Environmental Issues

Forest Protection and Revegetation

1. Many people say Law No. 19/2004 only benefits companies, like Inco, that gain more profit by sacrificing the environment. Is that true?

A: PT Inco is firmly committed to the protection of forest areas and revegetation efforts because our operations depend on water. We continue to meet and comply with the prevailing government standards and regulations, including those concerning forest protection and revegetation. To date, PT Inco has designated a maximum of 1,000 hectares out of the total 218,000 hectares under the Contract of Work (CoW) to remain clear for operational purposes.

2. How do we know that you have really “implemented special measures” to preserve the environment?

A: PT Inco has an excellent record of compliance with environmental policy, particularly revegetation initiatives. We have a Reclamation Guarantee Fund that demonstrates our compliance with our obligations. The fund is reviewed every year by the Ministry of Energy and Mineral Resources to ascertain sufficiency of funds. We have obtained government approval to revise our Environmental Management Plan (RTKL) for 2003-2007. Other feasibility studies including Amdal, RPL, and RKL are undertaken prior to exploration of other areas and have been approved by the Ministry of Energy and Mineral Resources.

3. How can you be so sure the local community supports your efforts?

A: We value two way communication and input from the community. We prioritize partnership, development, and empowerment, especially with the community. We encourage regular community meetings where feedback is given and received on a continuing basis. Input is given prominence in all our planning documents. Problems are resolved using a “family values” approach.

4. According to the 2003 report by Forest Watch Indonesia, Indonesia loses 2.4 million hectares of forest land annually. Law No. 19/2004 (which covers permission to mine in protected forests) will see Indonesia lose even more forest areas due to mining operations. What are you doing to make sure PT Inco operations remain environmentally friendly?

A: PT Inco is firmly committed to the protection of forest areas and revegetation efforts because our operations depend on water. We continue to meet and comply with the prevailing government standards and regulations, including those concerning forest protection and revegetation. To date, PT Inco has designated a maximum of 1,000 hectares out of the total 218,000 hectares under the Contract of Work (CoW) to remain clear for operational purposes.

5. How would you react if Law No. 19/2004 was annulled by the Constitutional Court?

A: It is not wise for us to speculate on the ruling of the Constitutional Court. At all times, PT Inco complies with all relevant laws of Indonesia.

6. Why were only 13 mining fields (owned by 12 companies) out of around 150 fields granted the permission to mine in the protected forest areas?

A: This is a decision for the government. We are not in the position to judge the government’s decision.

7. Does PT Inco intend to comply with Ministry of Forestry Regulation No. 12/2004 which will add to the obligations that must be fulfilled, and costs that must be paid by the company, both of which are not mentioned in the CoW ?

A: As stated in the CoW, matters outside the CoW are the responsibility of the government. Expenses incurred will be deducted from payments made to the government.

Dust Emissions

1. PT Inco implemented in 1996 an environmental management program that included control of kiln exhaust and electrostatic precipitators (ESP). This was aimed at reducing dust emissions. Why has it taken you so long to comply with the regulations? Why haven’t you accelerated the timetable for ESP installation in all four furnaces?

A: PT Inco has so far invested more than US$130 million on dust control technologies to reduce dust emission. However, we need to ensure that the technology that we use is effective and this takes time. By the first quarter of 2005, we will install the first dust control system in one of our four furnaces and this will virtually eliminate dust emissions. The process takes six to twelve months to be declared “safe to operate.” If this first dust control system is successful, we will use it for each of our remaining three furnaces over the next three years to eliminate all dust emissions on all four furnaces by 2007.

2. PT Inco’s operations emit dust and smoke which contribute to air pollution. What have you done to minimize the impact of pollution on the surrounding environment?

A: We have carried out significant investment and made progress in dust control. In the past 12 years, we have reduced overall dust emissions by about 80% and hope to eliminate dust emissions from all four furnaces by 2007. To date, we have invested more than US$130 million on dust control technologies to reduce dust emission. In addition, we continue to carry out feasibility study research on possible solutions to control dust emissions by working together with Inco Technical Services Limited (ITSL), our most advanced research division located in Ontario, Canada. One outcome from this process is an action plan designed to address this issue this year.

3. Pollution by PT Inco has led to a decline in the quality of cocoa planted 10 km away from the factory. Are you aware that pollution from your activities affected cocoa branches and created spots on the bark of the cocoa trees? Are you aware that your pollution has caused birth defects in local fish – fish without teeth?

