ASIAN LABOUR UPDATE - 80
In a very real sense, the extractive industries represent the earliest phase of
global factory, the beginning of the basic production circuit, and the foundation
of the web of global production networks that form todays global economy. The
extractive industries, the holes maker in the ground as Peter Dicken put it
correctly, become strategic sector that supply raw materials to many other
industries. There is almost none of modern production disconnects from the
extractive industries for raw materials.
The foundation of the extractive industries is a notion of natural resources. In
fact, natural resources are not naturally resources as it is both a socio-cultural and
a political construction. The industry has been a political project that involved
aggressive intervention of both transnational corporations and national
governments by imposing vast range of regulation that serve their interest. There
is no doubt that corporations and states exploit natural resources for capital
accumulation.
Due to the operation of extractive industries, there have been massive
environmental destructions, coercive displacement and dispossession of the
indigenous people from their habitat. Many of these people have lost their lands,
livelihood, and even their lives. Their habitat has been extinguished where their
lives rely heavily on it. And there are more people who are in the verge of being
displaced and dispossessed due to the industries aggressive exploitation.
The recent case of London-based global metals and mining giant, Vedanta
In this issue:
No Economic and Job Growth in Mining Industry in the Philippines, Only Plunder Need to Run By Daisy Arago
4
Mining Sector and its Future in India By Ramamurthy Sreedhar
13
The Case of Freeport Mc-Morran Copper & Gold Inc in Indonesias Extractive Industry By Abu Mufakhir
19
Trans-National Corporations in Extractive Industry and the Struggle Against them: The Case of Malaysia By Charles Hector
25
Australian Mining Companies' Resistance to Collective Bargaining By Michael Walker
31
Report Highlights Crisis of Occupational Safety and Health in Asia By Omana George
35
Luviana Ariyanti: The Struggle of a Female Journalist for Labour Rights in Indonesia By Yohana Sudarsono
37
Regional Round-up 41
Resource/Review 48
PUBLISHED BY ASIA MONITOR RESOURCE CENTRE, HONG KONG Issue 80 January 2012 - April 2012
ASIAN LABOUR UPDATEASIAN LABOUR UPDATE
Against Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive IndustriesAgainst Extractive Industries
Continue to page 3
www.amrc.org.hk
2 ASIA MONITOR RESOURCE CENTRE
ISSN 1815-9389
Issue Number 80
January - April 2012
Copyright 2012 Asian Labour Update; all rights reserved
EDITORIAL TEAM
Sanjiv Pandita, Omana George, Wulandari,
Sally Choi, Fahmi Panimbang
ASIAN LABOUR UPDATE (ALU) is a quarterly news bulletin on labour issues in southern and eastern Asia. It is prepared and published by the Asia Monitor Resource Centre Ltd (AMRC), a non-prot, pro-labour, non-governmental organization based in Hong Kong.
Articles and information in ALU may be reproduced in non-prot publications with clear citations, credit to author/s and ALU. For online reprints, please notify us of the relevant URL; for printed matter, please send one hard copy to the address below.
ALU articles do not necessarily reect views and positions of AMRC.
Opinions to the editor are encouraged. Asian labour groups and NGOs may ask for complimentary subscriptions.
The Editor
Asia Monitor Resource Centre
Flat 7, 9/F, Block A
Fuk Keung Industrial Building
66-68 Tong Mi Road Kowloon, Hong Kong
Tel: (852) 2332-1346
Fax: (852) 2385-5319 Email: [email protected]
URL: http://www.amrc.org.hk
Photo cover by CTUHR, Philippines.
TMC Nickel strip mining, the place used to be a
mountain beside the bay ve years ago, today, it is
reduced to a smoldering plain
A S I A N L A B O U R
UPDATE
Contributors & Editorial Board
Daisy Arago is Executive Director, Center for Trade
Union and Human Rights (CTUHR), Quezon city,
Philippines. Email: [email protected].
www.ctuhr.org
Ramamurthi Sreedhar, is chairperson of mines, min-
erals & PEOPLE, India. Email: [email protected]
Abu Mufakhir is researcher with Sedane Labour
Resource Center (Lembaga Informasi Perburuhan
Sedane, LIPS), Indonesia. Email:
Charles Hector is human right activist, based in Ma-
laysia. Email: [email protected]
Michael Walker is a union ocial in Sydney, Austral-
ia. Email: [email protected]
Yohana Sudarsono is an activist with Independent
Educator Union (INERU) Indonesia - Aliated to
Federasi Serikat Pekerja Kerakyatan Karawang - Mem-
ber of KSN (National Union Confederation) Indone-
sia. Email: [email protected], yosudar-
The Research Institute for Alternative Workers
Movements (RIAWM), South Korea (http://
www.pssp.org)
Noel Colina, Executive Director at Institute for Occu-
pational Health and Safety Development (IOHSAD),
Philippines
Sedane Labor Resource Center (Lembaga Informasi
Perburuhan Sedane, LIPS), Indonesia
Amirul Haque Amin, President of National Garment
Workers Federation (NGWF)
ASIAN LABOUR UPDATE - 80 3
Resources, shows that many of corporations in
the industries have been the notorious examples
in violating human rights, indigenous rights and
environmental laws from the beginning of their
operation. Mining companies are vigorously anti-
union in outlook and have a long history of
victimising, sacking union activist, and even killing
the people.
Dedicated for those who have been the victims of
this development, the current issue of Asian
Labour Update presents the picture of extractive
industries in Philippines, India, Indonesia,
Malaysia and Australia. The issue is aimed to
uncover the very ugly face of the extractive
industries. Against the rhetoric of the industries
contribution to the economic growth, the cases
show the complete opposite. For example,
although the Philippines gold reserves amounted
to at least 16.873 billion US dollars or about 76 per
cent of the countrys GDP in 2011 which
according to Philippines National Statistical
Coordination Board is sucient to completely
eradicate poverty in the country Philippines
remains one of the poorest nations in the region.
As Arago describes on the Philippines case in her
article, one of the major push factors in poverty
increase in the country is the massive
displacement of shing and farming communities
and subsequent loss of livelihood due to large-
scale mining operations. It is clearly not the case
that mining operation spurs the growth for the
people. On the contrary, it has been impacting
social life and creating huge environmental
catastrophes.
In India, mining sector has a low contribution to
the economy as GDP from the sector has never
exceeded ve per cent even after liberalisation.
Villages in the mining regions, as Ramamurthi
explains in his article, are getting devoid of
drinking water due to increased competitive use
of water by the industry, which huge quantum of
water for 300 million populations is being gulped
by the mining industries. Besides, forty-two per
cent of households in villages in India live without
electricity whereas the industry is consuming the
major share of electricity.
The case of Indonesia has also shown clear
example how the extractive industries have
brought about a huge impact on people and
environment. Today the only largest gold reserve
in the world is in the poorest province of
Indonesia in West Papua. Since 1960s, the gold
mining in West Papua has been virtually under
complete control of US-based TNCs, including
Freeport Mc-Morran Copper & Gold Inc. Since
1991, through the extension of second contract,
beneted with the area concession of 2.6 million
hectares, Freeport Mc-Morran Copper & Gold Inc.
had expelled people from their land. In his article,
Mufakhir describes that recently at least 60
people were killed and 148 people were
imprisoned for obstructing Indonesias mining
investment. The recent strike involving at least
12,000 workers took place from June 2011 till early
2012, the longest since Reformasi in 1998. During
the strike there were at least seven Freeport
workers died, not to include two victims from
traditional mining area.
In Malaysia, Hector exposes the issue of the
Australian TNC, Lynas Corporation Limited. He
describes that Lynas Corporation decided to ship
rare earths ore from its mine in Mount Weld to
Malaysia, where it was to be processed into highly
sought after rare earths metals at its facility in
Gebeng Industrial Zone in Pahang. As a result,
medical examinations on children in the
processing area found that nearly 40 per cent of
them suered from lymph node diseases,
turbinate congestion and recurrent rhinitis. Seven
of the leukemia victims have since died.
Given this barbaric nature of corporation in the
extractive industries, it is important for the social
movements to resist against the extraction in any
way. Indigenous people, workers, and society in
general should have democratic control over their
lands, their own natural resources, and their
livelihood.
