East Kalimantan’s black gold

According to data from the Office of Mines and Energy, there are 1,430 mining permit holders in East Kalimantan Province — 820 companies holding exploration permits, and the rest given permission to operate. Altogether, these companies hold concessions covering 5.13 million hectares (12.7 million acres), just over 40 percent of the province’s total land area.

In 2015, these companies extracted 237.12 million tons of coal from the province, amounting to almost half of the total national production of 461.6 million tons.

Coal production is now predicted to decline, in part due to sluggish demand from India and China. According to the Ministry of Energy and Mineral Resource’s strategic plan, nationwide coal production in 2019 is predicted to drop to 400 million tons.

As a result, many coal mining companies have gone out of business. In 2015 alone, 125 mining companies in East Kalimantan went bankrupt, many of them leaving behind unreclaimed mine pits in their concession areas.

The true scale of the problem is difficult to determine. Amrullah, head of the East Kalimantan Office of Mines and Energy said reports from 81 companies indicated there were a total of 314 former mine pits in the province as of December 2016. However, a survey conducted by the Office counted more than twice that number by using Landsat images to spot 632 coal mines transformed into giant puddles.

The true number could be even higher. Not all pits are visible on satellite images, due to factors like cloud cover at the time images are captured. In addition, Amrullah said many companies still have not reported their mining pits, and the Office of Mines has not made direct field inspections.

The names behind the companies

According to data from the East Kalimantan Office of Mines and Energy, PT MHU holds 47,230 hectares of concessions and has left 56 pits scattered across Kutai Kartenegara. The real number is likely to be higher. For example, when visiting a site in Jonggon Jaya Village in Kutai Kartenegara where records show just one pit, Mongabay-Indonesia found two, both without fences or posted registration numbers.

Based on the latest company documents obtained by Mongabay-Indonesia, PT MHU is owned by PT Pakarti Putra Sang Fajar and Private Resources Pty Ltd. In turn, PT Pakarti’s shares are owned not by individuals but by two other companies: Bhaskara Alam and Riznor Rezwara.

These companies are linked by one name: Reza Pribadi. He is listed as a commissioner of both PT MHU and PT Pakarti. At PT Riznor, he is listed as a shareholder along with Rizal Risjad.

Pribadi is also listed as director of PT Riznor, a position he also holds at Private Resources — “private” can be translated into Indonesian as “pribadi” — a company headquartered in Perth, Australia. Reza Pribadi is the son of Henry Pribadi, owner of the Napan Group, one of Indonesia’s largest companies.

PT MHU did not respond to repeated requests for comment in person, by mail or by email.

Other well-connected companies have also left behind mining pits in East Kalimantan.

PT Energi Cahaya Industritama’s former mine is located in Rawa Makmur, in Samarinda. An 11-year-old named Nadia Zaskia Putri died in that pit on April 8, 2014. The company reported just five pits of the Office of Mines. Based on satellite imagery, the company appears to have left behind 22. A subsidiary, PT Dunia Usaha Maju, left behind two more pits in Samarinda, bringing the total to 24.

Budi Fachroni, head of technical mining at PT Energi Cahaya Industritama confirmed the company has left behind coal-mining pits, but said the number was much lower. He said eleven holes have already been closed, three are in the process of being reclaimed and another six are still being actively mined.

In this company, there are two retired two-star police generals, Aryanto Sutadi and Alpiner Sinaga, whose roles are listed as “first director” and commissioner.

At least one company has left behind even more mine pits than PT MHU. Data from the mining office suggests that a company called PT Kaltim Prima Coal has left behind 71 open pits in East Kutai regency, although the company states it has only 29 inactive mine pits.

According to Imanuel Manege, PT Kaltim Prima Coal’s general manager for health, safety and the environment, 11 of those pits are currently being mined, 18 have not been excavated, while eight have already been reclaimed. “We close the pits in accordance with the mining plan approved by the Directorate General of Minerals and Coal,” said Manage.

So far, there have been no reports of deaths in any of these sites.

PT Kaltim Prima Coal is owned by the PT Bumi Resources holding company, one of Indonesia’s largest coal producers. The majority owner of PT Bumi is the Bakrie Group, a massive conglomerate owned by a powerful family that includes Aburizal Bakrie, a former cabinet minister who also served as chair of the Golkar Party.

