against extractive industries - issue of the asian labour update

ASIAN LABOUR UPDATE - 80

In a very real sense, the extractive industries represent the earliest phase of

global factory, the beginning of the basic production circuit, and the foundation

of the web of global production networks that form todays global economy. The

extractive industries, the holes maker in the ground as Peter Dicken put it

correctly, become strategic sector that supply raw materials to many other

industries. There is almost none of modern production disconnects from the

extractive industries for raw materials.

The foundation of the extractive industries is a notion of natural resources. In

fact, natural resources are not naturally resources as it is both a socio-cultural and

a political construction. The industry has been a political project that involved

aggressive intervention of both transnational corporations and national

governments by imposing vast range of regulation that serve their interest. There

is no doubt that corporations and states exploit natural resources for capital

accumulation.

Due to the operation of extractive industries, there have been massive

environmental destructions, coercive displacement and dispossession of the

indigenous people from their habitat. Many of these people have lost their lands,

livelihood, and even their lives. Their habitat has been extinguished where their

lives rely heavily on it. And there are more people who are in the verge of being

displaced and dispossessed due to the industries aggressive exploitation.

The recent case of London-based global metals and mining giant, Vedanta

In this issue:

No Economic and Job Growth in Mining Industry in the Philippines, Only Plunder Need to Run By Daisy Arago

4

Mining Sector and its Future in India By Ramamurthy Sreedhar

13

The Case of Freeport Mc-Morran Copper & Gold Inc in Indonesias Extractive Industry By Abu Mufakhir

19

Trans-National Corporations in Extractive Industry and the Struggle Against them: The Case of Malaysia By Charles Hector

25

Australian Mining Companies' Resistance to Collective Bargaining By Michael Walker

31

Report Highlights Crisis of Occupational Safety and Health in Asia By Omana George

35

Luviana Ariyanti: The Struggle of a Female Journalist for Labour Rights in Indonesia By Yohana Sudarsono

37

Regional Round-up 41

Resource/Review 48

PUBLISHED BY ASIA MONITOR RESOURCE CENTRE, HONG KONG Issue 80 January 2012 - April 2012

ASIAN LABOUR UPDATEASIAN LABOUR UPDATE

Against Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive Industries

Continue to page 3

www.amrc.org.hk

2 ASIA MONITOR RESOURCE CENTRE

ISSN 1815-9389

Issue Number 80

January - April 2012

Copyright 2012 Asian Labour Update; all rights reserved

EDITORIAL TEAM

Sanjiv Pandita, Omana George, Wulandari,

Sally Choi, Fahmi Panimbang

ASIAN LABOUR UPDATE (ALU) is a quarterly news bulletin on labour issues in southern and eastern Asia. It is prepared and published by the Asia Monitor Resource Centre Ltd (AMRC), a non-prot, pro-labour, non-governmental organization based in Hong Kong.

Articles and information in ALU may be reproduced in non-prot publications with clear citations, credit to author/s and ALU. For online reprints, please notify us of the relevant URL; for printed matter, please send one hard copy to the address below.

ALU articles do not necessarily reect views and positions of AMRC.

Opinions to the editor are encouraged. Asian labour groups and NGOs may ask for complimentary subscriptions.

The Editor

Asia Monitor Resource Centre

Flat 7, 9/F, Block A

Fuk Keung Industrial Building

66-68 Tong Mi Road Kowloon, Hong Kong

Tel: (852) 2332-1346

Fax: (852) 2385-5319 Email: [email protected]

URL: http://www.amrc.org.hk

Photo cover by CTUHR, Philippines.

TMC Nickel strip mining, the place used to be a

mountain beside the bay ve years ago, today, it is

reduced to a smoldering plain

A S I A N L A B O U R

UPDATE

Contributors & Editorial Board

Daisy Arago is Executive Director, Center for Trade

Union and Human Rights (CTUHR), Quezon city,

Philippines. Email: [email protected].

www.ctuhr.org

Ramamurthi Sreedhar, is chairperson of mines, min-

erals & PEOPLE, India. Email: [email protected]

Abu Mufakhir is researcher with Sedane Labour

Resource Center (Lembaga Informasi Perburuhan

Sedane, LIPS), Indonesia. Email:

[email protected]

Charles Hector is human right activist, based in Ma-

laysia. Email: [email protected]

Michael Walker is a union ocial in Sydney, Austral-

ia. Email: [email protected]

Yohana Sudarsono is an activist with Independent

Educator Union (INERU) Indonesia - Aliated to

Federasi Serikat Pekerja Kerakyatan Karawang - Mem-

ber of KSN (National Union Confederation) Indone-

sia. Email: [email protected], yosudar-

[email protected]

The Research Institute for Alternative Workers

Movements (RIAWM), South Korea (http://

www.pssp.org)

Noel Colina, Executive Director at Institute for Occu-

pational Health and Safety Development (IOHSAD),

Philippines

Sedane Labor Resource Center (Lembaga Informasi

Perburuhan Sedane, LIPS), Indonesia

Amirul Haque Amin, President of National Garment

Workers Federation (NGWF)

ASIAN LABOUR UPDATE - 80 3

Resources, shows that many of corporations in

the industries have been the notorious examples

in violating human rights, indigenous rights and

environmental laws from the beginning of their

operation. Mining companies are vigorously anti-

union in outlook and have a long history of

victimising, sacking union activist, and even killing

the people.

Dedicated for those who have been the victims of

this development, the current issue of Asian

Labour Update presents the picture of extractive

industries in Philippines, India, Indonesia,

Malaysia and Australia. The issue is aimed to

uncover the very ugly face of the extractive

industries. Against the rhetoric of the industries

contribution to the economic growth, the cases

show the complete opposite. For example,

although the Philippines gold reserves amounted

to at least 16.873 billion US dollars or about 76 per

cent of the countrys GDP in 2011 which

according to Philippines National Statistical

Coordination Board is sucient to completely

eradicate poverty in the country Philippines

remains one of the poorest nations in the region.

As Arago describes on the Philippines case in her

article, one of the major push factors in poverty

increase in the country is the massive

displacement of shing and farming communities

and subsequent loss of livelihood due to large-

scale mining operations. It is clearly not the case

that mining operation spurs the growth for the

people. On the contrary, it has been impacting

social life and creating huge environmental

catastrophes.

In India, mining sector has a low contribution to

the economy as GDP from the sector has never

exceeded ve per cent even after liberalisation.

Villages in the mining regions, as Ramamurthi

explains in his article, are getting devoid of

drinking water due to increased competitive use

of water by the industry, which huge quantum of

water for 300 million populations is being gulped

by the mining industries. Besides, forty-two per

cent of households in villages in India live without

electricity whereas the industry is consuming the

major share of electricity.

The case of Indonesia has also shown clear

example how the extractive industries have

brought about a huge impact on people and

environment. Today the only largest gold reserve

in the world is in the poorest province of

Indonesia in West Papua. Since 1960s, the gold

mining in West Papua has been virtually under

complete control of US-based TNCs, including

Freeport Mc-Morran Copper & Gold Inc. Since

1991, through the extension of second contract,

beneted with the area concession of 2.6 million

hectares, Freeport Mc-Morran Copper & Gold Inc.

had expelled people from their land. In his article,

Mufakhir describes that recently at least 60

people were killed and 148 people were

imprisoned for obstructing Indonesias mining

investment. The recent strike involving at least

12,000 workers took place from June 2011 till early

2012, the longest since Reformasi in 1998. During

the strike there were at least seven Freeport

workers died, not to include two victims from

traditional mining area.

In Malaysia, Hector exposes the issue of the

Australian TNC, Lynas Corporation Limited. He

describes that Lynas Corporation decided to ship

rare earths ore from its mine in Mount Weld to

Malaysia, where it was to be processed into highly

sought after rare earths metals at its facility in

Gebeng Industrial Zone in Pahang. As a result,

medical examinations on children in the

processing area found that nearly 40 per cent of

them suered from lymph node diseases,

turbinate congestion and recurrent rhinitis. Seven

of the leukemia victims have since died.

Given this barbaric nature of corporation in the

extractive industries, it is important for the social

movements to resist against the extraction in any

way. Indigenous people, workers, and society in

general should have democratic control over their

lands, their own natural resources, and their

livelihood.

