Funds Now, Reclamation Later

Companies in South Kalimantan have been able to withdraw all of their land reclamation funds, without restoring any of the affected land around their former mines. It is possible that laws have been broken in the process.

Location of a former PT Kintap Bukit Mulia coal mine in Bukit Mulia Village, Kintap District, Tanah Lau Regency, South Kalimantan. Oil palm trees have not been planted on this area of approximately two hectares. This photograph was taken in October 2018. (Photo: Diananta P. Sumedi/Tempo)

Two-meter high oil palm trees can be seen on a 30-hectare expanse of land. This swathe of trees, which have begun bearing fruit, grow in Bukit Mulia Village, Kintap District, Laut Regency, South Kalimantan. This land used to be the site of a coal mine belonging to PT Kintap Bukit Mulia.

Last October, Tempo went to see the location of that former PT Kintap mine. Among those recently planted trees there was still a landfill area of about one hectare where nothing has been planted.

PT Kintap obtained a production Mining Business License (IUP) for 84 hectares in the Kintap District in 2010. A year later, this company began mining coal there. Five years in, PT Kintap reduced its coal mining activity to a 34-hectare area.

Budi Aprianus, a former Head of Mining Engineering at PT Kintap, said that the company only mined half of the allowed production area. The company decided to discontinue coal production on the entire IUP area for a number of reasons, one of them being high production costs. “We could only excavate coal on about 34 hectares,” said Budi in Palangkaraya, last November.

After deciding to halt its mining activity, PT Kintap withdrew Rp1,092,133,239 of land reclamation security deposits in 2016. This company put those land reclamation security deposits in Bank Mandiri in 2010, as two time deposits. “We have withdrawn all of our land reclamation security deposits,” said Budi.

Even though PT Kintap has reclaimed all of their land reclamation security deposit funds, there is still a former mine site measuring approximately one hectare where the land has not been restored. According to Article 53 Clause (2) letter c of Regulation of the Minister of Energy And Mineral Resources Number 07 of 2014 Regarding the Implementation of Land Reclamation and Post-Mining Activity for Mining Business Activity and Minerals, land reclamation security deposit funds can only be fully withdrawn after land reclamation work on the mining area is complete.

According to this Regulation of the Minister, a company can withdraw its land reclamation security deposit after obtaining government approval, in this case from the South Kalimantan Energy and Mineral Resources Office. Government Energy offices must first check the condition of the site before giving their approval. PT Kintap has not fully restored the land at its former mine, yet they have been able to withdraw their entire land reclamation security deposit.

Budi Aprianus disagreed that there is an area of the former PT Kintap mine in Bukit Mulia which has not been restored. He insists that the company has carried out land reclamation on the entire area by planting oil palm trees.

Oil palm tree seedlings growing in the former coal mine area of PT Kintap Bukit Mulia in Bukit Mulia Village, Kintap District, Tanah Laut Regency, South Kalimantan. The older oil palm trees growing around the area belong to PT Sinar Mas Agro Resources and Technology (SMART). This photograph was taken in October 2018.(Photo: Diananta P. Sumedi/Tempo)

PT Kintap’s land reclamation process was aided by PT Sinar Mas Agro Resources and Technology (SMART), a Sinar Mas group company. PT SMART helped out because the coal mining area belonging to PT Kintap is located within their oil palm plantation area. PT SMART already had a license for an oil palm plantation at that location.

PT Kintap later obtained a license at the same location, on an area smaller than that held by PT SMART. Despite this overlap, PT Kintap was still able to mine at that location because they had different types of business licenses. “The oil palm seedlings were provided by PT SMART and the land reclamation funds were PT Kintap Bukit Mulia’s responsibility,” said Budi.

Linson, Administrative Head of PT SMART for Pelaihari in Bukit Mulia Village, was reluctant to comment on this matter. “I don’t wish to comment on this,” he said. Gunawan Harjito, Head of Minerals and Coal at the South Kalimantan Energy and Mineral Resources office, said that PT Kintap was able to withdraw its land reclamation security deposit because they have already reclamated the land around their former mine. “They have withdrawn their entire land reclamation security deposit because they have already carried out the land reclamation work,” he said.

I

Supreme Audit Agency Findings

In the Tanah Laut Regency, two other companies have withdrawn their land reclamation security deposits. They are: PT Energi Bumi Jaya Sentosa and CV Era Niaga Mandiri. PT Energi Bumi Jaya Sentosa had made a Rp315 million security deposit and PT Era Niaga Mandiri had made a Rp665,282,226 deposit. The two withdrew their land reclamation security deposits three years ago.