Editorial
4 ASIA MONITOR RESOURCE CENTRE
No Economic and Job Growth in Mining Industry in
the Philippines, Only Plunder Need to Run Daisy Arago
The Philippines has about $840 billion (about
P36.64 trillion at P43.62 per US dollar)-US$ 1 tril-
lion worth of mineral deposits
which include gold, copper, nickel, chromite,
manganese, silver and iron according to the US
Department of State estimate[1]. The country
ranks rst in the world with the largest iron ore
deposit, third in gold, fourth in copper, fth in
nickel and sixth in chromite deposits.[2]
The Philippine gold reserves alone can amount to
P7.36 trillion, (US$16.873 billion) or about 76 per-
cent of the countrys gross domestic product
(GDP) of P9.73 trillion in 2011. This amount ac-
cording National Statistical Coordination Board
(NSCB) is enough to completely eradicate pov-
erty in the country.[3] Perhaps, there are more,
but still undiscovered.
Whilst mining operations started several decades
ago and liberalized in 1995 by
virtue of the passage of the
Philippine Mining Act of 1995
(Republic Act 7942), this
wealth is still largely un-
tapped, Yet, despite what the
industry players call as failure
to maximize the potentials,
mining operations (from both
large scale and small scale
metallic and non-metallic min-
ing) already registered a Php
106.1 Billion (US$2,432.4M)
Gross Production Value at the
end of the Arroyo govern-
ment in 2009. [4]
It was no surprise therefore
that the Philippine Develop-
ment Plan (2011-2016) or the
so-called Social Contract that
the Aquino government formulated, the mining
industry was identied as among the key areas
where intensive promotion, industry develop-
ment and a more focused incentives package
will be pursued. This aimed to increase exports,
encourage foreign and domestic investments and
thus generate employment.[5] In embracing the
plan, the Department of Labor and Employment
(DOLE) placed the mining industry as the fth
expected employment generator, next to agri-
business, cyber-services, health and wellness,
hotel restaurant and tourism industries. Manufac-
turing sector which normally creates more jobs
was only placed at number eight in the key priori-
ty areas.[6]
Two years into the Aquino government, the ap-
proved Mining Production Sharing Agreement
(MPSA)[7] an agreement often granted to large
scale mining operations already rose from 275
MPSA in 2009 to 340 as at
March 31,2012. Fully opera-
tional metallic mining compa-
nies now stand at 30.[8] Min-
ing investments on the other
hand, reached $618.50 million
in 2011, though lower than
the governments $1.4 billion
target. This year (2012) the
government expects to raise
the mining investments to
$2.27 billion.[9]
Whilst these statistics glow
and could further fuel more
mining transnational corpora-
tions (TNCs) to rush to the
Philippines, the workers and
people that the Aquino gov-
ernment professed to have
The Philippine gold
reserves alone can
amount to P7.36 trillion,
(US$16.873 billion) or
about 76 percent of the
countrys GDP of P9.73
trillion in 2011. This
amount according
National Statistical
Coordination Board
(NSCB) is enough to
completely eradicate
poverty in the country
Feature
ASIAN LABOUR UPDATE - 80 5
social contract with and promised to get uplifted
by mining operations seemed to have forgotten.
In a country where more than 10 million able-
bodied people are either unemployed or under-
employed[10] and about 30 million experience
hunger, the nagging questions that needed to be
answered are: Has the increase in number of min-
ing companies and gross production value in min-
ing resulted in increase in jobs? Or has this result-
ed to the improvement in livelihood of communi-
ties where mining operations exist? Do mining
operations spur growth for majority of Filipino
people?
The answer to all questions is NO.
Employment too little, and contractual in nature
Contrary to what the govern-
ment wants to impress to
the public that increase in
mining operations would
result to increase in jobs, the
countrys mining industry
contributes too little in em-
ployment generation.
The NSCB revealed that min-
ing and quarrying industry
had the least contribution to
Philippine economic and em-
ployment growth in the peri-
od of 1998 to 2010.[11]
Data from the Mines and
Geosciences Bureau (MGB)
show that to date, the min-
ing operations only employ a
mere 0.6 percent or 210,000
workers in 2011. This gure is
not limited to mining alone, but includes quarry-
ing. The Center for Environment
Concerns noted that jobs generated from mining
are mostly from small scale mining operations and
not from mining TNCs.[12]
The recently concluded International Solidarity
Mission on Mining (ISMM) held from April 25-30,
2012[13] oers a more concrete picture of what
the Philippines extractive industry does to the
Filipino workers, people and the environment.
CARAGA region (Region XIII), considered as the
countrys mining capital and one of the areas cov-
ered by the ISMM, presents a paradox of growth
in mining operations. Mining operations account
to only 2.6% of employment in the region translat-
ed into 23,138 workers. MGB CARAGA Director
Mr. Alelo Ensomo admitted that not only this is
far too little, but the nature of jobs generated by
mining is mostly contractual and unskilled, i.e jobs
ranging from three months to nine months only.
[14]
An ocular visit at the nickel extraction or strip min-
ing operations sites of Sumitomo- Taganito Min-
ing Company (TMC), Zenshou Mining (Chinese
company) and Platinum Group Metals Corp
(PGMC) in Surigao del Norte,
tens of dust sweepers, load-
ers/haulers and handful ma-
chine operators are the only
visible workers, though TMC
reportedly has about 1000
workers. PGMC has a purchas-
ing agreement with the Aus-
tralian company-BHP Billiton,
one of the worlds biggest
mining company.
In Philsaga Mining Corpora-
tion (Philsaga) -- a subsidiary
of Australian based Medusa
Mining Limited in Agusan del
Sur, data gathered by ISMM
noted that there are only
about 700 regular or perma-
nent workers out of an esti-
mated 4,000 workforce. Phil-
saga is engaged in gold and
Employment Contribution of Mining and Quarrying
Year # Employed % to total
Employment
2007 149.000 0.4%
2008 158,000 0.5%
2009 169,000 0.5%
2010 197,000 0.5%
2011 210.000 0.6%
Source: MGB, Mar 2012
Has the increase in
number of mining
companies and gross
production value in
mining has resulted to
the improvement in
livelihood of communities
where mining operations
exist? Do mining
operations spur growth
for majority of Filipino
people?
The answer to all
questions is NO.
6 ASIA MONITOR RESOURCE CENTRE
silver extraction and has its own milling plant.
Together with Philex Gold Philippines Inc, its
MPSA covers 6,262 hectares of land in Agusan del
Sur and Surigao del Sur.
Even in other regions where gold mining started
much earlier than in CARAGA such as in Lepanto
Mining Corporation Benguet, Cordillera region,
jobs are not only decreasing in the last four years
but remaining employment is being contractual-
ized. From the total workforce of 1.700 regular
workers in 2003, it is now down to 600 regular
workers after more than a thousand workers
were dismissed since the 2007 strike. Subse-
quently, they were replaced by 800 contractual
workers, who are paid half the wage that regular
workers are receiving. They are also deprived of
any benets given to regular workers.
Not only does mining operations fail to generate
more jobs, it also fails to cut down on underem-
ployment. By the end of 2011 for instance, CARA-
GA posted one of the highest underemployment
in the country accounting for 26.6% or 1.9 million
workers next to Bicol region (Region 5)another
mining areaat 35.4%.[15]
Yet, by the nature of mining operations that exist
in the Philippines, which is, extractive and export
oriented in nature, the scant employment contri-
bution is hardly surprising. Mining TNCs that are
given every right to extract all mineral in areas
covered by their MPSAs export mineral ores to
other countries for processing. Mineral ores from
nickel mining operations for instance are export-
ed to South Korea, China or Japan for processing
as there is only one nickel processing plant in Phil-
ippines which is based in Palawan. Sumitomos
HPAL (nickel plant) is yet to start its full operation
next year. This is to say that in spite of the tre-
mendous wealth from mineral deposits that the
country has, the possibility for massive job gener-
ation is extremely limited as there is no industry
being developed nor skills and technology are
learned for jobs available, no matter how few
they are, are largely unskilled.
