the environment of open pit mining, but on the other hand makes an exception for seven companies to continue with such mining in protected forests. In a Jakarta press conference today, Indonesian NGOs argued that to be consistent with the evidence brought by the appellants, the Court should have annulled the Presidential Decree (and ratification) because it endangers the livelihoods of many and thus contravenes clause 33 (3) of the Indonesian Constitution.

The Indonesian government had expressed concern in a number of forums regarding the threats of international litigation if it did not allow mining companies who had already proceeded to operational stages to continue to mine, and the influence of these and related concerns is evident in the court ruling:


"Although this Court shares the opinion of all the experts brought by the appellants regarding the dangerousness and negative impacts of open pit mining in protected forests, nevertheless this Court also understands the reasoning for the need for a transitional regulation which continues the legal status or rights gained by mining companies before the advent of the Forestry Law (1999)." (quoted from the conclusions at pp 413-414 of the Judgement of the Constitutional Court).

Australian company Newcrest’s Halmahera mine is one of 7 projects permitted to conduct open pit mining in protected forests: on the basis that they have already begun exploitation. When it cleared the Toguraci protected forest during construction, the Halmahera mine in fact illegally operating in breach of a specific ban in the Indonesian Forestry Law, a situation which lead to local community protests and documented human rights abuses at its Toguaraci mine.

“The outcome of this decision reflects poorly upon the Australian government and its role in lobbying the sovereign Indonesian government to put Australian companies’ interests over the interest of the Indonesian population. Threats of international legal action should these companies have been required to adhere to environmental laws have effectively been used to allow mining companies such as Newcrest to continue operations which the court has found have dangerous and unacceptable impacts. This can only negatively influence neighbouring countries perceptions of Australia and the already tarnished reputation of Australian corporations in their territories.” said Techa Beaumont of Sydney-based Mineral Policy Institute.

“While it is encouraging that the Indonesian courts have recognized the important public interest that the ban on open cut mining represents, this decision is a disappointing example of the economically powerful using international trade laws to place the interests of big business over the protection of environmental concerns and the public interest.”, concluded Ms. Beaumont.