“Illegal Mining in Bintan Portrays Disorder in the Governance of Mining Permits in Riau Islands” by Deasy Simandjuntak

2017/64, 27 October 2017

Since the beginning of October 2017, local residents of Sekuning, Bintan, Riau Islands (Kepri) Province have been disturbed by illegal tin mining activities over a 250 hectare area. The company involved, PT. Adikarya, has been conducting mining operations while only possessing an exploration (i.e. research) permit. In addition, the provincial office of Energy and Mineral Resources (Distamben) has not issued a permit for these activities.

Mining comprises 16% of Kepri’s Regional Gross Domestic Product, and is the third largest contributor to the province’s economy after manufacturing and construction. Clarity in the procedure of handling mining permits is therefore crucial for investors. This case portrays the current disorder in the governance of mining permits in Kepri, and raises broader questions about local government capacity.

According to regulations, key mining licenses (Izin Usaha Pertambangan) consist of exploration and production operation/exploitation permits. Exploration refers to research activities preceding the mining, including geological, geochemical and geophysical analysis, while exploitation is the actual mining. Officially, companies must first participate in an auction to secure the right to specific mining areas (Wilayah Izin Usaha Pertambangan). Upon winning, they may apply for licenses directly at the provincial government (for domestic companies), or the Ministry of Energy and Mineral Resources (ESDM) (for foreign companies), or through the One-Door Integrated Services (PTSP).

The confusion at Sekuning is due to several events. First, the Kepri government had actually halted all mining operations; second, new regulations cause uncertainty in permit issuance; third, areas for economic activities, including mining, are regulated by Kepri’s new spatial plan.

Kepri had this year ceased all mining operations following the ESDM’s 2016 decision to revoke hundreds of mining permits throughout Indonesia – 45 of which were in Kepri – for not fulfilling the “clean and clear” requirements (i.e. failing to submit exploration reports, obtain environmental documents and show evidence of payment of debt and royalty). With this official termination, there should be no mining activities in Kepri. There is no certainty whether the licenses would be renewed, and former mines are now left untended and could pose an environmental hazard.

Indonesia’s new regional governments’ Law No. 23/2014 transfers the authority of issuing permits from the district to the provincial and national level. Under this Law, and the subsequent ESDM Minister’s Regulation No. 34/2017, the province, with the recommendation of Distamben and through the PTSP, is authorized to issue mining licenses within the provincial territory until 12 miles off-shore. The problem with Sekuning is that the PTSP has issued an exploration permit without Distamben’s recommendation. Meanwhile, Kepri’s 2016 official spatial plan designates Sekuning for residential and agricultural use, not mining. It is thus puzzling how PTSP could issue an exploration permit for this location.

Not only limited to Kepri, this case illustrates the recurring problem in Indonesia’s “recentralization”, where authorities have been legally transferred from districts to provinces or national level, yet implementation is hindered by lack of clarity and coordination between offices.

Deasy Simandjuntak is Visiting Fellow at ISEAS – Yusof Ishak Institute.

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS – Yusof Ishak Institute.  No part of this publication may be reproduced in any form without permission.