Business Times 5 Aug 10;
Indonesia has drafted rules for a 2-year ban on forest clearing permits
(JAKARTA) Several coal and mining projects in Indonesia with a combined value of US$14 billion may face delays as a forest moratorium could make it harder for them to obtain forestry land-use permits, mining associations said yesterday.
Newmont Mining Corp, BHP Billiton, and Freeport McMoRan Copper & Gold Inc, are among the companies whose projects in Indonesia may be affected, officials said.
Newmont's Indonesia unit has plans to develop the Elang copper reserve in Sumbawa island, while BHP Billiton has the Maruwai coal project in Kalimantan, and Freeport operates the giant Grasberg copper mine in Papua.
Indonesia has drafted rules for a two-year ban on permits for forest clearing, after signing a US$1 billion climate aid deal with Norway aimed at avoiding greenhouse gas emissions from deforestation.
One of the clauses in the draft states that permits to convert peatland and natural forests that have already been issued will continue to be valid.
However, another section states that 'there will be an assessment of the economic impact and revocation of permission to convert peatland and cessation of issuing new permits'.
The moratorium, if applied, would make it harder for miners to obtain forest land-use permits and they may risk having their existing forest permits revoked, said Priyo Pribadi Soemarno, executive director of the Indonesia Mining Association.
'We support the moratorium but we see an attempt to review permits that have been awarded and this is negative for investment,' Mr Soemarno told reporters on the sidelines of a mining seminar, adding that there are more than eight mining projects with a combined value of US$14 billion which may face delays.
'This means existing projects will face obstacles to proceed. Investment that has been planned may be delayed,' he said.
'Freeport also may face problem as it still needs to process its forestry permit to develop Grasberg,' he said.
Freeport owns 90.64 per cent of PT Freeport Indonesia, which operates the huge Grasberg copper and gold mine in Papua province, while the Indonesian government owns the remainder.
Indonesia's forestry ministry in February said it has asked Freeport to submit a request to use land in a protected forest area.
President Susilo Bambang Yudhoyono has vowed to cut greenhouse gas emissions by as much as 41 per cent from business as usual levels by 2020.
The vast majority of Indonesia's emissions are caused by the clearing of carbon-rich natural and peatland forests so curbing deforestation is seen as a quick win.
Daniel Murdiyarso, senior scientist at the West Java-based Center for International Forestry Research said the moratorium on the issue of new permits to clear natural and peatland forests could affect many production forests.
'So if your mining concession is intersecting with production forest then it's very likely they will be affected. Most of the mining sectors, especially coal, will be affected.'
Indonesia has said existing permits would be honoured but Mr Murdiyarso said it was unclear if the exemption applied if the firms planned to clear the forest after the moratorium comes into effect in January 2011.
There was a risk that the delayed start date could act as a perverse incentive to clear before 2011.
'It could be 'hurry up, hurry up!'. It's hard to stop people doing that while the chance is still there,' he said, adding that industry may pressure the government to be more flexible about the new ban. -- Reuters
