Indonesia sits on a bed of mineral wealth. A leading producer of minerals and coal globally, Indonesia is both resource-rich and one of the worlds biodiversity hotspots. Of the many factors the Indonesian government must balance as it pursues its strategic vision in this field, this is certainly one of the most important as, once destroyed, and this biodiversity cannot be recreated.
Yet for as long as the countrys mining policies and investment climate are held in such low esteem by foreign investors, it is unlikely this important issue will receive the level of attention it deserves. It had been hoped that the current Mineral and Coal Mining Law, No. 4 of 2009, with its supporting framework of regulations, would provide investors with the necessary regulatory support to attract new investment into the sector while simultaneously strengthening Indonesia’s perception as a significant world player.
We are well versed in the economic benefits full implementation of the Law will bring, even if the extent of these continue to be treated to public debate, whereas its broader impact upon indigenous communities and the environment continue to be pushed to the periphery. These issues are critical to Indonesia developing a world class mining ecosystem, yet for as long as the current status quo is maintained and unsustainable, illegal and damaging practices ignored, this ambition will remain unrealized.
Mining operations are by their very nature environmentally invasive. They cause substantial changes to the landscape, air and water in their vicinity, consume large amounts of energy and produce great quantities of waste - in some cases as much as 99 percent of the material originally excavated. Thus some environmental damage could be considered inevitable. Nevertheless mitigating steps can be taken and preventive measures introduced, and in a more closely regulated industry, damaging practices can thus be eradicated. But this can have a serious impact on upfront project costs. In recognition of the above, the law requires Environmental Permit holders to safeguard sufficient fundingto rehabilitate their work site in the event of environmental damage or for final restoration. However, clarification continues to be sought around this and as to whether these provisions overlap with existing funds which must be earmarked for reclamation and post-mining guarantees.
The right framework is in place to ensure the environment is protected and natural resources preserved. The 2009 Environmental Law provides for stronger administrative and criminal penalties than any previous legislation before it but the mining sectors current fragmented state makes this hard to safeguard.
This law is important as it takes steps to ensure that environmental pollution or damage are tackled while imposing strict liabilities on companies that use dangerous and hazardous material and/or cause serious threat to the environment. It also imposes penalties on government officials who grant Environmental Permits without following the proper procedures.
However, in spite of these good intentions the implementation and enforcement of these measures continues to be a significant problem for Indonesian authorities and threatens their ability to develop a world-class industry. Implementation of the 2009 Mining Law is an important step in the creation of an industry that is easier to regulate and would drive the evolution of more sustainable practices, shaping an industry more supportive of the 2009 Environmental Law.
Implementation of the law without exceptions, or at least with minimal concessions, sends a clear signal to those operating in the sector that their actions are under surveillance, and that there are basic expectations around the practices they employ in their operations.
A more regulated industry would help eradicate the current plunderingof Indonesias natural resources, which takes place with little regard for the environmental destruction that comes alongside this. Clearer guidelines, greater oversight and stricter regulation would encourage companies to be more sustainable in their operations for the long-term benefit of their operations and the bio-diverse communities around them.
It is evident in the Mining Laws provisions that the government has put careful effort into balancing the interests of many - including foreign investors seek-ingto invest in Indonesia’s lucrative mining industry against those of the countrys indigenous operators. Indeed, its intentions are clear; to ensure that a fair proportion of the wealth derived from the exploitation of Indonesias minerals is retained by Indonesians for the benefits of Indonesia.
This certainly isnt the case today and the environmental disregard which takes place alongside this is doubly damaging for our countrys legacy.
Environmental considerations are a critical component of Indonesia’s vision to create a world-class mining industry. As Indonesia works to implement the law in a constructive manner it is important not to cut corners in this process, ensuring that these needs are addressed while accommodating broader business and economic objectives.
The government must guarantee a sustainable framework will be clearly put in place soon and which protects Indonesia’s interests not only in the short term but for many, many years to come.
Nur Hidayat is a policy analysis consultant for various institutions, Including JICA, UNDP and Walhi. The views expressed here are those of the author and do not necessarily reflect the official position or policies of these employers.
Source : JakartaGlobe, November 28, 2013