Mining Benefit Management for Sustainable Development

La Ode Alwi

,R. Marsuki Iswandi

, La Baco

and Lukman Yunus

Agribusiness Department, Agriculture Faculty, Halu Oleo University, Kendari – Indonesia

Agrotechnology Department, Agriculture Faculty, Halu Oleo University, Kendari – Indonesia

Keywords: Benefit Mining, Sustainable Development.

Abstract: The mining sector should be managed optimally from social, economic and ecological aspects. Region with

mining areas should innovate in mining benefits management to achieve sustainable development. This

research aims are: (1) to determine key indicators in mining benefit management to achieve sustainable

development; (2) to determine the role and function of stakeholders in sustainable mining management; and

(3) to formulate a mechanism of sustainable development with benefit transfer orientation. The study was

conducted in Bombana District, Southeast Sulawesi Province, Indonesia from April to July 2018. It uses

secondary and primary data. Primary data was obtained through Focussed Group Discussion (FGD). Data

was analyzed by Interpretative Structural Modeling (ISM) and descriptive analysis. The research results

were follows. First, local regulations was needed to regulate the mining benefits not used as a routine

development budget but as endowments fund. Second, the reinforcement was required in mining benefits

management, starting from production supervision, production cost and sales through mining benefit

agencies. Third, the stakeholders involvement were needed, namely local government / local board, mining

companies, NGOs, universities and communities with each roles and functions.

1 INTRODUCTION

1.1 Background

Mining sector has large contribution to regional

economic growth. Mining boom in one region will

increase the economic activity (Iswandi, 2014).

Mining businesses contribute to country income

through taxes and royalties. State can use the

revenue for regional development funds. Other

contribution of mining business is Corporate Social

Responsibility (CSR) for community, especially

those within mining ring area (Alwi, 2016 and

Iswandi, 2017). Ideally, mining business

contribution can become positive and reduce social

problems such as decreasing unemployment and

poverty, especially in areas with mining potential.

Therefore, mining existence in a region is a blessing.

It has contributed to solve social and economic

problems in the region.

Beyond the positive contribution, mining

management can also create very complex problems.

Auty (2003); Hampreys (2007) and Collier (2010)

argued that mining existence in a region not only

gives blessings but also a resources curse for regions

that rely on mining sector as the driving force of

their economy. Resources curse is characterized by

high environmental degradation and pollution due to

mining activities. Fauzi (2010) and Burke (2010)

stated that management of non renewable resources,

especially mineral mining, often causes externalities,

resulting in higher recovery costs. MacMohan et al.

(2000) in Iswandi (2017) said that cost of

environmental mitigation in Indonesia from mining

reaches US $ 0.5 billion per year. Meanwhile, Fauzi

(2014) said the cost of environmental degradation

varies between US $ 0.56 billion to US $ 7.7 billion

per year. It consists of various types of degradation,

as water salinity, air pollution and land degradation.

On other hand, capitalist system considers human

beings and natural resources as a means to achieve

their life purpose. Materialistic sizes are the main

targets for capitalist. This understanding has spread

around the world including in Indonesia. Budiati

(2012); Rustiadi et al. (2011) and Jing et al. (2005)

in Alwi et al. (2016) said that the impact of

capitalism leads to welfare and incomes gaps with

the implications to erosion of environment life to

become not harmony.

236

Ode Alwi, L., Marsuki Iswandi, R., Baco, L. and Yunus, L.

Mining Beneﬁt Management for Sustainable Development.

DOI: 10.5220/0009900700002480

In Proceedings of the International Conference on Natural Resources and Sustainable Development (ICNRSD 2018), pages 236-240

ISBN: 978-989-758-543-2

The resource curse phenomenon is not always

happened. Some countries as Norway, Alaska,

Botswana, Kazakhtan, Azerbaijan and Sao Tome

and Principe show a success in mining resources

management and provide inter-generational welfare

and justice (Sachs et al., 2001; Frankel, 2012 ). The

steps were taken by some countries to make the

income source from non-renewable natural resources

as a stability fund and not used as a routine

development budget but used as strategic

investments. The fund was known as the Natural

Resource Fund (NRF) with the purpose to anticipate

the resource curse.

Considering the success experience of several

countries in mining management and the support of

Indonesian legislation, it was needed an innovation

and restructuring of mining benefit management.

Similarly, Bombana regency as one of areas having

gold mining potential requires good mining benefit

management toward sustainable development.

1.2 Problem

This research has three issues. First, what were key

indicators in mining benefits management to achieve

sustainable development. Second, how were the role

and function of stakeholders in sustainable mining

management. Third, how a beneficiary transfer

mechanism was oriented to sustainable

development.

1.3 Objectives

This research has three objectives. First is to

determine the key indicators in mining benefits

management to achieve sustainable development.

Second is to determine the role and function of

stakeholders in sustainable mining management.

Third is to formulate a transfer-benefit mechanism

with sustainable development orientation.

2 RESEARCH METHODS

2.1 Research Location and Time

The research location was Bombana District,

Southeast Sulawesi Province, Indonesia. The study

was conducted from April to July 2018.

2.2 Data Collection Technique

This research uses secondary and primary data.

Secondary data were obtained from various related

institutions. Primary data were obtained through

Focussed Group Discussion (FGD). The FGD

participants were representatives from Regional

Planning and Development Agency, Regional

Environment Agency, Department of Energy and

Mineral Resources, Forestry Service, and

Agriculture and Plantation Agency (at Southeast

Sulawesi Province and Bombana District level),

academics, mining entrepreneurs, non-governmental

organizations (NGOs), and community leaders.