There is also PT Indo Tambang Raya Megah. This company is believed to have 68 coal mining pits through three subsidiaries: PT Trubaindo (20 pits), PT Kitadin Embalut (14) and PT Indomunco Mandiri (34). PT Indo Tambang Raya Mega is a subsidiary of Thai mining firm Banpu Public Company Ltd.

PT Indo Tambangraya Megah spokesperson Tri Harjono said the group has not yet filled in these pits because the mines are still active. “Of course there will be mine pits,” said Harjono. “But they will gradually be restored with soil removed from the next mining area.”

Similarly, there is PT Toba Sejahtra, which lists five mining operations in East Kalimantan: PT Toba Bara Sejahtra, PT Indomining, PT Kutai Energi, PT Adimitra Baratama Nusantara and PT Trisensa Mineral Utama. Together, these subsidiaries are believed to have left behind a total of 15 coal pits.

The owner of 4,999 of PT Toba Sejahtra’s 5,000 shares is Luhut Binsar Pandjaitan, Indonesia’s coordinating minister of maritime affairs. Pandjaitian confirmed his share in the company in March. “Yeah, I’ve got a stake,” he said. “Why shouldn’t I?”

Pandjaitan said the company fills in its mine pits after operations have finished. “It the company did not do reclamation, it wouldn’t win awards,” he said.

Interlinked corporate boards

Some mines are controlled by companies that are technically not affiliated. However, the relationships between these companies can be traced through the people sitting on their boards of directors.

Take for example PT Sinar Kumala Naga, suspected to have left behind 15 mine pits, but with only three reported to the Mining Office. The company is connected to Kutai Kartanegara Regent Rita Widyasari.

Widyasari’s mother, Dayang Kartini, is listed as a commissioner and the company’s largest shareholder in the company. Widyasari’s sister, Silvi Agustinia, is also listed as a commissioner, as is Golkar politician Azis Syamsuddin.

When asked for confirmation about PT Sinar Kumala Naga’s abandoned mine pits, Syamsuddin replied only briefly: “I’ll check first.”

Dayang Kartini is also listed as a shareholder in PT Lembu Swana Perkasa, which has two inactive mine pits, and PT Beringin Jaya Abadi, which has left behind one pit. Meanwhile, Silvi Agustina is listed as the owner and President-Commissioner of PT Alam Jaya Bara, which according to the mining service has seven abandoned mine pits. All these companies operate in Kutai Kartanegara, where Widyasari is regent.

These companies did not respond to requests for comment by mail, phone or email.

Incomplete reclamation

Indonesia’s mining regulations clearly require mining companies to fill in and re-green mining sites. Plans detailing each stage of the process should be approved as part of the initial application for a mining license. Companies are also required to carry out environmental impact assessments, and to submit financial guarantees for reclamation and restoration of mining sites.

The law says companies must begin reclaiming mines within 30 days of ceasing operations. In practice, some companies simply walk away from their mines.

Take, for example, the abandoned mine pit that took the life of 10-year-old Raihan Saputra in December 2014. When its permit expired in November 2015, mine owner PT Graha Benua Etam had left behind four pits. The company’s listed office in Samarinda no longer exists. According to the deed, PT Graha Benua Etam is owned by people named Muslimin and Muhaimin.

Or look at PT Belengkong Mineral Resources, which holds a concession in West Kutai. Assistant Manager Thomas Bakker said his company left behind eight mine pits. According to Bakker, the mines were left unreclaimed at the request of the land holder, a local resident, who wanted the pits to remain uncovered so he could use them for fish farming and as a water source.

The request for changes to the reclamation plan was submitted to and approved by the West Kutai Mining authority. Accordingly, Bakkar said, the company’s reclamation guarantee funds were not disbursed after mining was completed.

Such justifications are often used by companies seeking to circumvent the obligation to fill in holes.

Investigations in Samarinda and Kutai Kartanegara found that some companies only install pumps or build toilets at pits to serve as “evidence” that these holes are being used by residents.

“We’re afraid that all companies will leave behind their pits with the justification that the water will be utilized by residents,” said Riza Indra Riadi, head of the East Kalimantan Environment Agency. According to Riadi, companies cannot simply change reclamation and restoration plans by providing a letter from the community requesting use of the pit. Instead, they must meet several requirements including having the water quality tested. Companies whose pits are found to reduce local water quality should be punished, she said.

Rosa Vivien Ratnawati, who oversees complaints and administrative sanctions at the environment ministry’s law enforcement body, said regional governments fall short when it comes to supervising reclamation and post-mining recovery. As a result, these incidents keep repeating themselves, she said. “We encourage local governments to resolutely impose sanctions.”