A: We take all allegations seriously and we have undertaken a series of scientific studies with the assistance of various independent institutions to further investigate the allegations. At this stage there is no scientific evidence linking spots on the bark of cocoa trees with dust emissions and other operational activities of PT Inco. We have an excellent record of compliance with the Indonesian government’s environmental standards and this is verified in our quarterly reports to the government.

4. Is it true that agricultural land near PT Inco’s operational areas has suffered as a result of high dust emissions? And that the dust emissions have created acid rain?

A: The dust emitted from our stacks is similar to the dust that occurs naturally in the soil in the agricultural land near our operations. At this stage there is no scientific evidence linking dust emissions with destruction of agriculture/farmlands/acid rain. We have an excellent record of compliance with the Indonesian government’s environmental standards and this is verified in our quarterly reports to the government.

5. According to one expert, yellow dust has been found in PT Inco’s operations in Matano, and black, brown, and red dust from the Sorowako operations. Why does this happen and what is the effect on human health?

A: While dust emission control must always be dealt with in a timely and professional manner, dust emission does not have a significant impact on a community’s health. Community health records show that there is no significant difference between the health of Matano and Sorowako residents and those in other regions that are not exposed to dust emissions. Our dust monitoring program shows that level of airborne dust and nickel in the community are well below government limits. The ambient dust levels in the surrounding community comply with government standards. Therefore any health risk is minimal.

6. Sorowako residents claim that air quality has decreased continually since PT Inco set up operations there. Is that true?

A: Our dust monitoring program shows that the level of airborne dust and nickel in those communities are well below the limits set by the government. We have been operating in Indonesia for almost 40 years and have recorded significant progress in environmental compliance. We consistently seek options for the best solution to manage any potential social and environmental impact that may arise within our areas of operation.

7. Is it true that people in the vicinity of Sorowako, especially children, are now suffering from respiratory illnesses such as asthma, and that this has been associated with your dust emissions?

A: We have scientific records that show our dust emission does not have a significant impact on community health. Community health records show that there is no significant difference between the health of Sorowako residents and those in other regions that are not exposed to dust emissions. Our dust monitoring program shows that the levels of airborne dust and nickel in the community are well below government limits. The ambient dust levels in the surrounding community comply with government standards and therefore any health risk would be minimal.

8. PT Inco operations and the city of Sorowako are located too close together, and dust particles have been quick to spread to residential areas. Is PT Inco willing to relocate for the sake of the health of the community?

A: While dust emission control must always be dealt with in a timely and professional manner, dust emission does not have a significant impact on community health. In addition, our dust monitoring program shows that the level of airborne dust and nickel in the community are well below government limits. The ambient dust levels in the surrounding community comply with government standards and therefore any health risk would be minimal.

9. It’s clear that PT Inco’s medical center seems unable to manage the health problems of the people in Sorowako, which are caused by pollution from PT Inco’s operations. Is this true?

A: While dust emission control must always be dealt with in a timely and professional manner, dust emission does not have a significant impact on community health. Community health records show that there is no significant difference between the health of Sorowako residents and those in other regions that are not exposed to dust emissions. We have an excellent record of compliance with the Indonesian government’s environmental standards and this is verified in our quarterly reports to the Indonesian government.

10. PT Inco always claims dust emissions do not have a significant effect on the community surrounding it, but isn’t this research carried out by PT Inco itself?

A: We are confident that the research has been carried out professionally and objectively. It is study-based and tracks the health records of community members who went to the PT Inco medical center as well as tracks record from regional health offices. Records show there is no significant difference between the health of Sorowako residents and those in other regions that are not exposed to dust emissions. We have an excellent record of compliance with the Indonesian government’s environmental standards and this is verified in our quarterly reports to the Indonesian government.

11. NGOs say that PT Inco is one of Indonesia’s worst polluters, as seen by the black ranking it received from the Indonesian Ministry of Environment. Why have you been ranked so poorly? What have you done about the environmental problems in your areas of operation?

A: The government recognizes PT Inco’s continuous efforts to comply with the government regulations on dust emission. We have carried out significant investment and made progress in dust control. In the past 12 years, we have reduced overall dust emissions by about 80% and hope to eliminate dust emissions from all four furnaces by 2007. To date, we have invested more than US$130 million on dust control technologies to reduce dust emission. PT Inco has been in operation in Indonesia for almost 40 years and has recorded significant progress in environmental compliance. Our excellent record of compliance with the Indonesian government’s environmental standards is verified in our quarterly reports to the Indonesian government.

