Indonesia president signals intention to go after illegal mines

Indonesia will move to “rectify” illegal mines estimated to have caused $19 billion in state losses, President Prabowo Subianto said in his first State of the Nation address.

The government has identified 1,063 illegal mining sites and is seeking support to crack down on them, Prabowo said in the annual speech in Jakarta on Friday. The illicit mines may be causing 300 trillion rupiah in losses to the state, he said, without specifying over what time period.

Illegal and poorly regulated mining is a major problem in Southeast Asia’s largest economy, causing disproportionate environmental damage and depriving the government of tax revenue. However, any crackdown could impact the supply of major export commodities like coal, nickel and tin.

A push against illegal mining would follow the seizure of 3.1 million hectares of palm oil plantations that the government says have violated regulations. Prabowo has gotten tough on the sector, with his attorney general’s office launching a legal case against major producer Wilmar International Ltd.

Since coming to power in October, Prabowo has targeted the country’s vast commodity sector more aggressively than his predecessor. Alongside the Wilmar probe, the attorney general’s office is investigating corruption at state oil firm PT Pertamina. The Ministry of Environment also plans to punish companies in the Indonesia Morowali Industrial Park — a major nickel smelting center — for environmental breaches.

(By Eddie Spence and Chandra Asmara)