Wages are unjustly low and discriminatory
Every two days, Philsaga Mining Corp, reportedly
produces a 17-18kgs gold bar. [16] If the 2011 aver-
age world market price of gold per troy ounce
(US$ 1,570.25/0z)) is used, the companys produc-
tion every two days translates to a whooping US$
858,220.14 or Php 36.474 Million (at an exchange
rate of US$ 1=Php 42.50). In a months time, Phil-
Gate of Philsaga Mining Corp, Agusan del Sur (Photo:CTUHR)
ASIAN LABOUR UPDATE - 80 7
saga can get as big as US$12.873 million. This does
not include the silver production which the report
did not say.
Its workers however, have yet to benet from the
gold and silver mine. At the ISMM, some key in-
formants and Philsaga workers for example, of
whom 82% are contractuals are aghast upon learn-
ing of the huge wealth they produce for the com-
pany as they struggled hard to keep both ends
meet. Contractual workers are paid a measly
Php233/day (US$ 5.48), lower than the P241 pre-
scribed minimum wage in the region. Probation-
ary workers are paid slightly higher at Php279/
day.
Skilled workers also complained that their 30
years experience gained from other gold mill
plants have only earned them Php 349-Php369/
day ($8.21-$ 8.68) salary plus the mandated holi-
day and sick leaves. This is not commensurate to
our skills, the workers assigned to the milling
plant told the ISMM. Only a handful of skilled
workers such as the geologic mapper (doing ex-
ploration both surface and underground map-
ping) are paid Php 15,000 (US$352.94) per month
after working for more than two years as contrac-
tuals.
Residents in another town of Surigao del Sur, also
shared that workers at Marcventures Mining De-
velopment Corp (MMDC)- an Australian company
in Cantillan are paid even lower at Php230/day.
They are mostly recruited from other towns in-
stead of Cantillan presumably as pressure tactics
against the local government ocials who contin-
ually refuse to grant mining permit to MMDC and
oppose mining operations in their municipality.
In Lepanto Mining Consolidated Corp (Lepanto
Mining) in Benguet, wage discrimination against
contractual workers is sharper. Regular workers
for instance get a little more than Php 500 ($11.76)
a day, way above the Php255 ($6.00) minimum
wage in the region as a result of the unions col-
lective bargaining agreement. (CBA). In contrast,
contractual workers only receive Php 200 ($4.71)
per day.
The Philippines has about 500 existing wage lev-
els as a result of implementation of Republic Act
6727 or Wage Rationalization Act of 1989. There is
no denite criteria how wages are determined
except the governments broad classication of
regions, provinces and towns into urban, non-
Mamanwa tribe displaced by the military operations to pave way for the Taganito Mining exploration, Surigao del Norte (Photo: CTUHR)
8 ASIA MONITOR RESOURCE CENTRE
urban, agricultural areas. Agri-
cultural area is subdivided into
plantation and non-plantation,
which is further sub-classied
according to the number of
workers employed. The capac-
ity of industry to pay higher
wages is not factored in.
This explains the dierences in
wage levels receive by work-
ers in dierent companies or
even in the same company or
industry located in dierent
provinces or regions. Of course, the mining TNCs
can argue that they comply with the minimum
wage as prescribed by RA 6727 with respect to the
regular workers and that the law is to blame for
the low wages that Filipino workers get.. Even if
they comply, they can certainly pay more decent
wages to their workers considering the super
prots they generate from their operations.
RA 6727 has been severely criticized and various
progressive and militant unions and labor rights
organizations have in fact called for its repeal.
There are many reasons to scrap this law, Not only
this is ridiculous, as oil and commodity prices in
places outside Metro Manila are often higher,
there is simply no decent logic in the law. It is
highly divisive of the Filipino working class and
weakens its capacity to wage a struggle for across
the board national wage increases. The law legaliz-
es the exploitation of Filipino workers by TNCs
and their local partners by oering them cheap
labour outside of Metro Manila, such as in the cas-
es of Fee Trade Zones (FTZs) or
Special Economic Zones
(SEZs), mining and TNCs plan-
tations.
Violations of health and safety
standards persist.
Filipino mining workers are not
only exposed to exploitative
wages but also on various oc-
cupational risks.
In Lepanto Consolidated Min-
ing Corp - a gold mining com-
pany that has been existing for
70 years now in Benguet,
northern part of the Philip-
pines, violations of health and
safety standards. persist. The
company provides the workers
with Personal Protective
Equipment (PPE) such as skull
guard, lamp and boots, but not
enough to keep them safe. The
workers have to provide their
own mask, and to save, they
contend with cheaply priced
towel as alternative. This is no match to temper
the poisonous gas and chemicals that they are
forced to inhale while underground. Ventilation is
also poor and miners work in their undergarments
to shake o the heat. Workers accounts at the
ISMM note that many of their colleagues contract-
ed tuberculosis.
Apart from that, workers are prone to water-
borne diseases due to ooding in the mines. Many
workers they said got eczema from work.
Workers at Philsaga share similar experiences, but
with some twists. Regular workers are also provid-
ed with skull guard and boots for free, except that
most of them are in the administrative work, Casu-
als and contractual workers who dominate the
underground workers have to pay P500 each as
safety deposit, to be returned when their contract
or employment ends and in case of loss. Asked if
they have known any experience where the P500
was returned upon employment termination, and
they said none.
Mining Industry Contribution to the Economy
2009 2010 2011
Total Earnings by Mining Compa-
nies Php 144.4 B
$33.986 M
Contribution to GDP 0.80% 1.00% 1.00%
Contribution to Employment 0.50% 0.50% 0.60%
Total Exports of Minerals & Min-
eral Products $1,470 M $1,929 M $2,659 M
Total Exports of Non-Metallic
Mineral Products $156 M $162 M $177 M
Taxes, Fees and Royalties from
Mining P12,380.3 M P13,373.4 M P1,211.8 M
$291,302 $314.668.24 $ 28.512.94
Source: Mines & Geosiences Bureau
Data from the Mines
and Geosciences Bureau
(MGB) show that to
date, the mining
operations only employ
a mere 0.6 percent or
210,000 workers in
2011
ASIAN LABOUR UPDATE - 80 9
Independent unionism is either outrightly sup
pressed or halted through the use of yellow un
ion.
The countrys mining sector is largely non-
unionized that could be attributed to major fac-
tors: employment of temporary, exible or con-
tractual vis--vis the regular workers and suppres-
sive nature of labor relations. Lepanto Mining is
one the unionized companies, the union were
established in the 1980s-- that to a certain extent
able to weather the calculated union busting
measures. Violations of right to collective
bargaining, compounded by
series of illegal suspension,
dismissal of union ocers
forced the union to stage a
strike in 2007. The strike was
supported by the entire com-
munity and won. However,
more than 700 of its members
were dismissed, forced to
retire only to be replaced by
low-paid contractual workers.
The union at Lepanto Mining
is aliated with NAFLU-KMU.
[17]
Unionism at Philsaga mining reects a new but
traditional way of suppressing independent un-
ion. Last year, workers discontent over the pro-
longed contractual employment and low wage
prompted them to organize union. The manage-
ment learned of the initiative and to the workers
surprise, it endorsed and campaigned for PTGWO
TUCP (Philippine Transport and General Workers
Organizations). Without union election, PTGWO
was installed and a collective bargaining agree-
ment was signed in November last year. The
workers were never consulted of who they want
as ocers and whats in the CBA. In examining
the economic provisions of the CBA, it is apparent
that even the so-called benets provided for the
agreement are even lower than what the legal
standards prescribe.[18]
Where there are large scale mining operations
poverty rate is also high
From 2009-2010, foreign and domestic mining
corporations amassed a total earnings of
Php144.4 billion or US$ 33.986 Million. While they
raked in prots, the Philippine government only
got Php 13.373.4 million in taxes and royalties.
By virtue of RA 7942, the government can only
get 2% excise tax from mining operations, while it
is giving the Philippine land and water for whole-
sale exploitation. Thus, the increase in mining
companies revenue could hardly create a positive
impact on the economy.
In CARAGA region for example, where large scale
mining operations have inten-
sied in the last four years,
poverty incidence continually
increases. In 2009, it [poverty
incidence] was up to 39.6%
from 36.9% in 2006. In the
same year, 2009, two of its
provinces were included in the
countrys poorest provinces,
with per capita poverty
threshold at 43.%, next to
Zamboanga del Norte,[19]
host to Toronto Ventures
Inca Canadian gold mining
company
Apart from this measly income, one of the major
push factors in poverty increase is the massive
displacement of shing and farming communities
and subsequent loss of livelihood due to large-
scale mining operations. The destruction of land
and mountains had caused massive ooding in
areas, resulting to the decrease in rice and corn
production and halt in other economic activities
as roads became impassable. Residents narrated
that recent ash oods in Surigao ang Agusan
provinces that submerged several villages were
rst time, and the communities were not pre-
pared to deal with new situation. In addition, high
water siltation also deprives the sherfolks of
their source of income.