Editorial


No Economic and Job Growth in Mining Industry in

the Philippines, Only Plunder Need to Run Daisy Arago

The Philippines has about $840 billion (about

P36.64 trillion at P43.62 per US dollar)-US$ 1 tril-

lion worth of mineral deposits

which include gold, copper, nickel, chromite,

manganese, silver and iron according to the US

Department of State estimate[1]. The country

ranks rst in the world with the largest iron ore

deposit, third in gold, fourth in copper, fth in

nickel and sixth in chromite deposits.[2]

The Philippine gold reserves alone can amount to

P7.36 trillion, (US$16.873 billion) or about 76 per-

cent of the countrys gross domestic product

(GDP) of P9.73 trillion in 2011. This amount ac-

cording National Statistical Coordination Board

(NSCB) is enough to completely eradicate pov-

erty in the country.[3] Perhaps, there are more,

but still undiscovered.

Whilst mining operations started several decades

ago and liberalized in 1995 by

virtue of the passage of the

Philippine Mining Act of 1995

(Republic Act 7942), this

wealth is still largely un-

tapped, Yet, despite what the

industry players call as failure

to maximize the potentials,

mining operations (from both

large scale and small scale

metallic and non-metallic min-

ing) already registered a Php

106.1 Billion (US$2,432.4M)

Gross Production Value at the

end of the Arroyo govern-

ment in 2009. [4]

It was no surprise therefore

that the Philippine Develop-

ment Plan (2011-2016) or the

so-called Social Contract that

the Aquino government formulated, the mining

industry was identied as among the key areas

where intensive promotion, industry develop-

ment and a more focused incentives package

will be pursued. This aimed to increase exports,

encourage foreign and domestic investments and

thus generate employment.[5] In embracing the

plan, the Department of Labor and Employment

(DOLE) placed the mining industry as the fth

expected employment generator, next to agri-

business, cyber-services, health and wellness,

hotel restaurant and tourism industries. Manufac-

turing sector which normally creates more jobs

was only placed at number eight in the key priori-

ty areas.[6]

Two years into the Aquino government, the ap-

proved Mining Production Sharing Agreement

(MPSA)[7] an agreement often granted to large

scale mining operations already rose from 275

MPSA in 2009 to 340 as at

March 31,2012. Fully opera-

tional metallic mining compa-

nies now stand at 30.[8] Min-

ing investments on the other

hand, reached $618.50 million

in 2011, though lower than

the governments $1.4 billion

target. This year (2012) the

government expects to raise

the mining investments to

$2.27 billion.[9]

Whilst these statistics glow

and could further fuel more

mining transnational corpora-

tions (TNCs) to rush to the

Philippines, the workers and

people that the Aquino gov-

ernment professed to have

The Philippine gold

reserves alone can

amount to P7.36 trillion,

(US$16.873 billion) or

about 76 percent of the

countrys GDP of P9.73

trillion in 2011. This

amount according

National Statistical

Coordination Board

(NSCB) is enough to

completely eradicate

poverty in the country

Feature


social contract with and promised to get uplifted

by mining operations seemed to have forgotten.

In a country where more than 10 million able-

bodied people are either unemployed or under-

employed[10] and about 30 million experience

hunger, the nagging questions that needed to be

answered are: Has the increase in number of min-

ing companies and gross production value in min-

ing resulted in increase in jobs? Or has this result-

ed to the improvement in livelihood of communi-

ties where mining operations exist? Do mining

operations spur growth for majority of Filipino

people?

The answer to all questions is NO.

Employment too little, and contractual in nature

Contrary to what the govern-

ment wants to impress to

the public that increase in

mining operations would

result to increase in jobs, the

countrys mining industry

contributes too little in em-

ployment generation.

The NSCB revealed that min-

ing and quarrying industry

had the least contribution to

Philippine economic and em-

ployment growth in the peri-

od of 1998 to 2010.[11]

Data from the Mines and

Geosciences Bureau (MGB)

show that to date, the min-

ing operations only employ a

mere 0.6 percent or 210,000

workers in 2011. This gure is

not limited to mining alone, but includes quarry-

ing. The Center for Environment

Concerns noted that jobs generated from mining

are mostly from small scale mining operations and

not from mining TNCs.[12]

The recently concluded International Solidarity

Mission on Mining (ISMM) held from April 25-30,

2012[13] oers a more concrete picture of what

the Philippines extractive industry does to the

Filipino workers, people and the environment.

CARAGA region (Region XIII), considered as the

countrys mining capital and one of the areas cov-

ered by the ISMM, presents a paradox of growth

in mining operations. Mining operations account

to only 2.6% of employment in the region translat-

ed into 23,138 workers. MGB CARAGA Director

Mr. Alelo Ensomo admitted that not only this is

far too little, but the nature of jobs generated by

mining is mostly contractual and unskilled, i.e jobs

ranging from three months to nine months only.

[14]

An ocular visit at the nickel extraction or strip min-

ing operations sites of Sumitomo- Taganito Min-

ing Company (TMC), Zenshou Mining (Chinese

company) and Platinum Group Metals Corp

(PGMC) in Surigao del Norte,

tens of dust sweepers, load-

ers/haulers and handful ma-

chine operators are the only

visible workers, though TMC

reportedly has about 1000

workers. PGMC has a purchas-

ing agreement with the Aus-

tralian company-BHP Billiton,

one of the worlds biggest

mining company.

In Philsaga Mining Corpora-

tion (Philsaga) -- a subsidiary

of Australian based Medusa

Mining Limited in Agusan del

Sur, data gathered by ISMM

noted that there are only

about 700 regular or perma-

nent workers out of an esti-

mated 4,000 workforce. Phil-

saga is engaged in gold and

Employment Contribution of Mining and Quarrying

Year # Employed % to total

Employment

2007 149.000 0.4%

2008 158,000 0.5%

2009 169,000 0.5%

2010 197,000 0.5%

2011 210.000 0.6%

Source: MGB, Mar 2012

Has the increase in

number of mining

companies and gross

production value in

mining has resulted to

the improvement in

livelihood of communities

where mining operations

exist? Do mining

operations spur growth

for majority of Filipino

people?

The answer to all

questions is NO.


silver extraction and has its own milling plant.

Together with Philex Gold Philippines Inc, its

MPSA covers 6,262 hectares of land in Agusan del

Sur and Surigao del Sur.

Even in other regions where gold mining started

much earlier than in CARAGA such as in Lepanto

Mining Corporation Benguet, Cordillera region,

jobs are not only decreasing in the last four years

but remaining employment is being contractual-

ized. From the total workforce of 1.700 regular

workers in 2003, it is now down to 600 regular

workers after more than a thousand workers

were dismissed since the 2007 strike. Subse-

quently, they were replaced by 800 contractual

workers, who are paid half the wage that regular

workers are receiving. They are also deprived of

any benets given to regular workers.

Not only does mining operations fail to generate

more jobs, it also fails to cut down on underem-

ployment. By the end of 2011 for instance, CARA-

GA posted one of the highest underemployment

in the country accounting for 26.6% or 1.9 million

workers next to Bicol region (Region 5)another

mining areaat 35.4%.[15]

Yet, by the nature of mining operations that exist

in the Philippines, which is, extractive and export

oriented in nature, the scant employment contri-

bution is hardly surprising. Mining TNCs that are

given every right to extract all mineral in areas

covered by their MPSAs export mineral ores to

other countries for processing. Mineral ores from

nickel mining operations for instance are export-

ed to South Korea, China or Japan for processing

as there is only one nickel processing plant in Phil-

ippines which is based in Palawan. Sumitomos

HPAL (nickel plant) is yet to start its full operation

next year. This is to say that in spite of the tre-

mendous wealth from mineral deposits that the

country has, the possibility for massive job gener-

ation is extremely limited as there is no industry

being developed nor skills and technology are

learned for jobs available, no matter how few

they are, are largely unskilled.