The information regarding the withdrawal of these land reclamation funds was backed up by an audit conducted by the Supreme Audit Agency (BPK) of South Kalimantan. Their audit found that PT Energi Bumi Jaya Sentosa withdrew its land reclamation security deposit in 2017. However, this company is not listed in the records of the release of land reclamation security deposits and post-mining funds from the Tanah Laut Regency to the South Kalimantan Provincial Government in 2014.

Those three companies are among the 453 holders of Mining Business Licenses (IUP) in South Kalimantan which have deposited land reclamation security funds in banks. According to data from the South Kalimantan Office of Energy and Mineral Resources, the total amount of land reclamation security deposit funds kept in banks from those 453 IUP holders as of September 2018 comes to Rp347,739,842,686 and US$2.243,921.

Fifiana Fitri Amalia, Head of Accounting for the Regional Asset and Financial Management Agency of the Tanah Laut Regency, said that PT Energi Bumi Jaya Sentosa has withdrawn its land reclamation security deposit and post-mining funds. It was able to do so because they canceled to mine coal in the Takisung District, Tanah Laut –PT Energi Bumi Jaya Sentosa’s mining area. “They did not mine coal,” said Fifiana.

Fifiana does not know why PT Energi Bumi Jaya Sentosa did not proceed to mine in the Takisung District. She said such a matter was under the authority of the then Tanah Laut Office of Energy and Mineral Resources. That office has since been eliminated and was merged into the Office of Energy and Mineral Resources at the province level.

A check made by the Indonesian Forum for the Environment (Walhi) in South Kalimantan through satellite imaging shows that the location of PT Energi Bumi Jaya Sentosa’s mine still appears to be green. “It does look as if a mine has not been cleared at that company’s location,” said Rizqi Hidayat, Data Manager for Walhi of South Kalimantan.

Fifiana also said that PT Energi Bumi Jaya Sentosa was not added to the records of the turning over of land reclamation security deposits to the South Kalimantan Provincial Government. The consideration was that the BPK adjusted its finding by stating that PT Energi Bumi Jaya Sentosa had already withdrawn its land reclamation security deposit before the authority for managing land reclamation security deposits shifted from the regency to the province in 2014.

Fifiana’s explanation differs from that given by Gunawan Harjito, Head of Minerals and Coal of the South Kalimantan Office of Energy and Mineral Resources. Gunawan said that only one company has withdrawn its land reclamation security deposit, namely PT Kintap Bukit Mulia. He reasoned that, except for PT Kintap, the land reclamation fund withdrawal process took place before 2014, when the management of land reclamation security deposits and post-mining funds were still being handled by regency and city governments. “As far as we knew, PT Era Niaga Mandiri never withdrew their land reclamation security deposit,” said Gunawan.

A crater at the former coal mine of PT Era Niaga Mandiri in Riam Adungan Village, Kintap District, Tanah Lalut Regency, South Kalimantan. This company mined on about two hectares before discontinuing its mining work. This photograph was taken in October 2018.(Photo: Diananta P. Sumedi)

Gunawan’s explanation does not match the facts in the field. Tempo has seen a document for the withdrawal of a land reclamation security deposit belonging to PT Era Niaga Mandiri. The company withdrew those funds on August 16, 2018. At that time, management of land reclamation security deposits and post-mining funds had already shifted to the provincial government.

In the record for the withdrawal, PT Era Niaga Mandiri withdrew its land reclamation security deposit and post-mining funds, and placed them in a time deposit in the Banjarbaru Branch of Bank BNI. The company had initially placed its land reclamation security deposit in Bank Mandiri’s branch office in Pelaihari, Tanah Laut, South Kalimantan.

However, the record of the receipt of those funds does not mention the amount of the land reclamation security deposit and post-mining funds withdrawn or redeposited by the company. According to Article 12 Clause (3) letter e of Regulation of the Minister of Energy and Mineral Resources Number 07 of 2014 Regarding the Implementation of Land Reclamation and Post-Mining Activity for Mining Business Activity and Minerals, the land reclamation plan for the mining production phase must include a land reclamation activity budget plan.

Fifiana verified that document. She said that she does not know the amount of the land reclamation security deposit and post-mining funds which were redeposited by PT Era Niaga Mandiri. “Now the matter of land reclamation security deposits and post-mining funds is handled by the province. We no longer know anything about it,” she said.

PT Era Niaga Mandiri also withdrew a land reclamation security deposit of Rp665,282,226 in 2017, consisting of two time deposits in Bank BNI. The company then withdrew their Rp100 million post-mining security deposit from Bank BNI in early 2018. Those funds were for PT Era Niaga Mandiri’s mining activity in Riam Adungan Village, Kintap, Tanah Laut. The funds were withdrawn and redeposited in the same bank.

Darman, President Director of PT Era Niaga Mandiri, could not be reached for confirmation. His cellular phone number was not active. According to the information which was obtained, this company is located in the Rahayu Complex on Pramuka Street in Banjarmasin. Tempo was unable to find PT Era Niaga Mandiri’s office at that address.