The MGB regional Director Ensomo also admitted
that the mining has not undercut the poverty in
the region, except that they cannot do much but
to encourage companies to engage in some social
responsibility activities such as building schools,
...one of the major push
factors in poverty
increase is the massive
displacement of fishing
and farming
communities and
subsequent loss of
livelihood due to large-
scale mining operations
10 ASIA MONITOR RESOURCE CENTRE
clinics etc. Whilst this may sound noble, this
amount to relinquishing government responsibili-
ties for education, health etc. to TNCs charity that
bodes ill to giving the young people a patriotic,
pro-people and pro-environment education. As
TNCs provide them the schools, orientation and
employment to teachers, they become beholden
and loyal to the company rather than to their
country.
Large scale ecological destruction
Mining Act of 1995 declares
that all mineral resources in
public or private lands, includ-
ing timber or forestlands as
dened in existing laws, shall
be open to mineral agree-
ments or nancial or technical
assistance agreement applica-
tions.
A mineral agreement shall
grant to the contractor the
exclusive right to conduct
mining operations and to ex-
tract all mineral resources
found in the contract area. Permit given to large
scale mining companies is 25 years and could be
extended to 50 years.[20]
Thus the laws implementation takes heavy toll on
the environment. The nickel strip mining in Suri-
gao del Norte for instance have destroyed not
only the i`ron mountains but have polluted the
water that for century have been the source of
livelihood in the area.
In areas, visited by the ISMM, residents testied
that ve years ago, the area
being stripped by TMC
(Taganito Mines) in Claver,
Surigao del Norte used to be a
mountain, but now it was a
at deserted land.
It is certain that if the manner
by which large scale mining
operations are conducted the
way it is done today, the
mountains of those provinces
will become at deserted
place, its surrounding bay pol-
luted up to several kilometers
Part of the human chain opposing mining in Surigao, 28 April 2012 (Photo: CTUHR)
The strike was
supported by the entire
community and won.
However, more than
700 of its members
were dismissed, forced
to retire only to be
replaced by low-paid
contractual workers
ASIAN LABOUR UPDATE - 80 11
of siltation in less than 10
years from now.
Struggle and resistance
Extractive large scale mining
operations are not happening
unopposed. Progressive envi-
ronment groups and some
local government ocials
continually called for the re-
peal of the Mining Act of
1995. Temporarily, they called
for a moratorium of large scale extractive mining
operations in the country until a clearer policy
and downstream industry is put in placed. The
powerful Catholic Church called for a total ban to
mining. The human chain led by the Church and
the local government in Cantillan, Surigao del
Norte proves that the community will not take
things sitting down.
The International Solidarity mission on Mining
(ISMM) also condemned the appalling condition
of mine workers and the massive destruction of
the environment. It also supported the call for
moratorium od the current large scale extractive
mining operations until such time that the tech-
nology to develop downstream industry is availa-
ble.
At the Philippine House of Representatives,
Bayan Muna Partylist Representatives together
with Anakbayan, Anakpawis, ACT, and Gabriela
Womens Partylists have led what they called as
Peoples Mining Bill. The Bill recognizes the im-
portance of mining as a foundation of growth,
but it needs to be placed into the core of the
countrys national industrialization plan.
The bill merits all possible support and mining as
in the experiences in other countries can spur
industrialization given the correct policy frame-
work and program. The Mining Act of 1995 can in
no way deliver the benets that mining can possi-
bly deliver to the Philippines. Its ill-eects are al-
ready proven. Neither the so-called Executive
Order that President Aquino will issue to clarify
policies, as it only focuses on raising government
revenues without addressing the larger concerns.
Thus it is imperative that before further havoc is
created, the Mining Act of
1995 has to be repealed, now.
The trade union movement in
the country has denitely im-
portant role to play not only
to address the workers organ-
izing in the industry or in pro-
tecting their rights and wel-
fare but to enable them to
participate in crafting a peo-
ple-oriented mining policy and
laws. *
Endnotes
1) Aquino wants to impose higher taxes on mining in-
dustry Philippine Online Chronicles, 21 Mar 12
2) Mines and Geosciences Bureau (MGB) as published
in Mining in CARAGA, CARAGA Mining Situation under
the Aquino Administration, CARAGA WATCH, updated
April 2012
3) Gold not giving much glitter to economic, job
growth, Manila Times online, April 12,2012
4) Mineral Industry Statistics, Mines and Geosciences
Bureau (MGB), Department of Environment and Natu-
ral Resources (DENR), 16 April 2012
5) Aquino governments Philippine Development Plan
2011-2016, August 2010
6) Philippine Labor and Employment Plan 2011-2016,
Department of Labor and Employment, August 2010
7) Section 26 of Republic Act 7942 or Mining Act of
1995 denes Mineral production sharing agreement
(MPSA) - as an agreement where the Government
grants to the contractor the exclusive right to conduct
mining operations within a contract area and shares in
the gross output. The contractor shall provide the -
nancing, technology, management and personnel nec-
essary for the implementation of this agreement.
8) Mineral Industry Statistics, Mines and Geosciences
Bureau (MGB), Department of Environment and Natu-
ral Resources (DENR), 16 April 2012
9) Mining investments sharply lower The Philippine
Star, 07 May 2012
10) Labor Force Survey Philippines 2010-2011, Bureau
of Labor Employment Statistics, Department of Labor
and Employment, January 2012
11) Gold-not-giving-much-glitter-to economic-jobs-
Thus it is imperative
that before further
havoc is created, the
Mining Act of 1995
has to be repealed,
now
12 ASIA MONITOR RESOURCE CENTRE
growth - http://www.manilatimes.net/index.php/
business/top-business-news/20846-
12) 012 Philippine Mining Situation, Intensied Plunder,
Intensied struggles Center for Environment Concerns,
Philippines,
13) The International Solidarity Mission on Mining
(ISMM) was organized by the Metalworkers Alliance of
the Philippines (MWAP), Center for Trade Union and
Human Rights (CTUHR), Kilusang Mayo Uno (KMU),
Crispin Beltran Resource Center (CBBRC), Integrated
Philippine Electronics Network (iPEN) and Institute for
Occupational Health, Safety and Development
(IOHSAD), This was participated by 11 foreign delegates
from Australia, Belgium, South Korea, Germany, Japan
and the United States. ISMM visited CARAGA in Minda-
nao and Benguet in Cordillera Region.
14) ISMM interview with Mr Alelo Ensomo, CARAGA
Director of Mines and Geosciences Bureau, Surigao del
Norte, April 26,2012
15) Labor Force Survey Philippines 2010-2011, Bureau of
Labor Employment Statistics, Department of Labor and
Employment, January 2012
16) ISMM interview with workers and key informants,
28 April 2012
17) CTUHR Documentation, 2006- 2008
18) ISMM interview
19) Poverty Incidence (Population) 2006-2009, National
Statistical and Coordination Board
20) Section 18 and 26, RA 7942, :An Act Instituting A
New System Of Mineral Resources Exploration, Devel-
opment, Utilization And Conservation, 03 March 1995
ASIAN LABOUR UPDATE - 80 13
Mining Sector and its Future in India
Ramamurthi Sreedhar
Introduction
India is endowed with huge resources of many
metallic and non-metallic minerals. Since inde-
pendence in 1947, there has been a rapid growth
in the mineral production both in terms of quanti-
ty and value. Currently, India produces as many as
87 minerals, which include 4 fuels, 10 metallic, 47
non-metallic, 3 atomic and 23 minor minerals
(including building and other materials).
The mining activities are extremely poorly regu-
lated despite the fact that as early as 1948, the
founding fathers of the constitution realized this
need. During the Constitutional debates, they
said as early as in 1948, Industrialisation has
brought in its wake an ever-increasing demand
for mineral resources. These resources are non-
replenishable and mostly scarce. Proper control
over regulation and development of mines and
minerals is therefore, a matter of national con-
cern. Today over 80,000 mines operate illegally
as against nearly 10,000 legitimate leases. Only a
third of the legal mines actually report to the Indi-
an Bureau of Mines, the regulator.