Wages are unjustly low and discriminatory

Every two days, Philsaga Mining Corp, reportedly

produces a 17-18kgs gold bar. [16] If the 2011 aver-

age world market price of gold per troy ounce

(US$ 1,570.25/0z)) is used, the companys produc-

tion every two days translates to a whooping US$

858,220.14 or Php 36.474 Million (at an exchange

rate of US$ 1=Php 42.50). In a months time, Phil-

Gate of Philsaga Mining Corp, Agusan del Sur (Photo:CTUHR)


saga can get as big as US$12.873 million. This does

not include the silver production which the report

did not say.

Its workers however, have yet to benet from the

gold and silver mine. At the ISMM, some key in-

formants and Philsaga workers for example, of

whom 82% are contractuals are aghast upon learn-

ing of the huge wealth they produce for the com-

pany as they struggled hard to keep both ends

meet. Contractual workers are paid a measly

Php233/day (US$ 5.48), lower than the P241 pre-

scribed minimum wage in the region. Probation-

ary workers are paid slightly higher at Php279/

day.

Skilled workers also complained that their 30

years experience gained from other gold mill

plants have only earned them Php 349-Php369/

day ($8.21-$ 8.68) salary plus the mandated holi-

day and sick leaves. This is not commensurate to

our skills, the workers assigned to the milling

plant told the ISMM. Only a handful of skilled

workers such as the geologic mapper (doing ex-

ploration both surface and underground map-

ping) are paid Php 15,000 (US$352.94) per month

after working for more than two years as contrac-

tuals.

Residents in another town of Surigao del Sur, also

shared that workers at Marcventures Mining De-

velopment Corp (MMDC)- an Australian company

in Cantillan are paid even lower at Php230/day.

They are mostly recruited from other towns in-

stead of Cantillan presumably as pressure tactics

against the local government ocials who contin-

ually refuse to grant mining permit to MMDC and

oppose mining operations in their municipality.

In Lepanto Mining Consolidated Corp (Lepanto

Mining) in Benguet, wage discrimination against

contractual workers is sharper. Regular workers

for instance get a little more than Php 500 ($11.76)

a day, way above the Php255 ($6.00) minimum

wage in the region as a result of the unions col-

lective bargaining agreement. (CBA). In contrast,

contractual workers only receive Php 200 ($4.71)

per day.

The Philippines has about 500 existing wage lev-

els as a result of implementation of Republic Act

6727 or Wage Rationalization Act of 1989. There is

no denite criteria how wages are determined

except the governments broad classication of

regions, provinces and towns into urban, non-

Mamanwa tribe displaced by the military operations to pave way for the Taganito Mining exploration, Surigao del Norte (Photo: CTUHR)


urban, agricultural areas. Agri-

cultural area is subdivided into

plantation and non-plantation,

which is further sub-classied

according to the number of

workers employed. The capac-

ity of industry to pay higher

wages is not factored in.

This explains the dierences in

wage levels receive by work-

ers in dierent companies or

even in the same company or

industry located in dierent

provinces or regions. Of course, the mining TNCs

can argue that they comply with the minimum

wage as prescribed by RA 6727 with respect to the

regular workers and that the law is to blame for

the low wages that Filipino workers get.. Even if

they comply, they can certainly pay more decent

wages to their workers considering the super

prots they generate from their operations.

RA 6727 has been severely criticized and various

progressive and militant unions and labor rights

organizations have in fact called for its repeal.

There are many reasons to scrap this law, Not only

this is ridiculous, as oil and commodity prices in

places outside Metro Manila are often higher,

there is simply no decent logic in the law. It is

highly divisive of the Filipino working class and

weakens its capacity to wage a struggle for across

the board national wage increases. The law legaliz-

es the exploitation of Filipino workers by TNCs

and their local partners by oering them cheap

labour outside of Metro Manila, such as in the cas-

es of Fee Trade Zones (FTZs) or

Special Economic Zones

(SEZs), mining and TNCs plan-

tations.

Violations of health and safety

standards persist.

Filipino mining workers are not

only exposed to exploitative

wages but also on various oc-

cupational risks.

In Lepanto Consolidated Min-

ing Corp - a gold mining com-

pany that has been existing for

70 years now in Benguet,

northern part of the Philip-

pines, violations of health and

safety standards. persist. The

company provides the workers

with Personal Protective

Equipment (PPE) such as skull

guard, lamp and boots, but not

enough to keep them safe. The

workers have to provide their

own mask, and to save, they

contend with cheaply priced

towel as alternative. This is no match to temper

the poisonous gas and chemicals that they are

forced to inhale while underground. Ventilation is

also poor and miners work in their undergarments

to shake o the heat. Workers accounts at the

ISMM note that many of their colleagues contract-

ed tuberculosis.

Apart from that, workers are prone to water-

borne diseases due to ooding in the mines. Many

workers they said got eczema from work.

Workers at Philsaga share similar experiences, but

with some twists. Regular workers are also provid-

ed with skull guard and boots for free, except that

most of them are in the administrative work, Casu-

als and contractual workers who dominate the

underground workers have to pay P500 each as

safety deposit, to be returned when their contract

or employment ends and in case of loss. Asked if

they have known any experience where the P500

was returned upon employment termination, and

they said none.

Mining Industry Contribution to the Economy

2009 2010 2011

Total Earnings by Mining Compa-

nies Php 144.4 B

$33.986 M

Contribution to GDP 0.80% 1.00% 1.00%

Contribution to Employment 0.50% 0.50% 0.60%

Total Exports of Minerals & Min-

eral Products $1,470 M $1,929 M $2,659 M

Total Exports of Non-Metallic

Mineral Products $156 M $162 M $177 M

Taxes, Fees and Royalties from

Mining P12,380.3 M P13,373.4 M P1,211.8 M

$291,302 $314.668.24 $ 28.512.94

Source: Mines & Geosiences Bureau

Data from the Mines

and Geosciences Bureau

(MGB) show that to

date, the mining

operations only employ

a mere 0.6 percent or

210,000 workers in

2011


Independent unionism is either outrightly sup

pressed or halted through the use of yellow un

ion.

The countrys mining sector is largely non-

unionized that could be attributed to major fac-

tors: employment of temporary, exible or con-

tractual vis--vis the regular workers and suppres-

sive nature of labor relations. Lepanto Mining is

one the unionized companies, the union were

established in the 1980s-- that to a certain extent

able to weather the calculated union busting

measures. Violations of right to collective

bargaining, compounded by

series of illegal suspension,

dismissal of union ocers

forced the union to stage a

strike in 2007. The strike was

supported by the entire com-

munity and won. However,

more than 700 of its members

were dismissed, forced to

retire only to be replaced by

low-paid contractual workers.

The union at Lepanto Mining

is aliated with NAFLU-KMU.

[17]

Unionism at Philsaga mining reects a new but

traditional way of suppressing independent un-

ion. Last year, workers discontent over the pro-

longed contractual employment and low wage

prompted them to organize union. The manage-

ment learned of the initiative and to the workers

surprise, it endorsed and campaigned for PTGWO

TUCP (Philippine Transport and General Workers

Organizations). Without union election, PTGWO

was installed and a collective bargaining agree-

ment was signed in November last year. The

workers were never consulted of who they want

as ocers and whats in the CBA. In examining

the economic provisions of the CBA, it is apparent

that even the so-called benets provided for the

agreement are even lower than what the legal

standards prescribe.[18]

Where there are large scale mining operations

poverty rate is also high

From 2009-2010, foreign and domestic mining

corporations amassed a total earnings of

Php144.4 billion or US$ 33.986 Million. While they

raked in prots, the Philippine government only

got Php 13.373.4 million in taxes and royalties.

By virtue of RA 7942, the government can only

get 2% excise tax from mining operations, while it

is giving the Philippine land and water for whole-

sale exploitation. Thus, the increase in mining

companies revenue could hardly create a positive

impact on the economy.