Zainal, a field supervisor for PT Era Niaga Mandiri, knew nothing about this matter. He handles the company’s mining activity in the field. “I don’t know about that,” he said.

Even though data on the withdrawal of land reclamation security deposits differs between the Regional Asset and Financial Management Agency of the Tanah Laut Regency and the South Kalimantan Office of Energy and Mineral Resources, both recognized that the number of land reclamation security deposits being withdrawn is still very small. According to Gunawan Harjito, this is because companies are still mining.

It is suspected that companies are not withdrawing their land reclamation security deposits because land reclamation costs are much higher than the security deposits they placed in government banks. Ahmad Saini, an activist with the Mining Advocacy Network (JATAM), a non-government institution which operates in the mining field, suspects that companies intentionally do not withdraw their land reclamation security deposits even though they have matured, because the cost of restoring land excavated by their mining activity is much greater than the amount of the security deposits they have in the banks. “By having made those land reclamation security deposits, companies feel the matter of land reclamation has been settled,” said Ahmad, on Monday, February 25. This means, he said, companies do not feel a need to do land reclamation work because their security deposits can be used by the government to restore mine excavation areas.

According to Regulation of the Minister of Energy and Mineral Resources Number 7 of 2014 Regarding the Implementation of Land Reclamation and Post-Mining Activity for Mining Business Activity and Minerals, the mining period lasts up to five years. After that, the company is obligated to restore the excavated land according to the plan which was submitted to the government before they began production. After the land reclamation work is complete, the company can withdraw its land reclamation security deposit and redeposit it as a guarantee for its next mining plan.

According to Ahmad, it does appear that companies want to leave the matter of land reclamation work on excavated land to the government. According to regulations, if a company does not carry out land reclamation work on its former mining areas, the government can use their land reclamation security deposit to restore the condition of the land. However, according to Jatam’s records, the government tends to neglect open mines, which has resulted in deaths.

According to 2018 data from JATAM, of about a thousand mining companies in South Kalimantan, 813 have left behind holes from mining excavation, spread across eight regencies. JATAM obtained this data from reports in the field and by observing the licensed mining areas. Each year JATAM monitors the growth of excavation done by mining companies around Indonesia, including in South Kalimantan. Their observations found that the excavated areas left behind by mining activity has greatly increased over the past five years. “The facts show that land reclamation activity on former mines has not been maximal,” said Ahmad.

Riyadi, Head of the Tanah Laut Office of Public Housing, Residential Areas and the Environment; Rahmat Prapto Udoyo, Head of the Tanah Bumbu Office for the Environment; and Ikhlas, Head of the South Kalimantan Office for the Environment, said that they do not have data on the location of excavated mining land in their area. However, they did not deny that many holes remain at mines where companies have not carried out land reclamation work. “Every quarter we monitor the environment in mining areas, but do not make a record of the locations of holes excavated by mining companies,” said Rahmat, last November.

II

Flowing to Personal Accounts

Some peculiarities were found regarding these land reclamation security deposits. One coal mining business owner in South Kalimantan said that companies do not always jointly place their land reclamation security deposits in banks together with the government. According to Regulation of the Minister of Energy and Mineral Resources Number 07 of 2014, land reclamation security deposits are to be placed in a government bank in the name of both the company and the government.

This Company Y admitted that they have ever placed a land reclamation security deposit in the personal bank account of the head of regency mining office in 2014. At that time, Company Y sent a Rp1 billion security deposit upon the request of the head of that government office. Even though the security deposit was deposited to a government head’s private bank account, Company Y still received proof of making a land reclamation security deposit. “I have a deposit slip,” they said.

Proof of a land reclamation security deposit made by PT Borneo Orbit Sukses Sejati, a coal mining company in Kotabaru, South Kalimantan.(Photo: Diananta P. Sumedi/Tempo)

Sometimes companies make land reclamation security deposits for a very short time frame. An example of this can be seen with a security deposit made by PT Borneo Orbit Sukses Sejati, a coal mining company in Kotabaru, South Kalimantan. Last year, PT Borneo placed a Rp500 million land reclamation security deposit as a time deposit in Bank Kalimantan Selatan.

This bank account was jointly in the name of PT Borneo Orbit and the Head of the South Kalimantan Office of Energy and Human Resources. The deposit slip shows that PT Borneo Orbit made a land reclamation security deposit on July 25, 2018, with a one-month maturity period. This security deposit matured on August 25, 2018. The slip notes a 4.25 percent interest rate on that time deposit.

Rahmida, President Director of Borneo Orbit Sukses Sejati, admitted that was their deposit slip for a land reclamation security deposit. However, she was reluctant to comment on the matter. “I don’t want to comment about that,” she said, in October of last year.