News of Multinational Prospects Attracts Them : ‘Illegals’ Busy Taking Indonesia’s Gold

Five-year-olds equipped with tiny prospecting pans are among the tens of thousands of Indonesians making an illegal living digging and panning for gold.

The success of the “illegals” shows up in official statistics. Licensed gold mines will produce only a fifth of the 21.6 tons of gold the country expects to export this fiscal year, ending in March.

The government explains this by saying the extra production comes from “traditional” miners, rice-growers who add to their income by going off to pan for gold when farming is slow.

But the companies which hold mining rights to large tracts of gold-rich land in Indonesia’s outlying islands say non-licensed miners, few of them locals, materialize from nowhere as soon as news of a multinational prospect leaks out.

One contractor said after news broke that his Canadian joint-venture firm had signed a prospecting contract, the number of illegals in the area ballooned from around 200 to about 10,000.

Contractors often tolerate illegals if they are only going for alluvial, or surface, gold that doesn’t interest big-time miners. Some set aside specific areas where genuine traditional miners, locals with simple hand-held equipment, can work.

Jakarta recognizes that illegals not only are a pest but also pose a threat to the legal mines, whose gold production would help fill government cash-boxes.

President Suharto--after the government had handed out more than 100 gold exploration contracts--decreed that armed security forces be brought in to clear illegals off concession land if need be. Contractors complain, however, that his determination does not filter through to regional officials who have to carry it out.

The deadline for the clearout was July, 1988, but when a Reuters correspondent recently visited PT Kelian Equatorial Mining, an Australian joint-venture mine deep in the jungles of Kalimantan, the Indonesian part of Borneo, there was no shortage of gold seekers.

Young girls stood waist-deep in pits of water, expertly swilling pans of mud that would, with luck, yield gold, while men winched up buckets of earth from shafts.

They said on a good day they came away with around half a gram of gold each, worth about $4.50--twice Indonesia’s average daily wage.

“It’s hard for me to send them away,” said a policeman. “They are only doing it to fill their bellies.”

Industry sources say many of the illegal miners work for syndicates, which smuggle production out of Indonesia.

“There’s a very high level of organization. The illegals in our area are financed by Chinese businessmen who make obvious payments to officials,” said the manager of a Kalimantan mine.

He estimated that if smuggled gold were thrown into the export pot, the total figure could be as high as 30 tons. At present, the government receives tax or royalty revenue from less than five tons.

Would it not be in the government’s interest, then, to increase legal output by policing illegals more thoroughly?

“If you were sitting back in a position of authority and got a bar of gold every now and then, you might not see it that way,” one miner commented acidly.

He said the illegals attack all the richest veins, leaving the multinationals to get at the stuff that is more expensive to produce.

Illegal miners can do untold damage in digging pits and using pumps to blast water at the riverbank, filtering heavy gold from the soil that washes off.

“It’s criminal. Those guys are raping the riverbank,” said Michele Hawke, senior geologist for Kelian Equatorial Mining.

“No environmental impact studies for them. They just make one hell of a mess of things,” said the manager of another mine.

In other areas, the damage is more dangerous. One of the cheapest chemical ways to extract gold from ore is to mix it with the poisonous metal mercury.

“In our area, there are hundreds and hundreds of people all pumping sediments and mercury into the rivers and the sea. It’s absolutely lethal,” said a contractor from Sulawesi island.

Large mining companies use the more expensive cyanide, which decomposes soon after coming into contact with light and air.