JAKARTA: A potential lawsuit over halted mining operations could expose the state to fiscal risks amounting to tens of trillions of rupiah, extending far beyond legal fees to include lost revenue and compensation claims.
Josua Pardede, chief economist at Permata Bank, said that the costs from such disputes stem primarily from legal fees and, more significantly, the financial impact of the settlement or ruling. The latter includes possible obligations to reinstate permits or pay compensation.
“The decisive component is the outcome: compensation, lost revenue. The bill’s size is based on the project’s cash flow and economic value, not merely courtroom costs,” Josua said.
The Martabe gold mine, operated by PT Agincourt Resources, recorded approximately US$558mil in sales and a net profit of US$158mil in 2024.
Its contributions to government revenue, including royalties, taxes and fees, to the value of US$113mil.
Agincourt Resources is a subsidiary of publicly listed PT United Tractors, which itself is a subsidiary of diversified conglomerate PT Astra International.
“At this scale, the state’s fiscal risk includes not just legal costs, but also potential lost revenue from operational disruption and compensation claims,” Josua said.
“In a worst-case scenario, total exposure could jump from hundreds of billions to tens of trillions of rupiah, depending on disruption duration, compensation basis and the settlement outcome.”
He said that the key was to maintain procedural consistency, communicate in a calm and data-driven manner and ensure policy changes were not seen as abrupt moves undermining business certainty.
Josua noted that damage to investor trust could be contained if the government based any permit revocations on clear, measurable violations, followed a transparent and orderly process and provided a fair resolution, including compensation.
The importance of fair and consistent government action is made clear by the lives lost and environmental damage caused when regulations are not properly enforced, he said. — The Jakarta Post/ANN