In CARAGA region for example, where large scale

mining operations have inten-

sied in the last four years,

poverty incidence continually

increases. In 2009, it [poverty

incidence] was up to 39.6%

from 36.9% in 2006. In the

same year, 2009, two of its

provinces were included in the

countrys poorest provinces,

with per capita poverty

threshold at 43.%, next to

Zamboanga del Norte,[19]

host to Toronto Ventures

Inca Canadian gold mining

company

Apart from this measly income, one of the major

push factors in poverty increase is the massive

displacement of shing and farming communities

and subsequent loss of livelihood due to large-

scale mining operations. The destruction of land

and mountains had caused massive ooding in

areas, resulting to the decrease in rice and corn

production and halt in other economic activities

as roads became impassable. Residents narrated

that recent ash oods in Surigao ang Agusan

provinces that submerged several villages were

rst time, and the communities were not pre-

pared to deal with new situation. In addition, high

water siltation also deprives the sherfolks of

their source of income.

The MGB regional Director Ensomo also admitted

that the mining has not undercut the poverty in

the region, except that they cannot do much but

to encourage companies to engage in some social

responsibility activities such as building schools,

...one of the major push

factors in poverty

increase is the massive

displacement of fishing

and farming

communities and

subsequent loss of

livelihood due to large-

scale mining operations


clinics etc. Whilst this may sound noble, this

amount to relinquishing government responsibili-

ties for education, health etc. to TNCs charity that

bodes ill to giving the young people a patriotic,

pro-people and pro-environment education. As

TNCs provide them the schools, orientation and

employment to teachers, they become beholden

and loyal to the company rather than to their

country.

Large scale ecological destruction

Mining Act of 1995 declares

that all mineral resources in

public or private lands, includ-

ing timber or forestlands as

dened in existing laws, shall

be open to mineral agree-

ments or nancial or technical

assistance agreement applica-

tions.

A mineral agreement shall

grant to the contractor the

exclusive right to conduct

mining operations and to ex-

tract all mineral resources

found in the contract area. Permit given to large

scale mining companies is 25 years and could be

extended to 50 years.[20]

Thus the laws implementation takes heavy toll on

the environment. The nickel strip mining in Suri-

gao del Norte for instance have destroyed not

only the i`ron mountains but have polluted the

water that for century have been the source of

livelihood in the area.

In areas, visited by the ISMM, residents testied

that ve years ago, the area

being stripped by TMC

(Taganito Mines) in Claver,

Surigao del Norte used to be a

mountain, but now it was a

at deserted land.

It is certain that if the manner

by which large scale mining

operations are conducted the

way it is done today, the

mountains of those provinces

will become at deserted

place, its surrounding bay pol-

luted up to several kilometers

Part of the human chain opposing mining in Surigao, 28 April 2012 (Photo: CTUHR)

The strike was

supported by the entire

community and won.

However, more than

700 of its members

were dismissed, forced

to retire only to be

replaced by low-paid

contractual workers


of siltation in less than 10

years from now.

Struggle and resistance

Extractive large scale mining

operations are not happening

unopposed. Progressive envi-

ronment groups and some

local government ocials

continually called for the re-

peal of the Mining Act of

1995. Temporarily, they called

for a moratorium of large scale extractive mining

operations in the country until a clearer policy

and downstream industry is put in placed. The

powerful Catholic Church called for a total ban to

mining. The human chain led by the Church and

the local government in Cantillan, Surigao del

Norte proves that the community will not take

things sitting down.

The International Solidarity mission on Mining

(ISMM) also condemned the appalling condition

of mine workers and the massive destruction of

the environment. It also supported the call for

moratorium od the current large scale extractive

mining operations until such time that the tech-

nology to develop downstream industry is availa-

ble.

At the Philippine House of Representatives,

Bayan Muna Partylist Representatives together

with Anakbayan, Anakpawis, ACT, and Gabriela

Womens Partylists have led what they called as

Peoples Mining Bill. The Bill recognizes the im-

portance of mining as a foundation of growth,

but it needs to be placed into the core of the

countrys national industrialization plan.

The bill merits all possible support and mining as

in the experiences in other countries can spur

industrialization given the correct policy frame-

work and program. The Mining Act of 1995 can in

no way deliver the benets that mining can possi-

bly deliver to the Philippines. Its ill-eects are al-

ready proven. Neither the so-called Executive

Order that President Aquino will issue to clarify

policies, as it only focuses on raising government

revenues without addressing the larger concerns.

Thus it is imperative that before further havoc is

created, the Mining Act of

1995 has to be repealed, now.

The trade union movement in

the country has denitely im-

portant role to play not only

to address the workers organ-

izing in the industry or in pro-

tecting their rights and wel-

fare but to enable them to

participate in crafting a peo-

ple-oriented mining policy and

laws. *

Endnotes

1) Aquino wants to impose higher taxes on mining in-

dustry Philippine Online Chronicles, 21 Mar 12

2) Mines and Geosciences Bureau (MGB) as published

in Mining in CARAGA, CARAGA Mining Situation under

the Aquino Administration, CARAGA WATCH, updated

April 2012

3) Gold not giving much glitter to economic, job

growth, Manila Times online, April 12,2012

4) Mineral Industry Statistics, Mines and Geosciences

Bureau (MGB), Department of Environment and Natu-

ral Resources (DENR), 16 April 2012

5) Aquino governments Philippine Development Plan

2011-2016, August 2010

6) Philippine Labor and Employment Plan 2011-2016,

Department of Labor and Employment, August 2010

7) Section 26 of Republic Act 7942 or Mining Act of

1995 denes Mineral production sharing agreement

(MPSA) - as an agreement where the Government

grants to the contractor the exclusive right to conduct

mining operations within a contract area and shares in

the gross output. The contractor shall provide the -

nancing, technology, management and personnel nec-

essary for the implementation of this agreement.

8) Mineral Industry Statistics, Mines and Geosciences

Bureau (MGB), Department of Environment and Natu-

ral Resources (DENR), 16 April 2012

9) Mining investments sharply lower The Philippine

Star, 07 May 2012

10) Labor Force Survey Philippines 2010-2011, Bureau

of Labor Employment Statistics, Department of Labor

and Employment, January 2012

11) Gold-not-giving-much-glitter-to economic-jobs-

Thus it is imperative

that before further

havoc is created, the

Mining Act of 1995

has to be repealed,

now


growth - http://www.manilatimes.net/index.php/

business/top-business-news/20846-

12) 012 Philippine Mining Situation, Intensied Plunder,

Intensied struggles Center for Environment Concerns,

Philippines,

13) The International Solidarity Mission on Mining

(ISMM) was organized by the Metalworkers Alliance of

the Philippines (MWAP), Center for Trade Union and

Human Rights (CTUHR), Kilusang Mayo Uno (KMU),

Crispin Beltran Resource Center (CBBRC), Integrated

Philippine Electronics Network (iPEN) and Institute for

Occupational Health, Safety and Development

(IOHSAD), This was participated by 11 foreign delegates

from Australia, Belgium, South Korea, Germany, Japan

and the United States. ISMM visited CARAGA in Minda-

nao and Benguet in Cordillera Region.

14) ISMM interview with Mr Alelo Ensomo, CARAGA

Director of Mines and Geosciences Bureau, Surigao del

Norte, April 26,2012

15) Labor Force Survey Philippines 2010-2011, Bureau of

Labor Employment Statistics, Department of Labor and

Employment, January 2012

16) ISMM interview with workers and key informants,

28 April 2012

17) CTUHR Documentation, 2006- 2008

18) ISMM interview

19) Poverty Incidence (Population) 2006-2009, National

Statistical and Coordination Board

20) Section 18 and 26, RA 7942, :An Act Instituting A

New System Of Mineral Resources Exploration, Devel-

opment, Utilization And Conservation, 03 March 1995


Mining Sector and its Future in India

Ramamurthi Sreedhar

Introduction

India is endowed with huge resources of many

metallic and non-metallic minerals. Since inde-

pendence in 1947, there has been a rapid growth

in the mineral production both in terms of quanti-

ty and value. Currently, India produces as many as

87 minerals, which include 4 fuels, 10 metallic, 47

non-metallic, 3 atomic and 23 minor minerals

(including building and other materials).

The mining activities are extremely poorly regu-

lated despite the fact that as early as 1948, the

founding fathers of the constitution realized this

need. During the Constitutional debates, they

said as early as in 1948, Industrialisation has

brought in its wake an ever-increasing demand

for mineral resources. These resources are non-

replenishable and mostly scarce. Proper control

over regulation and development of mines and

minerals is therefore, a matter of national con-

cern. Today over 80,000 mines operate illegally

as against nearly 10,000 legitimate leases. Only a

third of the legal mines actually report to the Indi-

an Bureau of Mines, the regulator.