Within two decades of liberalised economy, much
in contrast with the Constitutional objectives,
mining as a sector has come to be associated
with scams, conicts, violence and ecological
degradation.
A Quick Overview
Mining of major minerals was a forte of the Public
Sector Undertakings until the nineties when the
country embarked on the economic policy of pri-
vatization and globalization. New ways are being
devised for exploitation of the resources and to
hand over wealth of the nation for small short-
term gains. The rapidity with which the global
interests want to usurp these resources is reect-
ed to the stock
markets and it is
with an exponen-
tial rate that min-
ing is devouring
lands and liveli-
hoods of many
communities. In
the case of coal,
the private sector
was a key player
until it was nation-
alized in the sev-
enties again to be
opened up in the
last decade and as
of today nearly
twenty per cent of
the known coal
reserves of the
country have been
Feature
In Sandur, most of the water sources are contamininated with iron ore dust and no one has access to clean
drinking water. (Photo: mines, minerals & PEOPLE)
14 ASIA MONITOR RESOURCE CENTRE
handed over to the private sector. Most mineral
resources are co-terminus with Forests and Sched-
ule Areas and mining has become a major source
of destruction of the environment and livelihoods
of the local communities and has reached alarm-
ing proportions. Some key facts:
1. Mining has a low contribution to the econo-
my. GDP from mining has never exceeded 5%
of the GDP even after liberalization. In com-
parison, small and medium enterprises con-
tributed signicantly (29%), employing more
people and aecting less people.
2. Out of the estimated or known coal reserves
of 267 billion tones, 48 billion tonnes, almost
one-fth are allocated to high networth com-
panies in what is now being debated as the
biggest scam around natural resource alloca-
tion amounting to illegitimate corporate ben-
ets of over 40 Billion USD.
3. Bauxite mines allotted to companies like AN-
RAK, NALCO, VEDANTA, and JINDAL could
last them for a century. Most of these mining
blocks are in the Schedule V areas which have
protection under the constitution and by Sa-
mata Judgment. The States have circumvent-
ed these protections by taking lease by state
corporations and entering into JVs with pri-
vate companies.
4. Mining in several blocks will only begin 5 dec-
ades from the date of clearance which is a
clear indication of sacricing resources in one-
go and also negating the chance of communi-
ties to assert their rights.
5. The input of resources into production stream
is huge e.g. inputs for 1000
kg primary aluminium pro-
duction requires >5000 kg
of bauxite ore, 13,000 litres
of fresh water, 27500 litres
of sea water, 15,711 kWh of
electricity consumption. It
clearly depicts that mining
of a mineral is not limited to
the mineral alone, it is highly
intensied resource use of
other resources or raw ma-
terials.
6. Occupational hazards in mining industry are
under reported, unreported and fail to recog-
nize the huge costs at the society level. Un-
derground coal mines result in 1 death for 2.5
mT of coal mines. A huge proportion of coal
mine workers suer from Coal Workers Pneu-
moconiosis (around 25% of coal workers).
Noise pollution (>90dB) is a huge neglected
aspect which is increasingly aecting workers
as the mines are mechanized and the protec-
tive gears do not respond to working condi-
tions or are not appropriately suitable to con-
ditions.
7. The reclamation costs are being estimated at
least 4% of the coal production costs, areas
impacted by coal res is increasingly aecting
a large conglomerate of settlements. With the
introduction of coal bed methane i.e. empty-
ing the last residues, the kind of water evacu-
ation is likely to damage land at large scale.
Even at micro levels of processing and dispos-
al there is 1 death per 5 mT of Coal input and
1.3 disabling injuries per mT.
8. Villages in the mining regions are getting de-
void of drinking water due to increased com-
petitive use of water by industry and mining.
It is not mining alone, once we see the down-
stream industry we realize that huge quantum
of water is being gulped by the industry e.g.
it is estimated that this water can serve 300
million populations. On the other hand, the
slippages in rural drinking water supply are
huge i.e. the overall quantity and quality prob-
lem is glaring. 42% of households in villages of
India have no electricity where as the
industry is consuming the major
share of electricity.
9. With heavy mechanization,
the labour or employment is
decreasing whereas in small
scale mining labour norms are
outed both in terms of remu-
neration as well as provision of
facilities.
The impacts are widespread and
Occupational hazards
in mining industry are
under reported,
unreported and fail to
recognize the huge
costs at the society
level
ASIAN LABOUR UPDATE - 80 15
diverse, and have created socio-economic and
cultural impacts over dierent geographies and
ecosystems from the Western Ghats which is an
UNESCO Heritage Site and a Global Biodiversity
Hotspot to Stone Quarries of Rajasthan where
silicosis is a blight on a huge population still
emerging from the cover of denial by the govern-
ment, and from coal mines in Meghalaya leading
to Acid Mine Drainage to beach sands in Kerala
causing cancer from radiation. Even constitution-
ally protected tribal areas Scheduled Areas,
(Schedule V and VI), where a large proportion of
the mineral wealth of the country rests, have not
been spared of this onslaught.
The current trend is to promote more mining and
a complex set of factors external as well as inter-
nal are driving more investments. India opened up
its FDI in mining without any bottlenecks for the
investors in 1991. The policies initially aided the
State and later, the corporates, as promoter of
economic growth and private protability by rap-
idly abstracting mineral wealth of the country.
Various actors have invested into the sector, in-
cluding national and international companies,
banks, equity funds, and also round-tripping of
illegal funds etc. It is now predicted to almost dou-
bling its current size with-
in the next 15 years. The
irony is while the mining
is being promoted, there
is no polluters pay princi-
ple in practice which is
building a huge cost to-
wards environment. The
regulatory regime is in
place but these are again
skewed by executive de-
cisions to promote invest-
ments. Moreover moni-
toring is not eective
thus leading to lowest
compliance.
Government of Indias
Priority and Our Con
cerns
The National Mineral Poli-
cy of 2008 banks upon
inviting high investments
into the mining sector and has promised of a Sus-
tainable Mining Framework. Although there has
been mention about impact on people, land acqui-
sition and compensation, it is hugely oriented at
looking mining as an economic opportunity. This is
reected in the new bill, through which a single
mining lease could be as large as 100 km2; renewal
of leases is being replaced by extension bequeath-
ing it till the deposit lasts which will make miners
squat for long; there is a growing dilution of provi-
sions which favours ownership to communities to
only prot sharing that too through a highly bu-
reaucratic setup.
The push is to change government policies and
make them favourable to industry, thus the min-
ing companies and the State are equally alienated
from the host communities. The nancial transac-
tions are very opaque, with investments banks
which are large in number channelizing funds
which is dicult to track. The whole issue of capi-
tal mobility and its role in expanding mining is still
poorly understood.
Ecosystems are getting disturbed beyond their
resilience, like the river ecosystem is getting huge-
ly aected, so is the wildlife corridors. The interre-
Girl from a stone quarry , she works with her disabled hand. (Photo: mines, minerals & PEOPLE)
16 ASIA MONITOR RESOURCE CENTRE
lationship between governance of a welfare state
and mining is marred by huge gaps and strange
complicated structures. The glaring anachronism
in terms of neglect of mapping human, botanical,
zoological and atmospheric resources is huge; the
result of which is these overlying resources are
not accounted and treated as overburden by com-
panies and government. Thereby the whole pro-
cess is damaging the huge potential of community
and undermining the wealth of the ecosystem.
By and large in the mining operation and invest-
ment world, the key beneciaries are investors,
banks, owners, politicians and contractors, con-
sultants and reclaimers. The cost is being paid by
local communities, workers, environment, ecosys-
tem and small investors.
The rst Industrial Policy Resolution adopted in
1948 codied the national policy in respect
of mines and minerals. Min-
ing sector also received due
attention in the second
'Industrial Policy State-
ment' issued in 1956. As a
follow-up measure to Indus-
trial Policy Resolution of
1956, the Mines Minerals
Regulation and Develop-
ment Act 1948 (MMRD)
was repealed and MMRD
Act 1957 was enacted. Un-
der this Act the Mineral Concession Rules 1960
and the Mineral Conservation and Development
Rules 1958 (MCDR) were issued. The new Industri-
al policy in 1991 oriented towards market liberali-
sation.
