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Understanding How the Revised Mining Law Favors Mining Giants

The recently passed Mining Law is considered by many to provide flexibility for corporations, especially in the extractive industry. Credit: Courtesy of Mining Advocation Network (JATAM)

June 17, 2020

By May Rahmadi

JAKARTA. The revision of Law Number 4 of 2009 on Mineral and Coal Mining has been heavily scrutinized and the government and the People’s Representative Council (DPR) have been criticized for having secretively passed it into law on May 12, 2020.

The content of the draft of the revised law is deemed controversial because it is seen as ignoring the interests of the public and the environment, and is favoring corporation instead.

The draft revision of the Mining Law has been opposed by various components of the society since 2019. Rejection of the revision was voiced at the same time as the rejection against the revisions of the Penal Code and the Corruption Eradication Commission Law (KPK).

When the draft revision on the Law on KPK was passed into law, deliberations on the revision of the Penal Code and Mining Law, were postponed towards the end of the tenure of the legislative council for the 2014-2019 period and obtained a carry-over status for the next elected legislative council. The carry over status was decided so as to avoid having to restart deliberation from zero.

The draft revision on the Mining Law was reopened by Commission VII of the DPR on March 30, 2020. The revision was passed into law, within two months.

Arip Yogiawa who heads the campaign and network division of the Indonesian Legal Aid Foundation (YLBHI) said that the revision of the Mining Law has many flaws to begin with.

“One of them is Article 47 which guarantees mining companies a 10 year-extension, twice,” Yogiawa told a press conference organized by the #bersihkanIndonesia People’s Coalition on May 13, 2020.

The #BersihkanIndonesia coalition said it is planning to file a judicial review against problematic articles of the new Mining Law to the Constitutional Court.

“Almost 70 percent of the content of the new Mining Law is qualified for a judicial review,” said Yogiawa. Besides YLBHI, the Indonesian Center for Environmental Law, Auriga Nusantara, and the Mining Advocacy Network (JATAM) are also members of the Coalition.

Problematic articles

JATAM Coordinator Merah Johansyah pointed to Article 1, Point 28a as an example, that will potentially be used to allow for massive exploitation.
“Not only on land but also in the sea, and this contradicts the Coastal Areas and Small Islands Law,” Johansyah said.

The said article stipulates that “The areas covered by the Mining Law are land space, marine space, including space within the earth as a territorial unit of the Indonesian archipelago, the bottom of its sea and its continental shelf.”

Meanwhile, Article 23 Point (2) of Law Number 1 of 2014 on the Management of Coastal Areas and Small Islands, coastal areas and small islands must be prioritised for education, research, aquaculture, tourism, farming, organic agriculture as well as for defense and security

Johansyah also pointed to Article 4, Point 2 in the revised Mining Law which stipulates that control over minerals and coals is determined by the central government.

Johansyah said that unlike the preceding law which provided a role for the regional administration in the issuance of permits, regional administration could only have that authority if the central government delegates it to them. “This means ignoring the principles of decentralization and regional autonomy,” Johansyah said.

Another pain point is Article 22, that says mining activities are allowed in rivers in an area of up to 100 hectares and this is seen as paving the way for the destruction of river ecosystem.

“The threat of river destruction is because the area is extended. Even under the old law which allows (mining in rivers) in an area of not more than 25 hectares, there were already a lot of cases. One of them, the one in Mojokerto. A sand and gravel mines. Three local people who walked all the way from Mojokerto to the front of the palace, to protest,” Johansyah said,

Auriga Nusantara researcher Iqbal Damanik said that Article 100 on the obligation to restore mining pits, no longer require mining companies to carry out post-mining restoration if they wanted to extend their permits. This is deemed to only favor mining companies and violates the rights of people living around the mine.

A JATAM study titled ‘Legitimizing Death Holes” issued in April 2020, showed how abandoned mining pits were very dangerous for the local population. These holes contained heavy metal and toxic materials. While water quality around abandoned mining pits also contained poison and thus was dangerous if consumed for household needs.‬

The study also said, there had been 143 fatalities between 2011 and 2019, due to gaping mining pits. JATAM also said that thousands of such open pits presented a time bomb that could claim lives at anytime.

Damanik said that abandoned mining pits covered 87,307 hectares and with the new Mining Law, the likelihood of the mining pits to be restored is now close to none. “Just imagine holes that big, with no obligation to evaluate and left just like that, yet permit extensions and area expansions are just granted,” Damanik said.

Corporations are not only reaping advantages from that article only. In Article 102, according to Damanik, coal entrepreneurs are not required to develop the downstream sector and a variety of fiscal and non-fiscal incentives are available for the coal mining industry.

This, he said, was an indication that with this revision, Indonesia is increasingly taken hostage and addicted to the deadly coal energy. “It is the main source of the global climate crisis,” he added.

