Wednesday, June 8, 2011
Indonesia’s gold mine attack
It is the local people, notably the 200 workers and their families, and Indonesian and Australian investors who immediately suffered losses after the temporary closure of the PT Sorikmas Mining (SMM) gold exploration project in North Sumatra’s Mandailing Natal regency on Sunday.
The Indonesia-Australian gold mining joint venture was forced to stop operations after hundreds of residents from the nearby village of Hutagodang Muda village attacked and burned an SMM camp on May 29, destroying buildings worth an estimated US$7 million and $20 million in mining samples.
We wonder why the local police and local administration failed to detect the dispute between the community and the mining firm. After all, it was not the first time SMM had been embroiled in a climate of hostility with the local people.
The mining company began exploration on a gold mining concession of 66,200 hectares in 1999, but had to stop operations in 2004 due to lack of support from the local administration. It resumed exploration in 2009 after winning a legal decision from the Supreme Court that further validated the legitimacy of its concession.
Whatever the reason behind the violence, the police should enforce the law against the perpetrators of the attacks.
Since SMM gained the concession during Soeharto’s New Order, the company seemed to have suffered from the notorious perception that, like most other major mining firms before 1998, SMM also had obtained its mining contract through collusion and corrupt practices.
The Supreme Court ruling in 2009 should have resolved, once and for all, the controversy over the legitimacy of its concession. As the latest incidents have shown, the political and social environment in the Mandailing Natal regency remained unfavorable.
This is really a challenge for both the central government and local administration to thoroughly investigate because past experiences have shown that such protesters may have genuine causes and legitimate grievances, but several others may hide self-serving interests.
Certainly, business is not always right and those that are found guilty of violating the laws should be brought to justice. On the other hand, those not guilty and find themselves being harassed and subjected to spurious claims should be protected by the government.
If such protests are not handled properly, businesses will be at the mercy of lynch mobs and the law of the jungle.
Simply ordering the closure of a mine without due process of the law boils down to the government succumbing to mob ultimatums and would set a bad precedent that could threaten the fate of many other resource-based investment ventures. Only when there is legal certainty and consistency in law enforcement can the course of investment be reasonably predicted and big investors will become more interested in investing their capital in Indonesia.
It is often unpopular to defend large companies, especially foreign firms, but we should stand up in defense of all legitimate businesses, be they foreign or domestic, as long as they abide by the law.
Jakarta Post Editorial