The National Mineral Policy 1993 was an exercise
to keep the mineral sector tuned to the restructur-
ing measures adopted in the trade and scal sec-
tors. The new Mineral Policy declared in March
1993, has made a radical departure from the earli-
er policies by throwing open the mineral sector to
private companies and by allowing equity partici-
pation by foreign companies in joint venture in
mining promoted by Indian Companies. Further
Amendments in MMRD Act, 1957 in 1999 was
brought in to reect the changed emphasis on
development rather than regulation and was
amended to MMDR Act.
The slow pace of Foreign Direct Investments (FDI)
in the mining sector even ve years after the liber-
alization of the investment regime, the lack of
enthusiasm for investment in prospecting shown
by the domestic private sector, and the lack of
resources with public sector agencies meant that
the sector was unable to signicantly contribute
to growth. During the Mid-term Appraisal of the
10th Plan in the Planning Commission, it was ob-
served that the 1993 policy had not been able to
achieve the aim of encouraging the ow of private
investment and introduction of high end technolo-
gy for exploration and mining because of proce-
dural delays, etc. A need for review of NMP, 1993
with a High Level Committee on National Mineral
to review the situation led to the National Mineral
Policy (NMP), 2008, which confers lot more con-
cessions to investors while also expressing the
need for environmental and social safeguards. A
new Bill, the Mines Minerals
Development and Regula-
tion Act 2011 has been intro-
duced in the Parliament and
is currently under the scruti-
ny of the Parliamentary
Standing Committee.
The provisions regarding
working conditions and
workers are covered by the
Mines Act 1951 which is also
being reviewed. Surveys conducted in few select-
ed mines recently by Directorate General of Mines
Safety show that a signicant number of persons
employed in the mines are suering from occupa-
tional diseases including Silicosis, Coal Workers
Pneumoconiosis, Noise Induced Hearing Loss, etc.
Because of the acute shortage of Occupational
Health Inspectors, a complete picture of the occu-
pational health status in mines is not available.
Moreover, the persons employed in mines are
exposed to number of hazards at workplace
which adversely aect their health. Some of the
important ones are dust, noise, vibrations, heat,
humidity etc.
The long-term programmes in every sector of the
economy in India are still governed by and large by
the Plan Programmes. Occupational Safety and
Health at workplaces has been declared a priority
Mining is one of the most
environmentally and socially
destructive economic activity.
It has a low contribution to
the GDP but the conflict it
engenders is enormous and
widespread
ASIAN LABOUR UPDATE - 80 17
area for formulation of activities in the XII ve
year plan, the Planning Commission had set up a
Working Group on Occupational Safety and Health
(OSH) under the chairmanship of Secretary, Minis-
try of Labour and Employment. The report con-
cludes on the existing situation In spite of many
initiatives, the standards of safety in mines have
not yet reached to a worldwide accepted norm of
Zero Harm at Workplace. Further, there are peri-
odic occurrences of disasters in coal mines.
This calls for fresh initiatives with use of modern
technologies and tools, scientic data acquisition,
analysis and formulation of action plans on each
identied thrust areas, proper implementation
and eective monitoring of results. In the area of
statutory enforcement, result based inspections
and enquiries, compliance tracking system and on-
line monitoring of processes are proposed to be
undertaken through various plan schemes pro-
posed during the XII Five Year Plan.
However all these so called measures being taken
up as a priority will not be having much implica-
tions until the Mines Act is made more stringent
and companies and government agencies are held
accountable.
Towards a Way Ahead
Mining is one of the most environmentally and
socially destructive economic activity. It has a low
contribution to the GDP but the conict it engen-
ders is enormous and widespread. Our country
today has the dubious distinction of having illegal
mines signicantly outnumbering the legal mines.
A new Mines Mineral Development and Regula-
tion Act is on the anvil and it calls for far reaching
reforms in the mining sector. The future should
usher in an era of Mineral Development with de-
velopment as the focus rather than the current
attitude of exploiting minerals for mere prot.
The key emphasis has to be on
1. Rationalising and regularization of the on-going
mining activities on a war footing;
The unacceptable situation of illegal mining must
be put to an end. Irrational exploitation of dier-
ing grades of ores for short term gains has to be
restrained. Illegal mining of minor-minerals partic-
ularly of river-bed across the country have been
destroying the river systems and needs urgent
attention. This calls for a total moratorium on new
leases and ensuring zero-tolerance.
2. Increasing investments on exploration of all re-
sources and have a detailed map before embarking
on deeper exploration and even in that process es-
pecially through non-invasive technologies and aug-
menting the reserves both on-land and within our
exclusive economic zone in the oceans;
Exploration investment in the country is abysmally
low and does not even constitute two per cent of
the global exploration
investments and needs
to be raised signicantly.
There are very little re-
sources going into devel-
oping new exploration
methods. While our EEZ
extends to 200 km from
the coast, current invest-
ments are restricted only
to search for oil and gas
and disturbing the near
shore environment.
3. Enhancing the ecien-
cy of the mining activities
and generating more re-
sources from brown-Children working at an iron-ore mine site in Sandur. (Photo: mines, minerals & PEOPLE)
18 ASIA MONITOR RESOURCE CENTRE
eld expansion rather than opening up new
green-eld areas;
Small pocket deposits in forested regions are be-
ing opened up creating patchiness and larger im-
pact on the forest corridors while eciency im-
provements and expansion of existing deposits
are being neglected. This has to be a high priority.
4. Enabling and emphasizing on local value addition
and restricting export of minerals;
Though every state government talks about value
addition, in the name of lack of technology or that
mining is a stand-alone industry important miner-
als are being exported with very little benet to
the state or the communities. Value addition must
be the norm rather than as an exception.
5. Developing a widespread understanding of the
strategic value of dierent minerals and ensuring
conservation of requisite quantities of such miner-
als;
The strategic value of various minerals must be
recognized and specic eorts must be made to
conserve minerals essential for the countrys fu-
ture. Minerals such as bauxite, titanium, several
heavy metals which will be crucial for future devel-
opment of materials need to be assessed for our
long term needs rather than for prots to corpo-
rates in the current period.
6. Ensuring strict compliance of all the environmen-
tal, social and labour laws governing mining activi-
ties and several environmental, social and labour
laws are constantly violated in several mining con-
texts.
The laws should be made convergent with proper
oversight authorities. The blight of occupational
diseases such as asbestosis and silicosis must be
eliminated.
7. Enabling evolution of economic opportunities not
dependent on mining.
The long term consequences of climate change
and strategic future mineral availability should
form the key consideration in the development of
minerals. It is important to recognize that mineral
bearing areas do not suer from the classic situa-
tion of resource curse which is seen across the
globe. In order to do this eort must be made to
identify economic opportunities which are not
dependent on mining.
A Reection
We recognize that the minerals will be ours forev-
er if we restrain mining but the wealth of the soil
and other biota will be lost forever if we mine the
minerals below them. Mechanisms like paying the
Net Present Value as compensation do not reect
the true long term value of the ecosystem services
which the terrain and the plant and animal re-
sources provide. The future must make these im-
portant elements in the design.
These are issues that several organisations, net-
works and alliances be it mm&P in India, JATAM in
Indonesia and AIMES in Africa, ATNC, ANREOV,
JSAPMMD, NGO Forum on ADB, MAC and several
other groups in Latin America are grappling with
and confronting as realities. There are varied
strong protests in the entire life-cycle where alli-
ances have had a positive presence. We are
against Greeneld mining, we want the existing
mines to work as per rules and regulations and we
want mine-closure to happen properly including
the rehabilitation of the workers. We want our
countries to move away from an economy de-
pendent on mining in the short run.
The real change has to be in the development par-
adigm. We need greater information exchange
and relationships with the communities to evolve
this new paradigm. Otherwise we will run the risk
of ending up only in targeting governments and
investors and institutions jointly, delay the activi-
ties and denigrate their behaviour and denitely
seek justice to the specic communities and yet
feel inadequate. It is indeed a long way to go for
the transformation we are seeking!
