Apr 22, 2024 Last Updated 1:12 AM, Apr 19, 2024

Get your act together, Aussie!

Published: Jul 30, 2007

Jeff Atkinson

The story of the Australian-owned Indo Muro mine in Central Kalimantan illustrates what can happen when a mining company operates under the auspices of a corrupt and oppressive government and passively accepts the standards of that government. In this case this meant not negotiating with landowners over access, not paying proper compensation for land and other property acquired by the mine, and allowing the police to clear out small-scale miners who had been working the area before them.

Long before the company ever appeared in the Indo Muro area, local Dayak people knew of and were working gold-bearing deposits there. Small scale mining, with a pan in the river or using hand-dug shafts and tunnels, had become a major activity and a useful economic fallback for poor communities when agriculture was not paying well. It had also attracted large numbers of outsiders. Mining settlements had grown up at the deposits, which eventually took on the aspect of small towns.

While some of the mining techniques used by these small-scale miners were benign, others were environmentally damaging. Some used mercury to extract the gold. Because it was cheap, they preferred to throw it into the river after use rather than try and recover it. Some small enterprises, financed by outsiders, used pumps and high pressure water hoses to wash away river banks etc to get at the gold, while others used pumps to dredge river beds for gold-bearing sands.

But on the positive side, this activity provided villagers in this remote and neglected area with a level of economic security that they had never known before.


In 1985, the Indonesian-registered company PT Indo Muro Kencana (PT-IMK) was given a contract of work by the Indonesian government to explore and mine in an area of 480 square kilometres, covering the main deposits. In 1992 an Australian company, Ashton Mining Ltd, acquired 90 percent ownership of PT-IMK. The following year, Ashton Mining Ltd was reorganised, and their gold operations handed over to a newly formed company, Aurora Gold Ltd, based in Perth, in which Ashton retained a 30 percent share. Aurora Gold Ltd now owns 100 percent of PT-IMK and is the operator of the mine. Gold production began in December 1994.

To clear the way for PT-IMK, the Indonesian government in the late 1980s declared all the small-scale mining within the lease area 'illegal' and told people in the settlements they had to leave. Most refused to go, and when persuasion failed, the army and police were sent in. First they frightened people off, then they came in with bulldozers and simply knocked everything down - houses, shops, mosques - smashed all the mining machinery and filled in the mine shafts. What was left was then burnt, leaving nothing but rubble. These forced closures continued from 1987 till 1993.

'The company burnt down my house, along with my household goods, and even my clothes. It was all destroyed in front of my eyes. I cried. It was really terrible. So much was burnt. I lost a lot of my possessions. All burnt. They didn't give me a new house.'(A woman, who now sells vegetables door to door in nearby Puruk Cahu, recalling what happened in 1989).

These evictions did not however mean the end of small-scale mining. There were still some deposits outside the PT-IMK lease area worth working, and people returned to those within the lease whenever they could, risking arrest or worse at the hands of the Mobile Brigade. In a 1996 document, the company estimated that there were 1,002 'illegal miners' in its lease area, and said it intended to:

'Impress upon the Department of Mining and Energy and the police (Mobile Brigade) the need to take steps to restore security and orderShow that the local government and the company have rights and powers which must be maintained. If steps are not taken against illegal miners it will be considered as a sign of weakness and the problem will get worse.'

As well as the mining areas, land which had been used for growing rice, rubber, fruit and other crops was also appropriated by the mine. People who lost land and crops were given compensation, but the rate was set by government and was very low. Measurement of the land to be compensated for was carried out by a local government team, and owners had little or no input into the process. Many felt ignored and cheated. Some who protested felt the full force of police intimidation. The result was considerable anger, frustration and anxiety.

'We are small people, we have nothing to live from except planting our fields, plantations and panning for gold. That's all. Since Indo Muro came, they have appropriated our fields. We are not allowed by them to mine for gold. So what will be our fate if it goes on like this?' (Interview, Beringin, January 1998).

In the years that followed, the company appeared unwilling or unable to deal adequately with these problems, and unwilling to talk with any group other than official ones. In August 1999 the Australian owners, Aurora Gold Limited, issued what they called a 'statement of regret':

'The company (Aurora Gold Ltd) recognises that prior to acquiring its 90% ownership of PT Indo Muro Kencana in 1993 there were certain actions undertaken by previous owners and government security agencies that disadvantaged the local community in the contract of work area. While the company had no control over, or responsibility for, any such actions by former owners and government security agencies, it deeply regrets such incidents and the trauma that may have been caused to the community.'

On the question of compensation it was resolute. It would offer 150 jobs at the mine to local people, and try and improve community assistance programs, but would make no restitution for past injustices against small-scale miners because they were, it said, illegal squatters:

'PT-IMK rejects all claims for diggings, shafts, pits, rock crushing-milling buildings, stamp mills and associated activities and equipment declared illegal by the Government of the Republic of Indonesia.'

After Suharto

Residual resentment over unresolved claims and abuses by the police, together with the company's close identification with the Suharto government and its security apparatus, did it no good when that regime finally fell in 1998. Taking advantage of the looser political situation, large numbers of people, locals and outsiders, some of them backed by local officials, swarmed into the mining areas. The company described what happened in its 1999 annual report:

'The whole of 1999 was marked by increasing incursions by illegal miners into operating pits. At times mining operations had to cease as hundreds of illegal miners entered the pits to steal freshly blasted high-grade ore. In late June a group with land rights claims closed the Bantian-Batu Tembak (BBT) mining complex. Negotiations with this group proved difficult and in mid July, before the BBT complex could be reopened, another group which claimed outstanding land compensation from pre-Aurora activities also closed off access to the Permata-Hulubai (PBH) complex.

The loss of BBT and PBH left the Kerikil complex as the only pits providing ore to the processing plant, supplemented by low-grade stockpile material. In late September however a roadblock on the Kerikil haul road by unrepresentative protestors, agitated by a local non-government organisation, stopped company access to the Kerikil pits.'

By this time the community was becoming divided between those who wanted the mine to continue, including company employees, and those who wanted the company out and a return to the former situation. By early 2000, the replacement of some local officials meant that PT-IMK was able to obtain enough official support to have the police sent in to clear out the pits. The company was able to resume operations, although periodic illegal mining continues in some pits as well as occupations by land rights and compensation claimants. Meanwhile, the clearing operations have now added another set of grievances against the company.

Things might have been different for both the company and local people if PT-IMK had from the beginning been willing to respect the fundamental social and economic rights of those impacted by its operations. These include the right of indigenous landowners to determine what happens to their land; the right of those who lose the sources of their income to compensation that enables them to replace them; and the right of people to be free of violence and harassment by the police. Expressing regret is all very well, but restitution of those rights is also required.

Jeff Atkinson (jeffa@caa.org.au) is Mining Ombudsman with the non-government organisation Community Aid Abroad (Oxfam Australia, based in Melbourne, Australia). He previously wrote on mining in Indonesia in 'Inside Indonesia' no.47, July-September 1996.

Inside Indonesia 65: Jan - Mar 2001

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