Meanwhile articles 162 and 164 are seen as being closely and directly linked to public interest and the Coalition deems that these two articles would allow the criminalization of residents who oppose mines.

Article 162 provides sanctions for those who oppose mines and further explain that anyone who hinders or disrupt mining activities of holders of the valid permits such as IUP, IUPK, IPR or SPIB, can face jail time of up to one year and fines of up to Rp100 million.

Article 164 provides additional sanctions in the form of the confiscation of goods used in the crime, of any profit generated from the crime, and or the obligation to pay for the legal costs arising from the crime.

The Coalition also underlined Article 169A on the extension of Work Contracts (KK) and Coal Operation Agreements (PKP2B) of a company. Both KK and PKP2B are not to be conducted through an auction. Companies are also given a guarantee for an automatic two 10-year extensions without any reduction on concession area.

“KK and PKP2B holders will also be given a guarantee to be able to extend them into Special Mining Operation Permits (IUPK),” Damanik said.
Under the previous law, mining concessions have to be returned to the state at the time the permit expires and both KKs and PKP2Bs are auctioned.

Missing articles

Under the new Mining law, a number of articles that were in the previous law were scrapped. Damanik said that before the revision, there was Article 83 Point (2) that limits the surface of IUPK areas for minerals and metal mines to 25,000 hectares while Article 83 Point (4) limits IUPK concessions for coal production to 15,000 hectares.

The same fate with Article 165 that stipulates criminal sanction for government officials who engaged in corruption related to the issuance of mining permits (IUP), People’s Mining Permits (IPR) and IUPKs. The article provides up to two years of jail and fines of up to Rp 200 million for violators who abuses their authority for personal gains.

“Those articles have been dropped,” Damanik said and with the scrapping of Article 65, the new Mining Law will usher in further corruption in the extractive sector.

Indonesia Corruption Watch (ICW) Researcher Egi Primayoga said that the DPR and the government should not have passed the revision, much less continuing the deliberation as it has drawn strong objections from the public in 2019.

He suspected that the bill was passed amid pressure from holders of PKP2B permit which were about to expire. “The debate was rushed and held behind closed doors. Our suspicion is that mining elites who have interests in the coal business had pushed for the debate,” Primayoga said.

Bambang Wuryanto, the Deputy Chairman of Energy, Mineral Resources, Research and Technology, and the Environment of the DPR, who also heads the working committee on the revision of the Mining Law, denied that the discussions were held behind closed doors and were rushed. He claimed that the draft law had been prepared since 2016, including its list of problems.

“Many have asked through WhatsApp, the media, about the debates on the draft of the Mining Law, which was done in such speed. Our response is that the draft law had been prepared since 2016,” Wuryanto said.

Bambang also said that the draft law had already been comprehensively discussed with the central government and reiterated that discussing that draft law was one of the many tasks of the DPR as a legislative body.


“Everything was discussed at length so that our friends outside understand. If there are things that do not fit, then file a judicial review. Do not flood us with Whatsapp messages. That is terror,” he said.

Sajogyo Institute Researcher Eko Cahyono said that the passing of the draft law into law amid the ongoing pandemic made it appear as if the government and the legislative wanted to pay back what they owed to corporations that had backed them in the 2018 regional elections and the 2019 general elections.

Cahyono said that many district heads were supported by mining companies and in return, promised to ease procedures to extend permits or in getting new mining permits.

“Why would they insist in passing the draft law on mineral and coal mining amid this ongoing pandemic? The draft law on the KPK was also passed, and now they are pushing for a renewed debate on the Omnibus Law. To me, this is payback time, for the political promises made in the last regional and general elections,” Cahyono said.

Greenpeace Indonesia has named seven large corporations whose permits are about to expire but would see them automatically extended under the new law. They are PT Arutmin Indonesia (2020), PT Kendilo Coal Indonesia (2021), PT Kaltim Prima Coal (2021), PT Adaro Energy Tbk (2022), PT Multi Harapan Utama (2022), PT Kideco Jaya Agung (2023), and PT Berau Coal (2025).

Former KPK Commissioner Laode M. Syarif, said that the new Mining Law appeared to be more in favor of the interest of mining companies rather than of the interest of the country and the environment.

The new law, he said, had weakened the control of the state. “Because permits are automatically extended for decades,” he said, adding that “there are also no special attention given to the people living around the mines.”

On the criminal sanctions for government officials who engaged in corruption and abuse of authority, Syarif said that it would carry a very significant impact. When the government issues mining permits in national parks or in total disregard to environmental factors and the people living around the mines, that would be seen as a normal conduct.

“This is a step backward.,” he said. “It would be more difficult for law enforcers to take actions against crimes against the environment, natural resources and against corruption in the future,” he said. Ekuatorial.

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