ASIAN LABOUR UPDATE - 80 19
Introduction Extractive industry is a strategic sector for supply-
ing raw materials for other industries. There is no
modern economy can operate without any access
to adequate, aordable, and safe raw materials
produced by extractive industries. In general
there are four characteristics of the extractive
industry that distinguish it from other industrial
sectors: (1) Extractive Industry processes non-
renewable raw materials, therefore the raw mate-
rials in the industry are reduced and limited; (2)
extractive industry has a bound with production
sites with its local and specic nature right in the
places where raw materials are available; this
drives competition to get locations are potential
with limitless raw material resources; (3) extrac-
tive industry is both capital-intensive and technol-
ogy-intensive sector, therefore only companies
with substantial nancial support can operate; (4)
extractive industry has more horrible ecologically
destructive force than other industrial sectors. For
example, Newmont Oil Company in Bima district
in the eastern part of Indonesia, produces 140,000
tonnes of waste per day, means 21 times the daily
solid waste of Jakarta city. These four characteris-
tics are enforcing dierent development of ex-
tractive industry from the industries of other sec-
tors.
This article attempts to describe the reality of ex-
tractive industries in Indonesia under the control
and domination of transna-
tional corporations, that
making wealth in an unimagi-
nable amount from a mining
hotspot where the majority
of the population are in pov-
erty, experiencing various
kinds of land-grabbing, evic-
tion from their communal
land, and the workers earn
low wages with poor work-
ing conditions. The article
puts the extractive industry
in the context of relation between the state and
the massive expansion of transnational corpora-
tions (TNCs) in order to obtain raw materials for
prot, where TNCs do land-grabbing and natural
resources by using the imperative power of the
state, either through the establishment of regula-
tion, as well as the mobilization of the state-
owned violence means. In the accumulation of
extraction industries, the land-grabbing to get raw
materials resources currently is an inherent and
dialectical process. The case of Freeport Mc-
Morran Copper & Gold Inc will be elaborated as a
case study.
General Overview of Extractive Industry in Indo
nesia
Since it has raw materials resources, the govern-
ment considered the extractive sector as the most
strategic sector to earn foreign exchange. In that
context, the Government implemented a policy of
export-oriented economy and provided discretion
for foreign capital. For example, of the total cop-
per production in 2002, 1.17 million tons or 78 per
cent was exported, just as to the gold, from the
production of 142.2 thousand kg, as much as 73
per cent was exported.[1] Indonesia had become
the largest tin exporter that supplied 40 per cent
of the world's tin[2]. In 2011, Indonesia produced
290,000 tonnes of coal, 72 per cent for export
market.[3] In 2011, when Indonesia's export grew
13.6 per cent - it is beyond its historical average
rate of 7.5 per cent. Mining
sector had been counted for
Indonesias high exports,
particularly coal, while the
manufacturing, textiles, and
agricultural sectors had rela-
tively slowed down and ex-
perienced a decline.[4]
Like many other natural
sources-rich countries, Indo-
nesia extractive industry is
also under the control of
The Case of Freeport Mc-Morran Copper & Gold Inc.
in Indonesias Extractive Industry
Abu Mufakhir
Seventy five per cent
of the mining sector,
particularly oil and
gas, is controlled by
foreign capital
20 ASIA MONITOR RESOURCE CENTRE
foreign capital. For example, 85.4 per
cent of the 137 management conces-
sions over oil and gas elds in Indo-
nesia owned by foreign multinational
companies.[5] No less than 10 trans-
national oil companies are operating
in Indonesia, such as Caltex, Exxon,
Petrocina, with the production
reached 921.487 barrels per day in
2004. Seventy ve percent of the
mining sector, particularly oil and
gas, is controlled by foreign capital.
[6]
The situation was started from the
destruction of Soekarno era, with
their guided economic policy
throughout 1958-1965, during which
time the state conducted interference toward the
market and destroyed the dominance of foreign
capital. Soehartos authoritarian regime that was
commenced in blood, has initiated the return of
more aggressive capital expansion up into the
remotes of Indonesia for the second time after
the colonial period. During the Soeharto regime,
there are at least three Acts passed soon after
one-year of ruling: Law No. 1 year 1967 concerning
Foreign Investment, Law No. 11 year 1967 on Basic
Provisions of Mining, and Law No. 5 year 1967 on
Basic Provisions of Forestry. These three laws got
rid of all the policies produced by Soekarnos era
that hindered foreign capitals. Since then, the
management of extractive industries was being
regulated (freed from any form of state interven-
tion that inhibiting) so that foreign capital has
exclusive access to land and the raw material re-
sources, through a mechanism called the
"Contract of Work.
At the same year of the pass-
ing of the three laws, the Gold
Mining Company, Freeport
Indonesia received a
"Contract of Work" as a li-
cense to operate and start
their exploration in Papua.
The Agreement between the
Government of Indonesia and
PT Freeport-was called 'First
Generation Contract of Work
which was given only to Freeport.[7]
When Soeharto regime toppled down in 1998,
there has been decentralization with the imple-
mentation of the Law No. 32 year 2004 on Region-
al Autonomy (Otonomi Daerah). The goal was to
reduce the authority centralized in Jakarta, and to
distribute it to the regions. Yet, in fact, what hap-
pened was the distribution of power in the hands
of oligarchs at the local level. Law No. 32/2004 on
Regional Autonomy, Article 13 provided
optional authority to the local government to-
ward the management of mineral and coal mining.
This was later conrmed by the issue of Mining
Regulations year 2008, which provides discretion
to local authorities to issue Mining Authority. It
triggered the grabbing of raw material resources
in the outposts become increasingly disclosed.
This condition continued with the enactment of
Law No. 4/2009 on Mineral and Coal Mining that
made the Law No. 11 year 1967
did not apply. The presence of
Mineral and Coal Mining Law,
to honour the previous con-
tract, did not at all encourage
(even just) renegotiation of
contract compiled during the
Soeharto regime. It was in
contrary emphasizing that the
contract made in the Soeharto
regime should be applied until
the contract was completed.
Province Number of Mining Per
mit*
Number of Contract in Oil and Gas
Mining
Poverty (percentage)**
Urban Rural
South Sumatra 189 29 16.73 14.67
Bangka Belitung 303 - 4.39 8.45
East java 209 24 10.58 19.74
East Kalimantan 788 25 4.02 13.66
South Kalimantan 261 2 4.54 5.69
Aceh 75 4 14.65 23.54
East Nusa Tenggara
56 1 13.57 25.10
Papua 9 22 5.55 46.02
*According to Directorate General of Oil and Gas, Ministry of Mines and Energy, 2011 ** Central Bureau of Statistics 2011
Source: JATAM
Recent Mining Permits issued by Regions and Cities
...at least 60 people killed
by violent state-forces, in
addition to 148 people
imprisoned and put in
trials with various
allegations of having
disturbed the mining
investment
ASIAN LABOUR UPDATE - 80 21
Law on Mineral and Coal Mining only changed the
regulation of Mining Authority into Mining Permit
that expanded the authority (based on the region-
al scale) to local governments.[8]
As a result, after the legalization of the Mineral
and Coal Mining Law, thousands of Mining Permit
issued by local governments. In 2011 there were
about 9,000 permits issued by the regions and
cities. That means, from about 30 regions and cit-
ies that had the potential of mining, they had is-
sued about 300 permits in average.[9] At least
every day 6 to 7 mining permits were issued since
2008, and there were 5,171
permits from 8,263 categories
of Clean & Clear based on the
Mineral and Coal Mining Law.
[10]
The integration of Indonesia's
economy into global market,
as well as the decentralization
policy in terms of the distribu-
tion of power to facilitate busi-
ness groups allied with local
oligarchy to ease the depriva-
tion of natural resources, are
the characteristic of current
extractive industry. Behind the
extractive industry, since the
enactment of Law No. 11/1967
and then replaced the Law No.
4/2009, JATAM recorded that
at least 60 people killed by violent state-forces, in
addition to 148 people imprisoned and put in trials
with various reasons and allegations of having
disturbed the mining investment. Many examples
of cases on how corporations in extractive indus-
tries commit land-grabbing, eviction of indigenous
peoples, environmental degradation, as well as
implementing low wages. Among these cases, I
will elaborate the case of Freeport Indonesia, a
subsidiary of Freeport-McMoran Copper & Gold
Inc. (FCX), called as the pioneer of foreign invest-
ment by Soeharto.
