May 28, 2024 Last Updated 8:34 AM, May 27, 2024

Dirty landlord

Published: Sep 12, 2007

Roger Moody

Waving palms, golden beaches, coral reefs and rolling, azure-covered hills. Not a bad representation of the east coast of Central Sulawesi, along the Tolo Bay. But when you approach Bahomotefe, the trees get patchy, heavy rocks have been dumped in the ocean to make a rough port, and there's a two-lane dirt track, driven through the forest with precious little regard for what grew in its way.

This is part of PT Inco's quarter million hectare lateritic nickel concession in southern Sulawesi. While Soroako became the site for both mine and smelter, Bahomotefe was always considered ripe for future exploitation. In 1996, Inco concluded a contract with the Suharto regime running till 2025, committing the company to a C$1.5 billion investment to expand the Larona hydro scheme and increase nickel output by 50%. Bahomotefe, along with another major deposit at Pomalaa south of Soroako, could be under the bulldozers within a few years - and the local people expelled.

PT Inco is a majority-owned subsidiary of the world's largest nickel miner, Inco of Canada. It's a company I've pursued for many years in my role as whistle blower on some of the world's most damaging mining outfits. Inco's Ontario smelters are the country's biggest single contributors to acid rain. In March 1999 I eagerly accepted an invitation from Yayasan Tanah Merdeka, an indigenous rights and environmental organisation based in Palu, Central Sulawesi, to perform a week-long investigation of the company's Indonesian operations.

The indigenous Bungku who live in Bahomotefe have long had their own adat system. It qualifies anyone clearing the forest for cultivation to assume ownership, while those who plant trees on abandoned plots also gain title to the land. Bahomotefe residents cultivate rice, coconuts, and cashews, but also gather forest products (such as rattan), and they fish. There's no doubt in my mind that they are strongly opposed to being thrown off their land, and have little stomach for employment as mine labourers, even if Inco were to offer jobs.

PT Inco has already ripped some 50,000 tonnes of ore from Bahomotefe from what are euphemistically called 'test pits'. The unsuspecting traveller comes suddenly upon open bore holes, 4 metres square, plunging to depths of 30 metres. I would have fallen down one of these had my friends not forewarned me - it was in the middle of an area where locals are trying to grow jambomente nuts. Last year, in response to community complaints, Inco said it would fill in the pits and fence off these holes - and that's the last the people have heard of it.

I also visited some of the Javanese and Balinese transmigrants at nearby One Putih Jaya. They had arrived six years back and were allocated a miserly 1000 hectares of land to grow rice (just over 2 hectares for each of their 450 families). One Putih Jaya is fairly fertile. Many transmigrants now identify the settlement as home - as evidenced by the profusion of flowers planted around carefully-kept lawns. They told me at a meeting they would only move if properly compensated.

Unfortunately, a resettlement area set aside for them at Soembalawati, 100 kilometres to the north, is principally a stretch of barren plains and commercial palm oil plantations. The only tract suitable for paddy rice is a vast swamp. An engineer on-site informed me that this might be drained, but only at the expense of emptying the nearby lake. And that would put paid to fresh water supplies for the district town of Tomata.

The newly 'constructed' camp at Soembalawati, in which One Putih Jaya residents would be dumped, sits on the crest of a windswept hill, evoking those indelible 1970s images of Soweto and the apartheid bantustans of South Africa. Each hollow shell of a wooden house looked as if it had been erected in a day by a band of indifferent, ill-paid labourers. The moment I placed my feet inside the doors, the entire edifice shook. It was an insult for the governor to claim that these shacks were substitutes for the lovingly tended homes I had seen in One Putih Jaya a week before.

Inco also faces demands from provincial and district governments for a slice of the royalties cake that has so far gone only to Jakarta. Last year, the provincial governor of Southeast Sulawesi (site of PT Inco's putative 70,000 hectare Pomalaa extension project) told the company to clear off, unless it began negotiations over direct payments to the province. Under Suharto's iron rule, such claims couldn't be entertained. Now they are escalating.

Last year, the world's biggest mining company, Rio Tinto, was forced to re-negotiate its own derisory 'agreement', made in the early nineties to compensate indigenous communities for the theft of land and natural resources by its Kelian gold operations in East Kalimantan. This followed a concerted campaign. A representative of the Dayak communities around Kelian visited Rio Tinto's 1998 annual general meeting in London. The idea of 'doing a Rio Tinto' on Inco in Canada appeals to the people in Bahomotefe.

