- Indonesian authorities have revoked or not renewed more than 2,100 mining licenses that fail to meet legal standards.
- In South Sumatra province, where 77 licenses were canceled, 10 coal mining firms have sued local officials for taking away their permits.
- So far, one lawsuit has succeeded, while four other companies have failed to get their licenses reinstated.
- The legal challenges in South Sumatra underscore the difficulties officials face as they try to clean up Indonesia's mining sector.
As Indonesian authorities move to strip thousands of mining licenses from firms that have failed to meet legal requirements, some companies are fighting back in the courts.
Claiming that local officials who revoked mining permits acted arbitrarily or exceeded their authority has so far yielded positive results for at least one company. In June, South Sumatra-based coal miner PT Batubara Lahat successfully sued to have its Mining Business License (IUP) reinstated after it was revoked by the provincial governor.
The Palembang Administrative Court ruled in the mining company’s favor, even though the mining firm had previously been found to owe the government more than 27 billion rupiah (~$2 million) in royalties and other non-tax obligations.
At the time of the verdict, activists feared the case would set a precedent, emboldening other mining companies to mount similar challenges. In South Sumatra province alone, ten companies have so far sued to have their IUPs reinstated — including two firms who initiated lawsuits after PT Batubara Lahat prevailed in court.
Despite that legal victory, similar lawsuits have not fared very well. “Of the five verdicts by the Palembang Administrative Court, only one (PT Babubara Lahat’s case) has gone in favor of the company,” said Rabin Ibnu Zainal, director of Pilar Nusantara, an NGO monitoring coal mining in South Sumatra.
Among the firms whose cases have so far failed, three sued the head of energy and mineral resources for South Sumatra: PT Bintan Mineral Resources, PT Buana Minera Harvest and PT Mitra Bisnis Harvest. Another coal miner, PT Andalas Bara Sejahtera, unsuccessfully sued the provincial governor.
Violations and revocations
The legal battles taking place in the South Sumatra represent just a small part of a much larger struggle by Indonesian authorities to stamp out illegality in the mining sector. Indonesia is one of the world’s leading exporters of coal, but civil society groups have for years documented cases of environmental, legal and human rights violations by mining firms.
In 2014, the KPK — Indonesia’s anti-graft agency — launched an investigation into the mining industry. In cooperation with the Ministry of Energy and Mineral Resources and the Ministry of Environment and Forestry, the KPK set out to examine the legality of mining permits in 12 provinces.
Out of 10,992 licenses examined as part of the investigation, around 40 percent were found not be be “clean and clear” — meaning they failed to meet all legal requirements, such as having proper registration to pay taxes, land rents and royalties. In South Sumatra, things looked even worse. Out of 359 IUPs issued in the province, only 175 were found to be in compliance with the applicable laws.
By April 2017, more than 2,100 mining permits nationwide were revoked or left to expire without being renewed, including 77 IUPs in South Sumatra.
However, more than 2,500 licenses found to be in violation still remain active, and the fight in South Sumatra underscores how complex it can be to actually shut these companies down.
Like PT Batubara Lahat, many of these violating firms owe large sums of money to the Indonesian government.
As of March 2017, coal companies were found to owe the government more than $380.2 million in unpaid royalties. In effect, the public have been denied their share of the profits from mining, while being left to deal with the negative social and environmental impacts of mining. Communities across the archipelago face problems ranging from water pollution and deforestation to community conflict and deadly abandoned mine pits in which at least 27 people have drowned.
In some cases — including the PT Batubara Lahat verdict — officials cite fears that revoking IUPs will only make matters worse by provoking companies to simply walk away from unpaid debts and unreclaimed mining sites. But activists insist the government must hold strong in the face of these challenges. “Coal companies operating in Indonesia, especially in South Sumatra, must operate correctly, not only not damaging the environment but also not harming the state,” said Zainal in a June interview.
This story was reported by Mongabay’s Indonesia team and was first published on our Indonesian site on Aug. 13, 2017.
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