Water Effluent and Cr6+

1. What is Cr6+? How dangerous is Cr6+ for the environment and human health?

A: Cr6+ or hexavalent chromium is a widespread contaminant that enters the environment through various industrial processes. Cr6+ compounds are highly water soluble, toxic in the environment, and carcinogenic in mammals. It is important to note that not all mining activities result in Cr6+ emissions. More importantly, Cr6+ is not part of PT Inco’s operations processing. Cr6+ can occur naturally in certain areas when ores are exposed to sunlight and oxidation. PT Inco monitors Cr6+ continuously because we are committed to compliance with government regulations on emissions as well as the reduction of any environmental impact in areas in which we operate.

2. What will happen if someone consumes too much Cr6+ and what are the symptoms of Cr6+ poisoning?

A: Not all mining activities result in Cr6+ emissions, which occur naturally in certain areas when ores are exposed to sunlight. Therefore PT Inco monitors Cr6+ on a continuous basis and takes prompt action whenever irregularities are detected.

3. Reports say Inco’s mining activities polluted the water in its operational areas ?

A: This is incorrect. An extensive five-year study of data obtained over the last 50 years conducted by Prof. Dr. Haffner from the University of Windsor, Canada, confirms that there has been no significant change in the quality of water in Lake Matano as a result of our operational activities. In addition, Cr6+ levels in the water within our operational areas are below the threshold limit.

4. Can you guarantee that people will not get cancer as a result of drinking water from sources located within Inco’s operational areas?

A: It is deliberately misleading to talk about guarantees in such a case. However our excellent record of compliance in meeting standards for water effluent speaks for itself. A study of PT Inco’s operations in Sorowako carried out in 2002 confirmed that our waste is not hazardous, and that our metal, organic and inorganic properties met the regulatory requirements of the government. A five-year extensive study of data obtained over the last 50 years conducted by Prof. Dr. Haffner from the University of Windsor in Canada, also confirmed that PT Inco’s operational activities resulted in a negligible impact on Lake Matano.

8. How much Cr6+ is created as a result of your mining activities?

A: Not all mining activities result in Cr6+ emissions. Cr6+ is not part of PT Inco’s operations processing and occurs naturally in certain areas when ores are exposed to sunlight and oxidation. However, PT Inco continuously monitors Cr6+ and tries to minimize exposure of areas prone to Cr6+. To date, we have managed to reduce Cr6+ level to below the threshold limit. We have scheduled additional geology and hydrology studies to enable us to better understand the root cause of Cr6+ and this will help us adjust our mining plan to help reduce it.

9. Where does the Cr6+ go to?

A: Before water from the processing and run off from mining and reclamation areas is discharged, PT Inco collects and treats it to ensure that it meets water quality standards. Although Cr6+ is not part of PT Inco’s operations processing, we are committed to minimizing exposure of areas prone to Cr6+ and we deal promptly and proactively with such issues whenever they arise.

10. What do you do to the effluent to make sure it is not harmful to the community?

A: Before water from the processing and run off from mining and reclamation areas is discharged, PT Inco collects and treats it to ensure that it meets water quality standards. Water effluent at PT Inco is controlled by a system of holding ponds in which dust and sediments are allowed to settle. Our effluent process contains only dust, and chemical additives are generally not required to get this water to acceptable standards before it is discharged.

11. Does this effluent – treated or untreated – have any relationship with the incidence of cancer in communities in which Inco operates?

A: PT Inco has managed to reduce Cr6+ level to below the threshold limit and has an excellent record of compliance in meeting standards for water effluent. PT Inco has been in operation in Indonesia for almost 40 years and has recorded significant progress in environmental compliance, as well as consistently seeks improvement in all aspects of operations management.

12. We understand that your environmental report (Amdal) is made by Regional Bapelda (Bapedalda). However most people know that they are incompetent etc. What do you say?

A: It is not PT Inco’s territory to question or judge an institution’s capability. PT Inco is committed to compliance with government regulations on emissions as well as the use of the most efficient and effective technology to reduce any impact on the environment in areas in which it operates. Hence, PT Inco always consistently seeks improvement in all aspects of operations management by providing regular monitoring report on general environmental conditions undertaken by various government authorities including Bapelda regional offices.

When an Amdal is conducted, Bapedalda reviews the documents that are assessed by the Evaluation Committee. This committee comprises various related institutions at national and regional level.