Choking Moving south to Soroako, I recalled the words of Kathryn Robinson, who toured PT Inco's imperial domain in 1985: 'Strip mining... induced the clayey soil from the hills to wash into the lake when it rained. Streams that once ran clear had become yellow' (Stepchildren of progress, 1986). Six years later the Jakarta Post recorded how dust from the nickel smelter was choking Soroako town. True, Inco had launched a US$60 million dust reduction programme. But according to PT Inco's then-president it would take 'another five years' - by the end of 1996. When I asked him for the completion date, one employee responsible for part of the plant shrugged: 'None has been fixed'.

Inco admits that emission standards during Soroako's first fifteen years were below par - claiming they were based on those current in Canada at the time. However, the upgrade and monitoring programme approved in 1992 was geared to Indonesian, not the lower Canadian limits. The most important part of the revised environmental management and monitoring plan was the retro-fitting of electrostatic precipitators (ESP) to the kiln exhausts, aimed at capturing emissions.

Set on the crest of the main Soroako site, the stacks belch out their plumes by day and night, in streams of weirdly shifting colours. Several of the chimneys seem to be staggering on their last legs. As high as a five storey building, they spread most of their outfall within a few kilometres of the plant. Some is cast much wider. A walk through the brush and across part of the reclamation area reveals blankets of dust upon what's left of the vegetation. A local guide took me to a clove plantation 10 kilometres from the smelting complex. There I plainly detected the 'crowns' on upper branches, the ragged mis-shaping of leaves, and sickly patches on the bark, characteristic of forests ravaged by decades of industrial pollution.

I asked Soroakan residents at special meetings if they had noticed a deterioration in the quality of air the past few years. 'Yes', one told me. 'The roofs of our houses are decaying. Before Inco came we could use them for many years. Now, after five or six years, they go rusty and need replacing. We suffer continual bouts of flu, colds and asthma - particularly our children. But when we go to the (company-run) health centre, we're simply told "it's not a big problem", and given some pills.'

In theory, the company has long been rehabilitating mined-out areas by re-seeding them. In practice much of this is a sham. The galloping exploitation of the past two years is clearly outstripping Inco's ability (or inclination) to rehabilitate land which had a precarious fertility in the first place, and many of whose nutrients have been washed away after the removal of forest cover. I predict that the scars on Soroako's surrounds will never completely heal. Soroako is the second cheapest source of nickel in the world and reaped considerable profits for north American investors. Who had paid the real costs of this massive enterprise?

Early in 1999, in the wake of 'reformasi', indigenous Soroakans felt emboldened to remind the company and government that undertakings given thirty years before, of proper compensation, health care and other benefits, had not been honoured. A copy of the 1973 agreement was found (apparently in company archives) dusted down and re-presented. On January 25th a demonstration by Soroakans was met more sympathetically than its forerunner had been in 1974. The day afterwards, the Canadian ambassador turned up at Soroako, and Inco re-opened the long-stalled negotiating process.

But this wasn't to last long. As I was leaving Soroako, PT Inco suddenly aborted a meeting between the company and residents. In the weeks since, no further meetings were proposed. Inco has nothing to lose by procrastination, and a lot to gain. Like other Indonesian miners, the company doesn't want to start negotiating a hefty benefits and compensation agreement until the terms of new Indonesian mining legislation are known.

Nickel prices bottomed-out last year, and has yet to significantly recover. Expensive commitments elsewhere New Caledonia and especially Voisey's Bay in Labrador, eastern Canada mean Inco will need to cut back on its outlays in Indonesia to boost its parlous cash flows.

The legendary 'Big Nickel' is trapped in a cleft stick. If the company's board in King Street, Toronto, or its underlings in Indonesia, think they can sail through the next 25 years as unscathed, unhindered and as cheaply as they have through the last, then they are baying at the moon.

Roger Moody ( is research coordinator for Minewatch Asia-Pacific (MWAP), which has offices in Britain and the Philippines and assists community organisations concerned about mining impacts. MWAP is planning to assist residents of Bahomotefe and Soroako to visit Canada in early 2000, to meet with the Innu Nation in Labrador and community leaders at Inco's operations in Ontario. Further details: Thanks to Yayasan Tanah Merdeka (

Inside Indonesia 60: Oct-Dec 1999

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