Gold mining company PT Sorikmas Mining (SMM) in North Sumatra’s Mandailing Natal regency on Sunday announced it had temporarily stopped operations after a recent attack on its facilities.
Hundreds of residents from Hutagodang Muda village, Siabu district, attacked and burned an SMM camp on May 29 in a culmination of volatile land disputes between the company and residents.
SMM general manager of business development Paul G. Du Plessis said the work stoppage was caused by huge losses brought about by the attack.
Du Plessis said he hoped the stoppage would be brief to limit larger losses by various parties, including the locals employed at the mining company.
“We are forced to stop operation because all of our belongings have been damaged and burned. We have to determine which facilities have to be rebuilt,” Du Plessis told The Jakarta Post in Medan on Sunday.
He explained that losses to the company had reached US$27 million: $7 million for building and office facilities and $20 million for mining samples.
Du Plessis said the losses hit the company hard, especially with regard to the mining samples damaged during the attack.
He said his company had spent years digging and collecting samples to be sent to Padang, West Sumatra, to analyze the gold content.
“Now we have to start from zero again,” Du Plessis said, adding that in the last two years of operation his company had spent “approximately $20 million to $30 million” on operational costs.
SMM is owned by Australia’s Sihayo Gold Limited (45 percent stake), state mining company PT Aneka Tambang (25 percent) and Indonesian investors (30 percent).
The company began operations in 1999 in Mandailing Natal on a 66,200-hectare concession. However, due to lack of support from the local administration, the company stopped operations for five years from 2004. In 2009, the company restarted operations after a Supreme Court ruling allowed it to continue exploration activities.
SMM spokesman Chris Koesoema Adhie said the company had been operating for two years but had not begun production. The company employed around 200 local workers, he said.
Koesoema said that since last March, SMM had received many requests by people claiming to be representatives of local residents.
He said some of the requests sought the firm to provide two hectares of land to each of the 500 households, in the area a Rp 500,000 stipend for each junior high student, a Rp 1 million stipend for each senior high student, and a Rp 2.5 million stipend for each university student in the area.
“We believe such requests, which we have not met, were the reason behind the attack,” Koesoema said, adding that the requests were unrealistic at a time when the company was still at the exploration stage.
The deputy director of the Medan branch of the Legal Aid Institute, Muslim Muis, who is also the legal representative for the attack suspects, said the requests were fair as people living near the mine were very poor.