Within two decades of liberalised economy, much

in contrast with the Constitutional objectives,

mining as a sector has come to be associated

with scams, conicts, violence and ecological

degradation.

A Quick Overview

Mining of major minerals was a forte of the Public

Sector Undertakings until the nineties when the

country embarked on the economic policy of pri-

vatization and globalization. New ways are being

devised for exploitation of the resources and to

hand over wealth of the nation for small short-

term gains. The rapidity with which the global

interests want to usurp these resources is reect-

ed to the stock

markets and it is

with an exponen-

tial rate that min-

ing is devouring

lands and liveli-

hoods of many

communities. In

the case of coal,

the private sector

was a key player

until it was nation-

alized in the sev-

enties again to be

opened up in the

last decade and as

of today nearly

twenty per cent of

the known coal

reserves of the

country have been

Feature

In Sandur, most of the water sources are contamininated with iron ore dust and no one has access to clean

drinking water. (Photo: mines, minerals & PEOPLE)


handed over to the private sector. Most mineral

resources are co-terminus with Forests and Sched-

ule Areas and mining has become a major source

of destruction of the environment and livelihoods

of the local communities and has reached alarm-

ing proportions. Some key facts:

1. Mining has a low contribution to the econo-

my. GDP from mining has never exceeded 5%

of the GDP even after liberalization. In com-

parison, small and medium enterprises con-

tributed signicantly (29%), employing more

people and aecting less people.

2. Out of the estimated or known coal reserves

of 267 billion tones, 48 billion tonnes, almost

one-fth are allocated to high networth com-

panies in what is now being debated as the

biggest scam around natural resource alloca-

tion amounting to illegitimate corporate ben-

ets of over 40 Billion USD.

3. Bauxite mines allotted to companies like AN-

RAK, NALCO, VEDANTA, and JINDAL could

last them for a century. Most of these mining

blocks are in the Schedule V areas which have

protection under the constitution and by Sa-

mata Judgment. The States have circumvent-

ed these protections by taking lease by state

corporations and entering into JVs with pri-

vate companies.

4. Mining in several blocks will only begin 5 dec-

ades from the date of clearance which is a

clear indication of sacricing resources in one-

go and also negating the chance of communi-

ties to assert their rights.

5. The input of resources into production stream

is huge e.g. inputs for 1000

kg primary aluminium pro-

duction requires >5000 kg

of bauxite ore, 13,000 litres

of fresh water, 27500 litres

of sea water, 15,711 kWh of

electricity consumption. It

clearly depicts that mining

of a mineral is not limited to

the mineral alone, it is highly

intensied resource use of

other resources or raw ma-

terials.

6. Occupational hazards in mining industry are

under reported, unreported and fail to recog-

nize the huge costs at the society level. Un-

derground coal mines result in 1 death for 2.5

mT of coal mines. A huge proportion of coal

mine workers suer from Coal Workers Pneu-

moconiosis (around 25% of coal workers).

Noise pollution (>90dB) is a huge neglected

aspect which is increasingly aecting workers

as the mines are mechanized and the protec-

tive gears do not respond to working condi-

tions or are not appropriately suitable to con-

ditions.

7. The reclamation costs are being estimated at

least 4% of the coal production costs, areas

impacted by coal res is increasingly aecting

a large conglomerate of settlements. With the

introduction of coal bed methane i.e. empty-

ing the last residues, the kind of water evacu-

ation is likely to damage land at large scale.

Even at micro levels of processing and dispos-

al there is 1 death per 5 mT of Coal input and

1.3 disabling injuries per mT.

8. Villages in the mining regions are getting de-

void of drinking water due to increased com-

petitive use of water by industry and mining.

It is not mining alone, once we see the down-

stream industry we realize that huge quantum

of water is being gulped by the industry e.g.

it is estimated that this water can serve 300

million populations. On the other hand, the

slippages in rural drinking water supply are

huge i.e. the overall quantity and quality prob-

lem is glaring. 42% of households in villages of

India have no electricity where as the

industry is consuming the major

share of electricity.

9. With heavy mechanization,

the labour or employment is

decreasing whereas in small

scale mining labour norms are

outed both in terms of remu-

neration as well as provision of

facilities.

The impacts are widespread and

Occupational hazards

in mining industry are

under reported,

unreported and fail to

recognize the huge

costs at the society

level


diverse, and have created socio-economic and

cultural impacts over dierent geographies and

ecosystems from the Western Ghats which is an

UNESCO Heritage Site and a Global Biodiversity

Hotspot to Stone Quarries of Rajasthan where

silicosis is a blight on a huge population still

emerging from the cover of denial by the govern-

ment, and from coal mines in Meghalaya leading

to Acid Mine Drainage to beach sands in Kerala

causing cancer from radiation. Even constitution-

ally protected tribal areas Scheduled Areas,

(Schedule V and VI), where a large proportion of

the mineral wealth of the country rests, have not

been spared of this onslaught.

The current trend is to promote more mining and

a complex set of factors external as well as inter-

nal are driving more investments. India opened up

its FDI in mining without any bottlenecks for the

investors in 1991. The policies initially aided the

State and later, the corporates, as promoter of

economic growth and private protability by rap-

idly abstracting mineral wealth of the country.

Various actors have invested into the sector, in-

cluding national and international companies,

banks, equity funds, and also round-tripping of

illegal funds etc. It is now predicted to almost dou-

bling its current size with-

in the next 15 years. The

irony is while the mining

is being promoted, there

is no polluters pay princi-

ple in practice which is

building a huge cost to-

wards environment. The

regulatory regime is in

place but these are again

skewed by executive de-

cisions to promote invest-

ments. Moreover moni-

toring is not eective

thus leading to lowest

compliance.

Government of Indias

Priority and Our Con

cerns

The National Mineral Poli-

cy of 2008 banks upon

inviting high investments

into the mining sector and has promised of a Sus-

tainable Mining Framework. Although there has

been mention about impact on people, land acqui-

sition and compensation, it is hugely oriented at

looking mining as an economic opportunity. This is

reected in the new bill, through which a single

mining lease could be as large as 100 km2; renewal

of leases is being replaced by extension bequeath-

ing it till the deposit lasts which will make miners

squat for long; there is a growing dilution of provi-

sions which favours ownership to communities to

only prot sharing that too through a highly bu-

reaucratic setup.

The push is to change government policies and

make them favourable to industry, thus the min-

ing companies and the State are equally alienated

from the host communities. The nancial transac-

tions are very opaque, with investments banks

which are large in number channelizing funds

which is dicult to track. The whole issue of capi-

tal mobility and its role in expanding mining is still

poorly understood.

Ecosystems are getting disturbed beyond their

resilience, like the river ecosystem is getting huge-

ly aected, so is the wildlife corridors. The interre-

Girl from a stone quarry , she works with her disabled hand. (Photo: mines, minerals & PEOPLE)


lationship between governance of a welfare state

and mining is marred by huge gaps and strange

complicated structures. The glaring anachronism

in terms of neglect of mapping human, botanical,

zoological and atmospheric resources is huge; the

result of which is these overlying resources are

not accounted and treated as overburden by com-

panies and government. Thereby the whole pro-

cess is damaging the huge potential of community

and undermining the wealth of the ecosystem.

By and large in the mining operation and invest-

ment world, the key beneciaries are investors,

banks, owners, politicians and contractors, con-

sultants and reclaimers. The cost is being paid by

local communities, workers, environment, ecosys-

tem and small investors.

The rst Industrial Policy Resolution adopted in

1948 codied the national policy in respect

of mines and minerals. Min-

ing sector also received due

attention in the second

'Industrial Policy State-

ment' issued in 1956. As a

follow-up measure to Indus-

trial Policy Resolution of

1956, the Mines Minerals

Regulation and Develop-

ment Act 1948 (MMRD)

was repealed and MMRD

Act 1957 was enacted. Un-

der this Act the Mineral Concession Rules 1960

and the Mineral Conservation and Development

Rules 1958 (MCDR) were issued. The new Industri-

al policy in 1991 oriented towards market liberali-

sation.

