Forest Protection

Part of the debate – in Westminster Hall at 11:00 am on 18th July 2007.

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Photo of Barry Gardiner Barry Gardiner Special Envoy for Forestry 11:00 am, 18th July 2007

Earlier this year, the Governments of Brunei Darussalam, Malaysia and Indonesia signed an important declaration on the "Heart of Borneo" initiative. Those three countries have one conservation vision, recognising the importance of their island, as they refer to it, as "a life support system". The initiative involves voluntary trans-boundary co-operation that is based, as they declare, "on local wisdom" and "on sustainable development principles". As such, the declaration brings together two agendas that have for far too long been kept apart. It may have been convenient for non-governmental organisations and Governments to separate developmental issues from environmental ones, but in truth they represent one agenda. Environmental sustainability will not happen if in order to achieve it we ask the world's poor to sacrifice economic growth and development. Equally, development that is not environmentally sustainable undermines its own foundations, as the Stern report recently highlighted.

I know that my hon. Friend the Minister recognises that point, and I welcome the fact that his previous boss as Secretary of State for International Development, our right hon. Friend Hilary Benn, has now taken over as Secretary of State for Environment, Food and Rural Affairs, strengthening further the links between the two Departments. Our right hon. Friend worked tirelessly on the issue of combating illegal logging in Indonesia. The "Heart of Borneo" declaration expresses that common environmental and developmental agenda in the following way:

"With one conservation vision and with a view to promote people's welfare, we will cooperate in ensuring the effective management of forest resources and conservation of a network of protected areas, productive forests and other sustainable land-uses within an area which the three respective countries will designate as the 'Heart of Borneo (HoB)', thereby maintaining Bornean natural heritage for the benefit of present and future generations".

I have worked closely with two of the three Ministers who signed that declaration—Minister bin Khalid from Malaysia and Minister Kaban from Indonesia—and in relation to Indonesia I want to put on the record today my admiration for just how far that country has moved since 1998 and the days of corruption under the Suharto regime, when the country was a kleptocracy. Today, it is a country putting in place protections under the law for its people and its quite extraordinary biota.

The island of Borneo is the third largest in the world, after Greenland and New Guinea, covering an area twice the size of Germany. Whereas Germany might boast approximately 2,700 different higher plant species, however, one mountain alone in Borneo, Mount Kinabaloo, has almost double that figure. The island as a whole registers more than 15,000—diversity as great as that in the whole of Africa.

Over the past 10 years, entirely new species to science have been discovered at a rate averaging three every month. That is true riches. It is based upon the rainforest, but it is worth immeasurably more as the basis for new drugs against cancer. There is the shrub that produces CBL316, a powerful new anti-cancer agent, and the compounds, calanolides A and B from the bintangor tree, which are effective against various strains of HIV. The forest also performs more mundane services for the local population, stabilising the climate, controlling soil erosion and regulating the supply of clean water. Those eco-system services are simply the essentials of life for 20 million people living on the island.

For the past decade the world has become progressively more aware of the importance of such services, of forests as carbon sinks and of their role in combating climate change. Deforestation is known to contribute approximately 20 per cent. of global greenhouse gas emissions every year, and for that reason illegal logging and oil palm plantations have recently been a focus of concern for the international community.

My hon. Friend the Minister well knows of my concerns in that area, but today I shall raise with him an equally serious threat to the Indonesian forest—that of open-cast coal mining. He will know from the work that his Department is doing with Indonesia in concluding a forest law enforcement, governance and trade voluntary partnership agreement, that the new, democratic Indonesian Government took commendably swift action to protect their remaining forests following the overthrow of the Suharto regime. On 30 September 1999, the Government enacted laws giving protected forest status to many of the remaining highland and key watershed areas. Included in that protected forest status were five out of seven concessions that the giant Anglo-Australian company BHP Billiton had, shall we say, secured under the Suharto regime.

Forestry law No. 41 of the statute book of the Republic of Indonesia in the year 1999 No. 167, addition to the national statute book No. 3888, clause 38, sub-clause 4 strictly states that open-cast coal mining is prohibited in protected forest areas. Having already invested approximately $40 million in exploring the potential of those concessions, BHP Billiton was not going to see them rendered effectively worthless without a fight. Along with a number of other companies, BHP Billiton lobbied to have the concessions reinstated. It did more than lobby: it threatened to bankrupt the fledgling democratic Government by launching legal proceedings to demand compensation. The new Parliament first refused to buckle, but that group of foreign companies applied significant international political pressure.

Questions to the Australian Senate have revealed a series of meetings at Australia's Jakarta embassy, where BHP Billiton's Andrew Wilson took a leading role. Those strategy meetings led directly to meetings between the Australian ambassador and a number of key Indonesian Ministries to press the companies' financial interests over the communities' national laws to protect their unique ecosystem. Eventually, Indonesia's new President, Megawati Sukarnoputri, submitted a perpu overruling Parliament. The Indonesian constitution is quite clear that it is for Parliament to enact the laws. The President, under clause 22(1) of the constitution, has the power to issue a decree or Government regulation in lieu of a law, only when the country is in the grip of a national crisis. The national crisis in that case was the threat that BHP Billiton and other companies would bankrupt the new democracy by suing at international arbitration for $22 billion.