FreeportMcMoran Copper & Gold Inc: The Ulti
mate Killer of Local People
Freeport-McMoran Copper & Gold Inc has a sub-
sidiary in Indonesia to operate in the country.
Freeport Indonesia (hereafter Freeport) is a gold
mining company with the most massive land con-
cessions. Since 1991, through the extension of se-
cond contract, beneted with the area concession
of 2.6 million hectares, Freeport had expelled peo-
ple from their land. One of the indigenous commu-
nities around the Freeport area was Amungme
Tribe, whose almost entire region has now be-
come Freeports concession area.[11]
Currently, a total of 22 thousand people working
in Freeport, 98 per cent are citizens of Indonesia
and 28 per cent of Papua. Workers in the operat-
ing divisions work at an alti-
tude of 4,600 meters above
sea level with weather swings
between high rainfall and ex-
treme cold. They worked for
an average of 12-14 hours per
day. This excluded the threat
such as mysterious shooting
terror. Meanwhile local work-
ers and Papuan were discrimi-
nated in terms of wages and
facilities from expatriates. In
particular, Papuan are often
employed in indecent and
disrespectful divisions, such as
sweeping street and aviation
eld, with their almost noth-
ing payment of Rp 40,- (USD
0,004) per hour or sometimes
was just paid with grocery items such as corned
beef, cigarettes, and tobacco.
Since 1967 to 2010, Freeport has produced 7.3 mil-
lion tons of copper and 724.7 million tons of gold.
As of per 2011, their ore reserves of 2.6 billion tons
in total. Roughly speaking, these reserves can pro-
duce 2.418 tons of gold. If the gold price is Rp 550
thousand per gram, the total value of the reserves
is Rp 1329 trillion, almost equivalent to the amount
of 2012 national budget of Rp1.435 trillion. The
prot of Freeport Indonesia has contributed 50.75
per cent of total revenues of its parent company,
Freeport McMoran Copper & Gold Inc. (FCX). FCX
is the largest shareholder of Freeport Indonesia
(81.28 per cent), other shares owned by PT Indo-
copper of 9.36 per cent, and by the Government
of Indonesia of 9.36 per cent.
Despite Freeport's
Grasberg mine in West
Papua has the only
largest gold reserves in
the world, Papua
remains the poorest
province in Indonesia,
with the highest risk of
illness and death, and
most violence by
military throughout the
country
22 ASIA MONITOR RESOURCE CENTRE
Despite Freeport's Grasberg mine in West Papua
has the only largest gold reserves in the world and
the largest copper deposits ever discovered13, it
has nothing to do with the improvement of Papu-
ans welfare. Papua remains the poorest province
in Indonesia, with the highest risk of illness and
death, and most violence by military throughout
the country. According to the BPS (Statistics Cen-
tral Bureau), the population of Papua that was at
the poverty line reached 944.79 thousand people
in 2010, while the number of unemployment in-
creased from 53.6 thousand in August 2010 to
60.5 thousand people, with open unemployment
of 3.94 per cent in August 2011 from 1.17 million of
labour force. The poverty rate in Papua is also far
exceeded the national average of 13.33 per cent.
During 42 years of operation, Freeport has
spawned enormous ecological damage. Free-
port's daily mining operations dispose 230,000
tons of rock waste into Aghawagon River and
rivers around. The acid rock
drainage - or the disposal of
water containing acid- as much
as 360000-510000 tons per day
has ruined two valleys which
include 4 miles (6.5 km) to a
depth of 300 meters. The Explo-
ration of the Grasberg reserves
is estimated to produce 6 billion
tons of industrial waste.[12]
Freeport that has employed
more than 1000 security guards,
through its status as a vital na-
tional asset, received protection of 700 police
personnel, Mobile Brigade unit, and the military,
even the special forces. Therefore, since 1998-
2004, Freeport has expensed funding for the Po-
lice / Army amounted to 20 million dollars.14
Amount of money for security forces meals dur-
ing 2001-2010, according to the Indonesia Corrup-
tion Watch (ICW), was amounting to 79.1 million
dollars.
The Struggle of Freeport Workers[13]
On July 4, 2011, at least 8000 workers of Freeport
Indonesia went on strike and faced by 349 heavily
armed police personnel, together with 40 person-
nel members of the Detachment B Mobile Brigade
of Papua Police completed with the Barracudas.
The police argued that what done by Freeport
workers was not on strike but protests and
demonstrations, which not allowed to be done at
the national vital objects, and Freeport is a vital
national object.
The strike was triggered by the rejection of nego-
tiations by the management due to the dualism
occurred in the union leadership. In addition to
refusing to negotiate, the management unilateral-
ly terminated members of union board, including
those who conducted negotiation. There the un-
ion led a change in the concept of remuneration
taking into account the working conditions, years
of service and corporate prots. Initially, the un-
ion (PUK SPSI) proposed the remuneration pack-
age for level 1 to Level 3 by 35 dollars per hour -
200 dollars per hour, then fell to 17.5 dollars per
hour - 43 dollars per hour. Meanwhile, Freeport
insisted the concept of percentage wage. The
management oered an in-
crease of 16 per cent, turned to
22 per cent of basic payment. At
that time the wage of Freeport
workers was only 1.50 s / d 3.50
dollars per hour, while the low-
est wage of Freeport workers in
the world between 30-50 dollars
per hour.
The strike continued for nearly
six months, since the rst strike
in the late June, and resumed in
September and extended until
mid-January 2012, and recorded as the longest
labour strike and involved the largest mass in the
labour movement after Soeharto era. During the
action, a support from workers and non-workers
was getting greater in Papua. Participants of
strike increased in number from 8 thousand to 12
thousand of workers from total of 22 thousand
workers in Freeport. Supports also came from
indigenous communities in Mimika regions, such
as Tribe of Amungme, Kamoro, Damal, Nduga,
Dani, Moni and Ekari. Solidarity echoed even to
other countries. They questioned the wage dis-
crimination and unfair work contract. While labor
organizations and non-governmental organiza-
tions in Jakarta, Mojokerto, East Java, and Yogya-
During the strike
there were 11
shooting with seven
Freeport workers
died, not to include
two victims from
traditional mining
ASIAN LABOUR UPDATE - 80 23
karta took rallies to condemn Freeport union bust-
ing practice, some foreign trade unions, such as
the United Steelworkers,USA and the Internation-
al Chemical Energy and Mining (ICEM), deplores
the response of Freeport and repression the state
apparatus in facing the strike. Occupy Phoenix
and the Industrial Workers of the World in Ameri-
ca also take action against the criminal acts in
Freeport Indonesia.
On the grounds that Freeport is a vital national
asset, the strikes were then prevented by various
means. Mimika District Police, Papua charged the
strikers with criminal incitement, vandalism, theft,
and disturbing public interest. Pressure on the
strikers was also carried out by means of terror in
the form of mysterious shootings. KontraS record-
ed during the strike there were 11 shooting with
seven Freeport workers died, not to include two
victims from traditional mining area. Until today
the authorities failed to investigate the shooters.
The experience of Freeport workers in conducting
strike teaches that labour strikes should be well-
prepared. Strike participants involve traditional
miners, contract-based workers as well as perma-
nent workers. They also made alliance with trade
unions and non-governmental organizations out-
side Papua. Freeport Union also run a campaign
strategy, by audiencing with the House of Repre-
sentatives, National Commission of Human Rights,
and even writing letter to the President. On the
eld, workers combined any forms of sabotage,
marches, blockades and work area occupation to
ght. Although, on December 14, 2011 reached an
agreement to increase the basic wage by 24 per
cent in the rst year and 13 per cent in the second
year, the value of the deal is far below the initial
demands.
Agenda for the Labour Movement
Expansion on extractive industry means a capital
geographical expansion on the land, since the
extractive industrial activity is the extraction of
dredged soil to obtain raw materials until no more
remaining selling value. Corporations in the ex-
tractive industries are even allowed to operate
within protected forests, allowed to evict migrant
peoples territories and territories cultivated by
indigenous peoples for generations, freed to vio-
late human rights and commit environmental pol-
lution vividly, allowed to produce any kinds of
exploitation and cultural, social, and historical
damages as a part of its accumulation practices.
Extractive industry (read: capitalism) considers
land as commod
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