The National Mineral Policy 1993 was an exercise

to keep the mineral sector tuned to the restructur-

ing measures adopted in the trade and scal sec-

tors. The new Mineral Policy declared in March

1993, has made a radical departure from the earli-

er policies by throwing open the mineral sector to

private companies and by allowing equity partici-

pation by foreign companies in joint venture in

mining promoted by Indian Companies. Further

Amendments in MMRD Act, 1957 in 1999 was

brought in to reect the changed emphasis on

development rather than regulation and was

amended to MMDR Act.

The slow pace of Foreign Direct Investments (FDI)

in the mining sector even ve years after the liber-

alization of the investment regime, the lack of

enthusiasm for investment in prospecting shown

by the domestic private sector, and the lack of

resources with public sector agencies meant that

the sector was unable to signicantly contribute

to growth. During the Mid-term Appraisal of the

10th Plan in the Planning Commission, it was ob-

served that the 1993 policy had not been able to

achieve the aim of encouraging the ow of private

investment and introduction of high end technolo-

gy for exploration and mining because of proce-

dural delays, etc. A need for review of NMP, 1993

with a High Level Committee on National Mineral

to review the situation led to the National Mineral

Policy (NMP), 2008, which confers lot more con-

cessions to investors while also expressing the

need for environmental and social safeguards. A

new Bill, the Mines Minerals

Development and Regula-

tion Act 2011 has been intro-

duced in the Parliament and

is currently under the scruti-

ny of the Parliamentary

Standing Committee.

The provisions regarding

working conditions and

workers are covered by the

Mines Act 1951 which is also

being reviewed. Surveys conducted in few select-

ed mines recently by Directorate General of Mines

Safety show that a signicant number of persons

employed in the mines are suering from occupa-

tional diseases including Silicosis, Coal Workers

Pneumoconiosis, Noise Induced Hearing Loss, etc.

Because of the acute shortage of Occupational

Health Inspectors, a complete picture of the occu-

pational health status in mines is not available.

Moreover, the persons employed in mines are

exposed to number of hazards at workplace

which adversely aect their health. Some of the

important ones are dust, noise, vibrations, heat,

humidity etc.

The long-term programmes in every sector of the

economy in India are still governed by and large by

the Plan Programmes. Occupational Safety and

Health at workplaces has been declared a priority

Mining is one of the most

environmentally and socially

destructive economic activity.

It has a low contribution to

the GDP but the conflict it

engenders is enormous and

widespread


area for formulation of activities in the XII ve

year plan, the Planning Commission had set up a

Working Group on Occupational Safety and Health

(OSH) under the chairmanship of Secretary, Minis-

try of Labour and Employment. The report con-

cludes on the existing situation In spite of many

initiatives, the standards of safety in mines have

not yet reached to a worldwide accepted norm of

Zero Harm at Workplace. Further, there are peri-

odic occurrences of disasters in coal mines.

This calls for fresh initiatives with use of modern

technologies and tools, scientic data acquisition,

analysis and formulation of action plans on each

identied thrust areas, proper implementation

and eective monitoring of results. In the area of

statutory enforcement, result based inspections

and enquiries, compliance tracking system and on-

line monitoring of processes are proposed to be

undertaken through various plan schemes pro-

posed during the XII Five Year Plan.

However all these so called measures being taken

up as a priority will not be having much implica-

tions until the Mines Act is made more stringent

and companies and government agencies are held

accountable.

Towards a Way Ahead

Mining is one of the most environmentally and

socially destructive economic activity. It has a low

contribution to the GDP but the conict it engen-

ders is enormous and widespread. Our country

today has the dubious distinction of having illegal

mines signicantly outnumbering the legal mines.

A new Mines Mineral Development and Regula-

tion Act is on the anvil and it calls for far reaching

reforms in the mining sector. The future should

usher in an era of Mineral Development with de-

velopment as the focus rather than the current

attitude of exploiting minerals for mere prot.

The key emphasis has to be on

1. Rationalising and regularization of the on-going

mining activities on a war footing;

The unacceptable situation of illegal mining must

be put to an end. Irrational exploitation of dier-

ing grades of ores for short term gains has to be

restrained. Illegal mining of minor-minerals partic-

ularly of river-bed across the country have been

destroying the river systems and needs urgent

attention. This calls for a total moratorium on new

leases and ensuring zero-tolerance.

2. Increasing investments on exploration of all re-

sources and have a detailed map before embarking

on deeper exploration and even in that process es-

pecially through non-invasive technologies and aug-

menting the reserves both on-land and within our

exclusive economic zone in the oceans;

Exploration investment in the country is abysmally

low and does not even constitute two per cent of

the global exploration

investments and needs

to be raised signicantly.

There are very little re-

sources going into devel-

oping new exploration

methods. While our EEZ

extends to 200 km from

the coast, current invest-

ments are restricted only

to search for oil and gas

and disturbing the near

shore environment.

3. Enhancing the ecien-

cy of the mining activities

and generating more re-

sources from brown-Children working at an iron-ore mine site in Sandur. (Photo: mines, minerals & PEOPLE)


eld expansion rather than opening up new

green-eld areas;

Small pocket deposits in forested regions are be-

ing opened up creating patchiness and larger im-

pact on the forest corridors while eciency im-

provements and expansion of existing deposits

are being neglected. This has to be a high priority.

4. Enabling and emphasizing on local value addition

and restricting export of minerals;

Though every state government talks about value

addition, in the name of lack of technology or that

mining is a stand-alone industry important miner-

als are being exported with very little benet to

the state or the communities. Value addition must

be the norm rather than as an exception.

5. Developing a widespread understanding of the

strategic value of dierent minerals and ensuring

conservation of requisite quantities of such miner-

als;

The strategic value of various minerals must be

recognized and specic eorts must be made to

conserve minerals essential for the countrys fu-

ture. Minerals such as bauxite, titanium, several

heavy metals which will be crucial for future devel-

opment of materials need to be assessed for our

long term needs rather than for prots to corpo-

rates in the current period.

6. Ensuring strict compliance of all the environmen-

tal, social and labour laws governing mining activi-

ties and several environmental, social and labour

laws are constantly violated in several mining con-

texts.

The laws should be made convergent with proper

oversight authorities. The blight of occupational

diseases such as asbestosis and silicosis must be

eliminated.

7. Enabling evolution of economic opportunities not

dependent on mining.

The long term consequences of climate change

and strategic future mineral availability should

form the key consideration in the development of

minerals. It is important to recognize that mineral

bearing areas do not suer from the classic situa-

tion of resource curse which is seen across the

globe. In order to do this eort must be made to

identify economic opportunities which are not

dependent on mining.

A Reection

We recognize that the minerals will be ours forev-

er if we restrain mining but the wealth of the soil

and other biota will be lost forever if we mine the

minerals below them. Mechanisms like paying the

Net Present Value as compensation do not reect

the true long term value of the ecosystem services

which the terrain and the plant and animal re-

sources provide. The future must make these im-

portant elements in the design.

These are issues that several organisations, net-

works and alliances be it mm&P in India, JATAM in

Indonesia and AIMES in Africa, ATNC, ANREOV,

JSAPMMD, NGO Forum on ADB, MAC and several

other groups in Latin America are grappling with

and confronting as realities. There are varied

strong protests in the entire life-cycle where alli-

ances have had a positive presence. We are

against Greeneld mining, we want the existing

mines to work as per rules and regulations and we

want mine-closure to happen properly including

the rehabilitation of the workers. We want our

countries to move away from an economy de-

pendent on mining in the short run.

The real change has to be in the development par-

adigm. We need greater information exchange

and relationships with the communities to evolve

this new paradigm. Otherwise we will run the risk

of ending up only in targeting governments and

investors and institutions jointly, delay the activi-

ties and denigrate their behaviour and denitely

seek justice to the specic communities and yet

feel inadequate. It is indeed a long way to go for

the transformation we are seeking!


