Methods for this study included foc

Methods for this study included focus groups and inter- views, using semi-structured questionnaires with small-scale miners, other people living in mining areas and nearby towns, officials from district, provincial and national governments, NGO staff, United Nations staff, mining company representa- tives, and other stakeholder groups. Field research was com- plemented by a review of policy documents and media discourses. The study draws partly on a retrospective analysis of the author’s experiences serving as a policy advisor to the United Nations Development Program (UNDP) and the Uni- ted Nations Industrial Development Organization (UNIDO) (2005–08) and mainly on independent field research conducted in June and July of 2010. 2 Overall, the findings illustrate how governance regimes in Indonesia’s extractive sector remain in a highly ambiguous transition period where the decentraliza- tion of power from the central government to district author- ities, instigated by the Autonomy Laws of 1999, is occurring with dubious degrees of effectiveness and with territorially un- even results in addressing small-scale mining. Very few re- sources have been allocated toward government functions for legalizing and supporting socially marginalized minework- ers. The article examines how overlapping administrative structures, political confusion, competition over resource own- ership, as well as widespread unwillingness to provide poorer labor groups with clear sets of rights—sometimes due to multi- ple sets of “hidden interests”—have all complicated efforts to promote sound management of resources. The study’s ap- proach emphasizes complexities inherent in efforts to promote local and indigenous rights 3 in the mining context, highlight- ing the need for rigorous attention to power dynamics that shape resource rights regimes and how these impact informal livelihoods in uneven ways. The study also suggests trajecto- ries for future research, critically engaging institutional strate- gies to address socioeconomic and environmental equity concerns in mining areas.


MINERAL GOVERNANCE IN HISTORICAL CONTEXT: KEY DEVELOPMENTS AND PRESSURES

Influences in the development of Indonesia’s Mineral Governance Institutions

Past research suggests that understanding Indonesian min- ing policy requires first recognizing historical influences on mineral governance institutions beginning with colonization and how these have evolved through transitioning patterns of institutional control in rural areas (Erman, 2007; Robinson, 1986). After Dutch colonial authorities introduced a system that gave elites exclusive resource rights and that centralized power in the licensing of minerals, resource governance re- gimes in the post-colonial era continued to centralize licensing power at the state level and prioritized mineral extraction even more emphatically as a national economic strategy (Ballard, 2001; Etemad & Salmasi, 2003). In 1958, the Indonesian Gov- ernment passed Foreign Investment Law No. 78, which sought to boost foreign investment in mining. Following the abortive coup attempt of 1965, the New Order Government under Pres- ident Suharto carried out new sweeping reforms in resource sectors, creating new regimes for mining. In 1966, actions were taken by the Temporary People’s Consultative Assembly (MPRS) by passing Decree No XXIII, reforming economic policies for the purpose of prioritizing extractive industries,

