Australian mining companies displace thousands of Indonesians

An Australian company has a significant but little-known role in the creation of the world’s largest mud volcano, located in the densely populated Sidoarjo district of Indonesia’s East Java province. The eruption began at 5am on May 28, 2006, when the mining company Lapindo Brantas took the decision to drill a bore hole to a depth of 2.8 kilometres without a protective steel casing. The subsequent eruption killed 13 people and has displaced more than 40,000 through the destruction of 13 villages.

Lapindo is a joint venture between Santos, Australia’s third largest oil and gas company, a company controlled by Aburizal Bakrie, one of Indonesia’s richest men and the chairperson of Golkar, the political party of former Indonesian dictator Suharto, and another Indonesian company. The Sydney Morning Herald on October 13 reported that Lapindo is owned by interests controlled by Aburizal Bakrie without mentioning Santos’ 18% stake.

Lapindo has tried to deny responsibility by blaming an earthquake in Yogyakarta, central Java, for the mud volcano. However a new report by an international team of scientists from Indonesia, the UK and Australia conclusively demonstrates that the company caused the disaster. “We have analysed the earthquake, which occurred two days previously 250 km away, which has been another suggested trigger for the mud flow,” said Dr Mark Tingay from Adelaide University’s School of Earth Sciences. The “earthquake was in order of magnitude 10 times too small to have had any effect on that region … Whereas the drilling nearby had a number of drilling accidents and a major flow of water out of the well just a day and a half before [the volcano] started to erupt and we can now see there’s clear evidence linking the well to the mud flow.”

Professor Richard Davies from the University of Durham believes the area covered by the mud volcano is “permanently damaged”, telling Radio Australia on February 18: “The mud volcano could carry on for another decade, and then even when the flow has stopped … gases will probably keep the mud volcano alive for hundreds, perhaps thousands of years”. So far the mud has inundated schools, factories, a national toll road and the state-owned Sidoarjo-Pasuruan railway line and continues to spread. Davies also believes the mud flow area could subside by 146 metres over the next 10 years.

The Indonesian Supreme Court in September 2009 acquitted Lapindo, finding insufficient evidence to link its drilling to the mud flow. Despite this, Lapindo is obliged by two presidential decrees to pay compensation to 40,000 people displaced from the immediate disaster zone, but it has so far stalled on paying most of the compensation. The Supreme Court ruling will be contested. An unpublished draft report by the United Nations Environment Program (UNEP) estimates the total economic losses from the mud flow so far at US$3.4 billion. Other estimates put the clean-up cost alone at over $4 billion.

Television Australia reported on December 11 that Santos was divesting its stake in Lapindo Brantas, having made only $22.5 million available for compensation, 0.67% of the draft UNEP estimate of economic losses and just 5% of the giant Australian corporation’s after-tax profit for 2009. Santos has international assets worth some $7.8 billion. It has recently expanded its mineral production in Indonesia, announcing in October the beginning of the Oyong phase two project to extract natural gas from the company’s 45% owned oil field located off the island of Madura, 70 kilometres from Surabaya, Indonesia’s second largest city.

The Australian company Indo Mines (formerly Kimberly Diamond) is displacing tens of thousands of farmers and fishers with its iron mine joint venture stretching along 22 kilometres of beach in Kulon Progo, a tsunami zone near Yogyakarta on the South Java Sea.

Thousands of farmers and their supporters have repeatedly made mass protests to the Yogyakarta parliament, the national parliament, the local mayor and provincial governor and the Australian embassy in Jakarta, which has denied that Indo Mines is an Australian company despite it being listed on the Australian stock exchange as Indo Mines Limited. Protesters are calling on the Indonesian government to nullify the joint venture company Jogja Magasa Iron’s contract of work.

While President Susilo Bambang Yudhoyono was celebrating his second inauguration in Jakarta on October 20, 28 trucks carrying 2000 coastal farmers besieged the office of the mayor of Kulon Progo to protest the planned iron sands mine, which they say will wreck coastal sand hills and vegetation, exposing tens of thousands of people to possible death by tsunami.

The last major tsunami on the south coast of Java, on July 17, 2006, killed more than 600 people. According to the NGO Mining Advocacy Network, “The extraction of iron puts the livelihoods of 123,601 local farmers and fishers at risk”.

The protesters refused the public consultation offered by the 70% Australian-owned company and rejected all plans to proceed with the mine, viewing the consultation as a strategy to aid the company’s plans. Indonesian police fired bullets and tear gas into the crowd, injuring 41 people, five seriously. Protesters took a petition to the Indonesian consulate in Melbourne on January 11 this year.

The Australian government remains silent about the victims of Australian corporate operations. Ignoring both the Sidoarjo and Kulon Progo cases, the Australian ambassador to Indonesia, Bill Farmer, in a media release promoting the Ozmine 2008 conference, claimed:

“Australian companies have delivered real benefits for the development of the mining sector in Indonesia, and have the potential to do much more, including in areas such as environmental sustainability”.