Whether that threat was real or not, it was effective. The perpu specified that the 13 companies' forest area mining permits, which predated forestry law 41 of 1999, should remain effective for their originally intended span. The constitutional court considered a challenge to the perpu, and it found that under Indonesian law a concession or contract of work is granted to a mining company to exclude others from mining in a certain area, and that it does not comprise a permit for exploitation. A company holding a contract of work may carry out exploration, but it gains a licence for exploitation only when its mining plan and environment impact assessment of a particular site have received Government approval.

Ultimately, the constitutional court ruled that when six companies that are still at the stage of exploration or of feasibility studies enter the exploitation stage, they must comply with the requirements in clause 38(4) of forestry law 41 of 1999, which prohibits open-cast mining in protected areas. Hence, six of the 13 companies listed in the presidential decree are prohibited from open-pit mining in protected forest.

None of the five BHP Billiton concessions in the heart of Borneo benefited from the 2004 perpu. To safeguard its investment in those coalfields, BHP Billiton required another way to secure the right to exploit them. The Maruwai coalfield is today represented on the BHP Billiton website as a contract of work for a deposit area measuring

"120 km by 60 km in a remote and isolated area that lies largely within the province of Central Kalimantan. The mining of the resource will see the development of infrastructure over a much wider area."

The website says that the coal deposits contain a

"mid-volume hard coking coal resource which in stage 1 of the development will support the production of at least 1 million tonnes per annum (mpta) of coal. In stage 2, up to 5 mpta will be produced, potentially for up to a 20-year period. The Maruwai project is currently in a feasibility study phase which is aiming to bring online the stage 1 mining of the Lampunut deposit by the second half of 2008...This was due to its ability to be mined by open cut methods, its proximity to navigable rivers and its coal quality."

It is no surprise that at the end of last year, new guidelines were issued for temporary use of forested areas. Under chapter 1 of Forest Regulations 14/mehut ii/2006, any forest

"which is considered 'unsuitable' for logging use can be considered for a change of status" under a land swap or financial compensation deal. The acquired forest can be used for strategic purposes that include mining.

However, as far as the Maruwai coalfield and BHP Billiton are concerned, those convenient regulations contain a potentially fatal provision. Chapter 2(4)(2) of the regulations states that

"in protected forest, open cast mining is not permitted."

Despite a presidential decree, a constitutional court case and a change in the regulations, BHP Billiton was left with the unfortunate result that the Maruwai coalfield could not be open-cast mined because it was inside a designated protected forest area in the heart of Borneo—thwarted by lines on a map, it seemed, until the maps themselves changed.

I have copies of documents, which I will happily make available to the Minister, showing BHP Billiton's success in making approximately 20,000 hectares of protected forest disappear from official maps. So proud were the company's staff of their two revisions of the maps that they boasted in a memo:

"Judge our success by the lines on the maps."

What tools they used to bring about the changes I do not know—I can guess that it was more than an ink eraser. However, block Lampunut, the first stage of the exploitation, comprises 7,721 hectares, almost all of which used to lie within protected forest areas. Now, not a single hectare is shown to lie within such areas. The forest has simply disappeared from the maps.

Will the Minister give me a simple reassurance that he will ask his officials to raise the issue with their counterparts during their discussions about the forest law enforcement, governance and trade voluntary partnership agreement? In concluding a VPA under which UK and European taxpayers' money will be used to improve forest governance, it is of the utmost importance to obtain clarity and stability in relation to the protected forest areas being discussed. It cannot be right that FLEGT agreements should be based on shifting sands.

I have laid substantial charges at the door of BHP Billiton, but I wish before closing also to lay an olive branch. The company acquired another licence in 1999—not in Indonesia, but from the inspector of mines in Sweden, in accordance with that country's Minerals Act, to exploit the Manek area. The area is only 4 km from the Sarek national park, part of the Laponia world heritage site. The eastern part of the area is important to the Sami people, and the issuing of the permit resulted in three separate appeals. In that instance, BHP Billiton engaged in intensive consultation and ultimately decided to relinquish its exploration licence.

That was the right decision, not only for the Sami people but for BHP Billiton, which enhanced its reputation with the Sami and has now secured alternative drilling programmes in Sweden as a consequence. I cite that case in the belief that it could be a precedent for the heart of Borneo. I recognise that Sweden is a developed nation with a much longer legal tradition of land and property rights, but BHP Billiton professes to care not just about having a green image but about the environment.

Later this year, the world's spotlight will fall on the Indonesian island of Bali as world leaders meet at the United Nations framework convention on climate change conference of the parties to discuss climate change issues and how to create financial mechanisms to avoid deforestation. They will meet in the same hotel that hosted the Coaltrans Asia conference last month, where BHP Billiton representatives gathered to be told that Indonesian coal production would steam ahead unfettered. The two conferences could not represent two more different futures for the heart of Borneo or for our planet.