Kelian land compensation
Kelian Equatorial Mining (KEM) in Indonesia ceased mining gold in 2003. Production ceased in February 2005. Local communities have agreed to key mine closure directions including the establishment of post closure institutions. But relations between mine and community have provided challenges over the life of the project.
Land compensation issues that occurred more than 12 years ago during initial development of the mine caused local, national and international controversy during the years of operation, even though KEM and Rio Tinto always took significant steps to constructively work with relevant parties, local non-government organisations and the Indonesian Human Rights Commission.
During the operating years KEM and Rio Tinto grappled with genuine multi-stakeholder challenges associated with land use, land ownership and land compensation decisions while all the time seeking to improve the economic participation of local people in regional development associated with mining activity. Support was provided for local communities through community development, capacity building and drought relief programmes as well as through employment and contracting opportunities.
KEM inherited a situation in which artisanal mining of alluvial gold deposits had occurred in the area in the 1940s and 1950s but which had virtually ceased when Rio Tinto explored the area between 1974 and 1976. In 1974 there were ten families in the area. Rio Tinto's presence and increases in the price of gold attracted 1,235 people and 362 houses to the KEM area by 1987 according to a government census and the number continued to grow as mining operations approached.
Construction of the mine necessitated the relocation of villagers, including some from the local area and many from elsewhere. Compensation of more than Rp2 billion was agreed at the time and support was given for moving housing materials.
Ten years later with the Reformasi period after the 1998 change of the Suharto government, there was significant growth in community compensation claims against the government and companies operating in Indonesia, including KEM. Claims were made against KEM for increases in compensation previously paid, for verbal promises relating to houses and loss of income, for alleged human rights abuses and for other items. The process to address and resolve these claims involved:
- a protocol negotiated between KEM and LKMTL (an NGO representing local communities) in early 2001 which was endorsed by communities in October 2001 following a consultation process. This process was supported by other parties, including WALHI (an Indonesian NGO affiliated with Friends of the Earth), the Indonesian Human Rights Commission, Justice Einfeld of Australia and Rio Tinto.
- establishment of resources and systems to finalise and validate claims. KEM and LKMTL are working together in these activities which involve clearance of over 10,000 individual claims.
- processes to review and resolve human rights claims. The parties have committed to an arbitration process to resolve claims which cannot be resolved by negotiation.
Processing, validation and settlement of claims continues, with completion targeted for early 2005.
Establishment of an effective process to address the compensation claims improved relationships between KEM and local communities and has enabled the implementation of a number of important community development and capacity building initiatives which seek to secure sustainable solutions for the post closure period.
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