Introduction Extractive industry is a strategic sector for supply-

ing raw materials for other industries. There is no

modern economy can operate without any access

to adequate, aordable, and safe raw materials

produced by extractive industries. In general

there are four characteristics of the extractive

industry that distinguish it from other industrial

sectors: (1) Extractive Industry processes non-

renewable raw materials, therefore the raw mate-

rials in the industry are reduced and limited; (2)

extractive industry has a bound with production

sites with its local and specic nature right in the

places where raw materials are available; this

drives competition to get locations are potential

with limitless raw material resources; (3) extrac-

tive industry is both capital-intensive and technol-

ogy-intensive sector, therefore only companies

with substantial nancial support can operate; (4)

extractive industry has more horrible ecologically

destructive force than other industrial sectors. For

example, Newmont Oil Company in Bima district

in the eastern part of Indonesia, produces 140,000

tonnes of waste per day, means 21 times the daily

solid waste of Jakarta city. These four characteris-

tics are enforcing dierent development of ex-

tractive industry from the industries of other sec-

tors.

This article attempts to describe the reality of ex-

tractive industries in Indonesia under the control

and domination of transna-

tional corporations, that

making wealth in an unimagi-

nable amount from a mining

hotspot where the majority

of the population are in pov-

erty, experiencing various

kinds of land-grabbing, evic-

tion from their communal

land, and the workers earn

low wages with poor work-

ing conditions. The article

puts the extractive industry

in the context of relation between the state and

the massive expansion of transnational corpora-

tions (TNCs) in order to obtain raw materials for

prot, where TNCs do land-grabbing and natural

resources by using the imperative power of the

state, either through the establishment of regula-

tion, as well as the mobilization of the state-

owned violence means. In the accumulation of

extraction industries, the land-grabbing to get raw

materials resources currently is an inherent and

dialectical process. The case of Freeport Mc-

Morran Copper & Gold Inc will be elaborated as a

case study.

General Overview of Extractive Industry in Indo

nesia

Since it has raw materials resources, the govern-

ment considered the extractive sector as the most

strategic sector to earn foreign exchange. In that

context, the Government implemented a policy of

export-oriented economy and provided discretion

for foreign capital. For example, of the total cop-

per production in 2002, 1.17 million tons or 78 per

cent was exported, just as to the gold, from the

production of 142.2 thousand kg, as much as 73

per cent was exported.[1] Indonesia had become

the largest tin exporter that supplied 40 per cent

of the world's tin[2]. In 2011, Indonesia produced

290,000 tonnes of coal, 72 per cent for export

market.[3] In 2011, when Indonesia's export grew

13.6 per cent - it is beyond its historical average

rate of 7.5 per cent. Mining

sector had been counted for

Indonesias high exports,

particularly coal, while the

manufacturing, textiles, and

agricultural sectors had rela-

tively slowed down and ex-

perienced a decline.[4]

Like many other natural

sources-rich countries, Indo-

nesia extractive industry is

also under the control of

The Case of Freeport Mc-Morran Copper & Gold Inc.

in Indonesias Extractive Industry

Abu Mufakhir

Seventy five per cent

of the mining sector,

particularly oil and

gas, is controlled by

foreign capital


foreign capital. For example, 85.4 per

cent of the 137 management conces-

sions over oil and gas elds in Indo-

nesia owned by foreign multinational

companies.[5] No less than 10 trans-

national oil companies are operating

in Indonesia, such as Caltex, Exxon,

Petrocina, with the production

reached 921.487 barrels per day in

2004. Seventy ve percent of the

mining sector, particularly oil and

gas, is controlled by foreign capital.

[6]

The situation was started from the

destruction of Soekarno era, with

their guided economic policy

throughout 1958-1965, during which

time the state conducted interference toward the

market and destroyed the dominance of foreign

capital. Soehartos authoritarian regime that was

commenced in blood, has initiated the return of

more aggressive capital expansion up into the

remotes of Indonesia for the second time after

the colonial period. During the Soeharto regime,

there are at least three Acts passed soon after

one-year of ruling: Law No. 1 year 1967 concerning

Foreign Investment, Law No. 11 year 1967 on Basic

Provisions of Mining, and Law No. 5 year 1967 on

Basic Provisions of Forestry. These three laws got

rid of all the policies produced by Soekarnos era

that hindered foreign capitals. Since then, the

management of extractive industries was being

regulated (freed from any form of state interven-

tion that inhibiting) so that foreign capital has

exclusive access to land and the raw material re-

sources, through a mechanism called the

"Contract of Work.

At the same year of the pass-

ing of the three laws, the Gold

Mining Company, Freeport

Indonesia received a

"Contract of Work" as a li-

cense to operate and start

their exploration in Papua.

The Agreement between the

Government of Indonesia and

PT Freeport-was called 'First

Generation Contract of Work

which was given only to Freeport.[7]

When Soeharto regime toppled down in 1998,

there has been decentralization with the imple-

mentation of the Law No. 32 year 2004 on Region-

al Autonomy (Otonomi Daerah). The goal was to

reduce the authority centralized in Jakarta, and to

distribute it to the regions. Yet, in fact, what hap-

pened was the distribution of power in the hands

of oligarchs at the local level. Law No. 32/2004 on

Regional Autonomy, Article 13 provided

optional authority to the local government to-

ward the management of mineral and coal mining.

This was later conrmed by the issue of Mining

Regulations year 2008, which provides discretion

to local authorities to issue Mining Authority. It

triggered the grabbing of raw material resources

in the outposts become increasingly disclosed.

This condition continued with the enactment of

Law No. 4/2009 on Mineral and Coal Mining that

made the Law No. 11 year 1967

did not apply. The presence of

Mineral and Coal Mining Law,

to honour the previous con-

tract, did not at all encourage

(even just) renegotiation of

contract compiled during the

Soeharto regime. It was in

contrary emphasizing that the

contract made in the Soeharto

regime should be applied until

the contract was completed.

Province Number of Mining Per

mit*

Number of Contract in Oil and Gas

Mining

Poverty (percentage)**

Urban Rural

South Sumatra 189 29 16.73 14.67

Bangka Belitung 303 - 4.39 8.45

East java 209 24 10.58 19.74

East Kalimantan 788 25 4.02 13.66

South Kalimantan 261 2 4.54 5.69

Aceh 75 4 14.65 23.54

East Nusa Tenggara

56 1 13.57 25.10

Papua 9 22 5.55 46.02

*According to Directorate General of Oil and Gas, Ministry of Mines and Energy, 2011 ** Central Bureau of Statistics 2011

Source: JATAM

Recent Mining Permits issued by Regions and Cities

...at least 60 people killed

by violent state-forces, in

addition to 148 people

imprisoned and put in

trials with various

allegations of having

disturbed the mining

investment


Law on Mineral and Coal Mining only changed the

regulation of Mining Authority into Mining Permit

that expanded the authority (based on the region-

al scale) to local governments.[8]

As a result, after the legalization of the Mineral

and Coal Mining Law, thousands of Mining Permit

issued by local governments. In 2011 there were

about 9,000 permits issued by the regions and

cities. That means, from about 30 regions and cit-

ies that had the potential of mining, they had is-

sued about 300 permits in average.[9] At least

every day 6 to 7 mining permits were issued since

2008, and there were 5,171

permits from 8,263 categories

of Clean & Clear based on the

Mineral and Coal Mining Law.

[10]

The integration of Indonesia's

economy into global market,

as well as the decentralization

policy in terms of the distribu-

tion of power to facilitate busi-

ness groups allied with local

oligarchy to ease the depriva-

tion of natural resources, are

the characteristic of current

extractive industry. Behind the

extractive industry, since the

enactment of Law No. 11/1967

and then replaced the Law No.

4/2009, JATAM recorded that

at least 60 people killed by violent state-forces, in

addition to 148 people imprisoned and put in trials

with various reasons and allegations of having

disturbed the mining investment. Many examples

of cases on how corporations in extractive indus-

tries commit land-grabbing, eviction of indigenous

peoples, environmental degradation, as well as

implementing low wages. Among these cases, I

will elaborate the case of Freeport Indonesia, a

subsidiary of Freeport-McMoran Copper & Gold

Inc. (FCX), called as the pioneer of foreign invest-

ment by Soeharto.