However, the central government doesn’t always do better. When the local government imposed sanctions on PT MHU, the Ministry of Energy and Mineral Resources requested these sanctions be canceled. “In our view, the company is committed to improving the environment,” said Hendrasto, the ministry’s technical and environmental director.

In December 2016, a year after Mulyadi drowned in one of PT MHUs abandoned mine pits, the holes were still open.

The threat of acid lakes

Four 3,000 liter blue water tanks line the wooden fence. Behind them stands an even larger tank, around six meters in diameter.

“PT MHU, ComDev (Community Development) Year 2009” is written on the belly of each tank. Outside the fence, the logo of the company is side-by-side with the logo of Kutai Kartanegara regency.

These tanks, located in the village of Margahayu, were donated by PT MHU in 2009. They hold water collected from an unreclaimed PT MHU mining pit about 500 meters away. From here, the water flows to the homes of Margahayu residents as a source of “clean water.”

This distribution system was originally organized by PT MHU, but in 2012, management has was transferred to the Tirta Pelita community association and inhabitants say they are now charged 5,000 rupiah per cubic meter.

“We have never tested the water because it is only for bathing and washing,” said Misto, manager of Tirta Pelita.

Mongabay-Indonesia arranged for laboratory tests to be conducted by ALS Laboratory Group in Bogor, West Java last December. Water samples from the Tirta Pelita water tank were found to be highly acidic — pH3.6, compared to the normal range for potable water, which ranges from six to eight. The water was also found to contain high levels of heavy metals: 5.85 milligrams of manganese per liter, 0.571 milligrams of zinc per liter and 0.683 milligrams of iron per liter.

By comparison, ALS Laboratory Supervisor Sisca Nurhafifi said the highest level of manganese tolerated by the Ministery of Environment and Forestry is four milligrams per liter. The health ministry dictates that iron content should not exceed 0.3 milligrams per liter.

Water samples were also taken from the former PT MHU mine in nearby Jonggon Village. The acidity was found to be at a normal level, but still contained iron, zinc and manganese.

A third sample was taken from water being used to irrigate rice filed in Jonggon Jaya village. This water is sourced from a former PT MHU coal pit in the village. It was found to have a pH of 3.4, and zinc and iron content in excess of government standards.

Heavy metals, including lead, iron, manganese and zinc were also found in the final sample, taken from water used in Jonggon Village, again from a PT MHU mine.

Water from this former mine pit has resulted in dozens of villagers being stricken with diarrhea. In the dry season of 2015, the villagers had difficulty obtaining clean water, pushing them to turn to the water from PT MHUs former mining pit for daily use.

Field research found also found ex-mining ponds being used for irrigation and household water in the concessions of a number of companies. Several were also used for fish farming.

Reporters requested comments from PT MHU by letter and in-person at the company’s Jakarta headquarters, but were unsuccessful.

Problems with reclamation guarantees

Indonesian law is designed to prevent companies from saving money by walking away from their responsibilities. In order to obtain a mining license, companies are supposed to demonstrate they have reclamation guarantee funds set aside to close up their pits once mining has ceased.

As of December 2015, the East Kalimantan Office of Mining and Energy listed 856 commercial license holders. Of these, only 338 had reclamation guarantee funds in place.

Likewise, only 96 of these 856 license holders had deposited post-mining guarantee funds, which are meant to fully restore the environmental and social conditions of a mining site. Unlike reclamation funds, these do not need to be deposited in advance, but must in place two years before the permit expires.

Timur Amrullah, head of the East Kalimantan mining office said many companies are delinquent in depositing these guarantees.

This was confirmed in 2016 by Indonesia’s Supreme Audit Body, which found numerous potential problems in the management of reclamation and post-mining guarantees in East Kalimantan. The audit found that many companies either had not completed reclamation plans at all, or did not have the specified guarantees in place. In addition, some companies that had provided bank guarantee certificates had allowed those certificates to expire, or had only submitted photocopies rather than original documents.

According to Amrullah, his agency is working “one by one” to collect data on mining companies in the province, including their reclamation and post-mining arrangements and the number of pits they are digging.

In the meantime, hundreds of abandoned mine pits lay scattered across the province, threatening not only the children who fall in them, but also the health of the people of East Kalimantan.

This article was published on Mongabay’s Indonesian site on May 15. Destrianita Kusumastuti and Hussein Abri Yusuf contributed reporting.

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