The province of Aceh in Sumatra is currently drawing up its spatial plan. In the current version, an area of 1.2 million hectares of forest would be converted to mining, logging and oil palm plantations. One of the driving forces behind this proposal appears to be a Canadian mining company, East Asia Minerals.
In May 2011, East Asia Minerals announced that it was buying 50% of Carbon Conservation, the Australian company that was developing the Ulu Masen REDD project. At the time, East Asia Minerals was clear about its motivations – getting the go-ahead for its mining projects in Aceh:
“Through the acquisition of a 50% equity interest in CC, the Company will develop a ‘green’ mining project which will use carbon and biodiversity offsets and the latest in environmentally friendly mining practices.”
Around that time, the Ulu Masen project more or less ground to a halt. A REDD project run by a company 50% owned by a mining company was a step to far for Aceh’s then-governor, Irwandi Yusuf, who was nick-named the “Green Governor”.
This week, East Asia Minerals put out a press release announcing that the Ministry of Forestry is “close to accepting a proposal to open 1.2 million hectares of forest in Aceh province for mining, logging, and palm oil production”. This is, incidentally, the same Ministry of Forestry that told the UN Forum on Forests last week that the country was committed to extending the two-year moratorium on conversion of primary forests and peatlands.
UPDATE – 21 April 2013: An on-line petition has been set up, which currently has more than 18,000 signatures, asking Zaini Abdullah, the Govenor of Aceh, to reject the plan to convert 1.2 million hectares of Aceh’s forests and to review the spatial plan. Sign the petition here, or click on the image below:
Edward Rochette, CEO of East Asia Minerals, said,
“We are very pleased with the recent news from the Indonesian Government. These new developments are good progress and positive news for mineral extraction in the area. This will help us realize the full value of our Miwah gold project in Aceh with a NI 43-101 compliant resource of 3.1 million ounces of gold.”
No wonder he’s pleased. His company seems to have taken on a key role in developing Aceh’s spatial plan – what should be a government policy. In its press release, East Asia Minerals states,
The company is working closely with government officials in the country and have company representatives on the ground in Aceh to obtain reclassification of the forestry zone from “protected forest” to “production forest.”
The area of forest at stake to East Asia Mineral’s mining projects is potentially very large, as this map from a 2011 presentation by East Asia Mineral illustrates:
To promote its interests in Aceh, East Asia Minerals has hired Fadel Muhammad, former Deputy Chairman of the Golkar political party. He was also Minister for Maritime Affairs and Fisheries and before that Governor of Gorontalo Province in Sulawesi. East Asia Minerals CEO Rochette says,
“In his advisory role Bapak Dr. Fadel will provide invaluable assistance to enable the projects in Indonesia to move forward in a timely and sustainable manner. We are very pleased to have Bapak Fadel advising the Company and look forward to working with him in this new role.”
Fadel has been accused of misusing US$567,000 from the 2001 Gorontalo provincial budget. The corruption case was closed in 2010 because of a lack of evidence, but opened again in May 2012. Since being named as a suspect in 2012, Fadel has been questioned twice by the Gorontalo Prosecutor’s Office, most recently last week. Fadel maintains his innocence. “It’s an old case that is over. I’m not afraid because I was not involved in corruption during my time at Gorontalo,” he told the Jakarta Post.
As Deputy Chairman of the Golkar Party, Fadel visited Aceh in April 2012, to support the current governor Zaini Abdullah during his election campaign.
None of East Asia Mineral’s lobbying has so far had much affect on its share price. The company’s share price started to fall from around US$8 at the end of 2010, and has been worth less than US$1 since the beginning of 2012. It currently stands at US$0.15. When East Asia Minerals bought 50% of Carbon Conservation, it paid US$500,000 plus 2.5 million shares. At the time the deal was announced (May 2011), East Asia Minerals share price was US$4. So the value of the shares paid to Carbon Conservation has fallen from US$10 million down to US$375,000:
East Asia Minerals reports that Fadelmay be granted stock options of the company, in future. Which gives Fadel an incentive to line his own pockets (assuming the share price would go up if East Asia Minerals gets permission to trash Aceh’s forests) but very little incentive to listen to the views of the people of Aceh (or anywhere else for that matter). Business as usual, then.
Dedi Ratih of WALHI (Friends of The Earth Indonesia) comments,
“This spatial plan is being developed via a highly ‘unhealthy’ process, in which foreign corporations are intervening and driving local policy. Reclassification of these forests is clearly not in the best interests of Aceh’s local communities, but instead in the interests of massive natural resources exploitation. This plan should be rejected immediately.”