FreeportMcMoran Copper & Gold Inc: The Ulti

mate Killer of Local People

Freeport-McMoran Copper & Gold Inc has a sub-

sidiary in Indonesia to operate in the country.

Freeport Indonesia (hereafter Freeport) is a gold

mining company with the most massive land con-

cessions. Since 1991, through the extension of se-

cond contract, beneted with the area concession

of 2.6 million hectares, Freeport had expelled peo-

ple from their land. One of the indigenous commu-

nities around the Freeport area was Amungme

Tribe, whose almost entire region has now be-

come Freeports concession area.[11]

Currently, a total of 22 thousand people working

in Freeport, 98 per cent are citizens of Indonesia

and 28 per cent of Papua. Workers in the operat-

ing divisions work at an alti-

tude of 4,600 meters above

sea level with weather swings

between high rainfall and ex-

treme cold. They worked for

an average of 12-14 hours per

day. This excluded the threat

such as mysterious shooting

terror. Meanwhile local work-

ers and Papuan were discrimi-

nated in terms of wages and

facilities from expatriates. In

particular, Papuan are often

employed in indecent and

disrespectful divisions, such as

sweeping street and aviation

eld, with their almost noth-

ing payment of Rp 40,- (USD

0,004) per hour or sometimes

was just paid with grocery items such as corned

beef, cigarettes, and tobacco.

Since 1967 to 2010, Freeport has produced 7.3 mil-

lion tons of copper and 724.7 million tons of gold.

As of per 2011, their ore reserves of 2.6 billion tons

in total. Roughly speaking, these reserves can pro-

duce 2.418 tons of gold. If the gold price is Rp 550

thousand per gram, the total value of the reserves

is Rp 1329 trillion, almost equivalent to the amount

of 2012 national budget of Rp1.435 trillion. The

prot of Freeport Indonesia has contributed 50.75

per cent of total revenues of its parent company,

Freeport McMoran Copper & Gold Inc. (FCX). FCX

is the largest shareholder of Freeport Indonesia

(81.28 per cent), other shares owned by PT Indo-

copper of 9.36 per cent, and by the Government

of Indonesia of 9.36 per cent.

Despite Freeport's

Grasberg mine in West

Papua has the only

largest gold reserves in

the world, Papua

remains the poorest

province in Indonesia,

with the highest risk of

illness and death, and

most violence by

military throughout the

country


Despite Freeport's Grasberg mine in West Papua

has the only largest gold reserves in the world and

the largest copper deposits ever discovered13, it

has nothing to do with the improvement of Papu-

ans welfare. Papua remains the poorest province

in Indonesia, with the highest risk of illness and

death, and most violence by military throughout

the country. According to the BPS (Statistics Cen-

tral Bureau), the population of Papua that was at

the poverty line reached 944.79 thousand people

in 2010, while the number of unemployment in-

creased from 53.6 thousand in August 2010 to

60.5 thousand people, with open unemployment

of 3.94 per cent in August 2011 from 1.17 million of

labour force. The poverty rate in Papua is also far

exceeded the national average of 13.33 per cent.

During 42 years of operation, Freeport has

spawned enormous ecological damage. Free-

port's daily mining operations dispose 230,000

tons of rock waste into Aghawagon River and

rivers around. The acid rock

drainage - or the disposal of

water containing acid- as much

as 360000-510000 tons per day

has ruined two valleys which

include 4 miles (6.5 km) to a

depth of 300 meters. The Explo-

ration of the Grasberg reserves

is estimated to produce 6 billion

tons of industrial waste.[12]

Freeport that has employed

more than 1000 security guards,

through its status as a vital na-

tional asset, received protection of 700 police

personnel, Mobile Brigade unit, and the military,

even the special forces. Therefore, since 1998-

2004, Freeport has expensed funding for the Po-

lice / Army amounted to 20 million dollars.14

Amount of money for security forces meals dur-

ing 2001-2010, according to the Indonesia Corrup-

tion Watch (ICW), was amounting to 79.1 million

dollars.

The Struggle of Freeport Workers[13]

On July 4, 2011, at least 8000 workers of Freeport

Indonesia went on strike and faced by 349 heavily

armed police personnel, together with 40 person-

nel members of the Detachment B Mobile Brigade

of Papua Police completed with the Barracudas.

The police argued that what done by Freeport

workers was not on strike but protests and

demonstrations, which not allowed to be done at

the national vital objects, and Freeport is a vital

national object.

The strike was triggered by the rejection of nego-

tiations by the management due to the dualism

occurred in the union leadership. In addition to

refusing to negotiate, the management unilateral-

ly terminated members of union board, including

those who conducted negotiation. There the un-

ion led a change in the concept of remuneration

taking into account the working conditions, years

of service and corporate prots. Initially, the un-

ion (PUK SPSI) proposed the remuneration pack-

age for level 1 to Level 3 by 35 dollars per hour -

200 dollars per hour, then fell to 17.5 dollars per

hour - 43 dollars per hour. Meanwhile, Freeport

insisted the concept of percentage wage. The

management oered an in-

crease of 16 per cent, turned to

22 per cent of basic payment. At

that time the wage of Freeport

workers was only 1.50 s / d 3.50

dollars per hour, while the low-

est wage of Freeport workers in

the world between 30-50 dollars

per hour.

The strike continued for nearly

six months, since the rst strike

in the late June, and resumed in

September and extended until

mid-January 2012, and recorded as the longest

labour strike and involved the largest mass in the

labour movement after Soeharto era. During the

action, a support from workers and non-workers

was getting greater in Papua. Participants of

strike increased in number from 8 thousand to 12

thousand of workers from total of 22 thousand

workers in Freeport. Supports also came from

indigenous communities in Mimika regions, such

as Tribe of Amungme, Kamoro, Damal, Nduga,

Dani, Moni and Ekari. Solidarity echoed even to

other countries. They questioned the wage dis-

crimination and unfair work contract. While labor

organizations and non-governmental organiza-

tions in Jakarta, Mojokerto, East Java, and Yogya-

During the strike

there were 11

shooting with seven

Freeport workers

died, not to include

two victims from

traditional mining


karta took rallies to condemn Freeport union bust-

ing practice, some foreign trade unions, such as

the United Steelworkers,USA and the Internation-

al Chemical Energy and Mining (ICEM), deplores

the response of Freeport and repression the state

apparatus in facing the strike. Occupy Phoenix

and the Industrial Workers of the World in Ameri-

ca also take action against the criminal acts in

Freeport Indonesia.

On the grounds that Freeport is a vital national

asset, the strikes were then prevented by various

means. Mimika District Police, Papua charged the

strikers with criminal incitement, vandalism, theft,

and disturbing public interest. Pressure on the

strikers was also carried out by means of terror in

the form of mysterious shootings. KontraS record-

ed during the strike there were 11 shooting with

seven Freeport workers died, not to include two

victims from traditional mining area. Until today

the authorities failed to investigate the shooters.

The experience of Freeport workers in conducting

strike teaches that labour strikes should be well-

prepared. Strike participants involve traditional

miners, contract-based workers as well as perma-

nent workers. They also made alliance with trade

unions and non-governmental organizations out-

side Papua. Freeport Union also run a campaign

strategy, by audiencing with the House of Repre-

sentatives, National Commission of Human Rights,

and even writing letter to the President. On the

eld, workers combined any forms of sabotage,

marches, blockades and work area occupation to

ght. Although, on December 14, 2011 reached an

agreement to increase the basic wage by 24 per

cent in the rst year and 13 per cent in the second

year, the value of the deal is far below the initial

demands.

Agenda for the Labour Movement

Expansion on extractive industry means a capital

geographical expansion on the land, since the

extractive industrial activity is the extraction of

dredged soil to obtain raw materials until no more

remaining selling value. Corporations in the ex-

tractive industries are even allowed to operate

within protected forests, allowed to evict migrant

peoples territories and territories cultivated by

indigenous peoples for generations, freed to vio-

late human rights and commit environmental pol-

lution vividly, allowed to produce any kinds of

exploitation and cultural, social, and historical

damages as a part of its accumulation practices.

Extractive industry (read: capitalism) considers

land as commod

against extractive industries - issue of the asian labour update

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