(Dec 9): Indonesia will slap hefty fines on miners that have illegally operated beyond their forest permits, the latest move by Indonesia President Prabowo Subianto as he cracks down on the sector.
Companies will be penalised between 354 million and 6.5 billion rupiah for every hectare they have deemed to have breached their permit by, according to an Energy and Mineral Resources Ministry regulation issued on Dec 1. The overall fine will depend on the number of years they operated outside of their permit area as well as the commodity produced, with nickel miners facing the steepest penalties.
The fines are the latest step in the Prabowo administration’s measures against alleged illegal activity in Indonesia’s sprawling commodities sector, which has sent ripples through the industry. His government has already seized parts of several mines and millions of hectares of palm oil plantations while also launching a corruption probe into the state energy company PT Pertamina.
Those that could face hefty fines include PT Weda Bay Nickel, the world’s biggest nickel mine which is jointly owned by Tsingshan Holding Group Co, Eramet SA and PT Aneka Tambang. The country’s forestry task force took over more than 148ha of the operation in September due to an alleged breach of its permit.
The harsher enforcement is a drastic change from the previous administration led by Joko Widodo, who oversaw a massive expansion of nickel production in Southeast Asia’s largest economy. Foreign smelting firms were lured by tax incentives and simplified land acquisition processes, as well as a ban on the export of raw nickel ore.
Illegal and poorly regulated mining is a major problem in Indonesia, causing disproportionate environmental damage and depriving the government of tax revenue. Illicit mines may be causing 300 trillion rupiah in losses to the state, Prabowo said in August, without specifying over what time period.
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