and stressing that capital from abroad must be sought. Based on the decree, two new laws were introduced, Foreign Invest- ment Law No. 1 of 1967 and Mining Law No. 11 of 1967. These laws have since been regarded as decisive influences in Indonesia’s economic history, particularly as foreign develop- ers were strongly encouraged to participate in the minerals sec- tor and granted with the majority of the country’s mineral rights.
The heavy prioritization on foreign investment in Indone- sia—a country that is among the top 10 producers in the world for gold, copper, nickel, and tin—would be continued and even more vigorously championed through structural adjust- ment reforms pursued during financial crisis in the 1990s (Ballard, 2001; Watkins, Kardono, & Saraswati, 2006). While Article 10 of the Mining Law stipulated that development of strategic and vital minerals could be undertaken by private developers appointed by the Minister of Mines and Energy, this often took the form of highly contentious contractual agreements, later named as Contract of Work for minerals (CoW), Coal Contract for coal (CC), and Production Sharing Contract for Petroleum (PSC) (Etemad & Salmasi, 2003). Sig- nificantly, however, for economic and practical reasons, the Minister was also empowered to designate certain limited deposits of strategic minerals for exploitation and authorize the development of other minerals by provincial governments, under a “Mining Authorization” scheme or Kuasa Pertam- bangan (“KP”) (Article 12, Law 11, 1967). The “KP” license allows only the participation of Indonesian individuals or wholly-owned Indonesian companies, and domestic investors were also accommodated through provisions known as “People’s Mining” permits (Aspinall, 2001). 4 Hence, the “indigenous mining sector” became recognized—on paper— as a distinct, legitimate basis for local development insofar as the new code established the principle that Indonesian citi- zens could register to participate directly in mineral extraction activities.
Decades of debate over how to update the Mining Law have seen many arguments surface, primarily through pressures ex- erted by foreign mining companies 5 and NGOs. 6 One of the less commonly publicized arguments for reform is that “indig- enous people are not recognized constitutionally as having any legal rights to mineral deposits” (Watkins et al., 2006, p. 5, my emphasis). Despite the common view that the mineral code should be updated, though, Law No. 11 of 1967 still provided the core legal and technical framework for mining for over four decades, until new reforms finally passed in Parliament in 2009, as discussed later in this article. The 1967 law classi- fied minerals into three groups: Group A—“Strategic Miner- als” (including oil, coal, and tin, among other minerals); Group B—“Vital Minerals” (including iron, copper, lead, gold, and silver); and Group C—minerals not included in either group A nor B (including limestone, sand, and gravel). This classification was altered slightly by Regulation No. 27 of 1980 which stipulated that development of strategic and vital minerals is controlled by the State while the provincial govern- ment is in charge of managing “C” group minerals. Particu- larly for vital and strategic minerals, the authority for their development was vested in the Minister of Mines and Energy, who could assign foreign contractors to conduct developments under CoW agreements. Yet, following the Autonomy Legis- lation passed in 1999, dramatic hopes for the democratization and strengthening of local district-level environmental gover- nance began to permeate the country with various new impli- cations for different sectors (Casson & Obidzinski, 2002; Duncan, 2007; Engel, Lopez, & Palmer, 2006; McCarthy, 2004; Palmer & Engel, 2007); decentralization was widely
viewed as an attempt to “bring government programs closer to the local level, where presumably they are to be tailored according to local needs and conditions” (Li, 2002, p. 275); this shift started to affect the mining sector in new ways. A key change emerged in the form of Government Regulation No. 75 of 2000, which authorized regional governments—at the regency level (Kabupaten)—to issue “KP” (local indige- nous permits) for all minerals. These developments, as the next sections explore, have shaped contemporary challenges con- siderably, setting a stage for major ongoing disagreements over mining and the role of decentralization as coherent, pro-poor, and pro-environment development strategy.

Governing minerals in the post-1999 era: “decentralization,”
rights and controversy

Despite the policies for decentralization, significant confu- sion continues to permeate in regard to whether national or lo- cal authorities can administer the mining rights in a particular region and with regard to the permitting of particular miner- als. Forbes (2007) describes how institutional tug-of-wars cre- ate problems as “the mining industry in Indonesia is burdened by overlapping claims” with “’overlaps of power between the central, regional, and local governments.” Local government officers whom I interviewed in 2007 and again in 2010 argued that KP mineral licenses could be issued independently by Kabupaten without approval from the central government; but this was often disputed by central government agents whom I interviewed, who suggested local governments were prone to a lack of responsible control while letting licenses overlap. Some central government officers suggested that local authorities failed to protect the property of companies from community members who “invaded” the land—an issue that national authorities have often sought to address through the use of police squads, as discussed below. Various stake- holders suggested that unless decentralization processes are clarified, national authorities will never truly relinquish power to lower levels of government for mining. These concerns abundantly confirm and extend further on earlier warnings by researchers who cautioned that the spirit of the Autonomy Laws was being selectively resisted in the extractive sector. Thorburn (2002) articulated this sentiment: “while many deci- sions that directly affect local people’s access to and use of lo- cal forest, land, coastal, and marine resources have been delegated to the districts, the Ministries of Forestry and Min- ing have managed to retain a greater measure of centralized control ove