2.3 The Observed Parameters

The observed parameters relates to key indicators in

mining benefit management to achieve sustainable

development, i.e. attributes based on FGD

stakeholders' perceptions. The parameters of each

attributes and parameters were given score 1 (bad), 2

(good enough), 3 (good) and 4 (very good)

categories.

2.4 Data Analysis

Reliability matrix through Interpretative Structural

Modeling (ISM) was used to analyze data to

determine the key indicators attributes in mining

benefit management. Safitri et al. (2014) said that

ISM analysis score = 1 if there are more than half

the number of respondents said the parameter to i

has contextual relationship with parameter to j, the

opposite has score 0. Meanwhile, descriptive analyse

was used to determine the role and functionality of

stakeholder in relation with mining benefit and

benefit transfer mechanism.

3 DISCUSSION

3.1 Key Indicators of Mining Benefit

Management

Key indicators of mining benefit management were

variables to support sustainable development. These

indicators were an institutional strength in mining

management. Good institutionalization was the

mechanism that conforms to a commonly agreed,

transparent, effective and responsive organization

procedure for public interest.

Sulistyani (2004) said that to achieve a welfare

rationalization related to mining management with

sustainable development orientation was absolutely

need responsive management for public interest.

Good management was characterized by a credible

Mining Beneﬁt Management for Sustainable Development

237

commitment to institutional goals (Williamson,

2000). In accordance with FGD results and Iswandi,

et al. (2018), 12 key indicators of mining benefit

management for sustainable regional development

were identified in Table 1.

Table 1: Key Indicators of Mining Management with

Sustainable Development Orientation.

No Ke

Indicators Descri

tion

Utilization of

effective mining

enefits

Effective and useful mining

benefit management

2. Financial flow

The flow pattern in

accordance with applicable

mechanism or regulation

Production

Supervision

Ensuring the level of gold

produced in every

production process by

com

External

supervision

Mining benefits managed

by a particular institution

(stand alone) should be

audited by an external party

(Financial Auditing

enc

Mining benefit

management

odies

Availability of individual

institutions in mining

enefits mana

ement

Investment

placement

committees

Maintaining the continuity

to fulfil short term

obligations (liquidity) and

long term (solvency) and

rofit

Availability of

multi-stakeholder

human resources

The importance of high

quality human resources to

manage the mining benefits

from multi

arties

Regulation

availability (Local

Regulation)

Local Regulation is needed

to regulate mining benefit

as local perennial or

eneration fun

Availability of

mining benefits

Available funds through

corporate taxes and royalty

/ land rent payments during

mining process activities

Social impact

(lower social

conflict

)

Conflict minimization from

mining management

11.

Economic impacts

(increasing the

regional economic

revenues)

Increasing the community

income and Domestic

Product Bruto in Bombana

District

12.

Ecological/

environmental

impacts (no

degradation and

ollution)

The availability of internal

supervisors to oversee the

performance of mining

benefit management bodies

ISM analysis produces Structural Model Charts from

key indicators as shown in Figure 1.

Figure 1: ISM model Diagram from mining benefit

management. Sources: Iswandi et al. (2018).

3.2 Stakeholders Role in Mining

Benefit Management for

Sustainable Development

Orientation

Research results found five stakeholders of mining

benefit management. They are: (1) Local

Government, (2) Mining companies, (3) Non-

governmental organizations (4) Universities and (5)

communities. Each stakeholder has roles and

functions as presented in Table 2. Williamson

(2000), Shultz (2004), Stiglitz (2007), Dharmawasan

(2010) and Yustika (2012) stated that stakeholder

involvement in public institutions can decrease the

monopolistic attitudes of renter and ruler because of

mutual supervision from each other.

The mining companies pay mining benefits in

form of taxes and royalties to government and

mineral rent as the repayment value of capital

services disrupted by gold mining activities. The

mining benefits should be used as a mining

endowment managed by independent institutions

such as the Investment Committee to determine the

amount of endowment funds for strategic investment

objectives, spill over effects and as a solidarity fund.

ICNRSD 2018 - International Conference on Natural Resources and Sustainable Development

238

Table 2: Roles And Unctions Of Stakeholders In Mining Benefits Management.

The mining benefits management should be

monitored, audited and validated by state auditor as

Development and Financial Examiner (BPKP) and

Regional Inspectorate. Therefore, the mining

benefits derived from mineral rent, taxes and

royalties can be set aside as long-term endowments.

The mining benefit management mechanism is

shown in Figure 2.

Figure 2: Mining Benefit Management Mechanism.

4 CONCLUSION

1. Local regulations is needed to regulates the

mining benefits not used as a routine

development budget but as endowments fund

that serve as: (a) cushion instruments due to

economic shocks from mining sector; (b) a

catalyst to transform from mining to non-mining

sector; (c) alternative funding mechanism for

regional development; and (d) reserve funds to

reduce the burden of mining companies on

environmental restoration.

2. The reinforcement is needed in mining benefits

management, starting from production

supervision, production cost and sales through

mining benefit agencies.

3. The stakeholder’s involvement is needed, namely

local government / local board, mining

companies, NGOs, universities and communities

with each roles and functions.

REFERENCES

Alwi, L.O., Dharmawan, A.H., Fauzi, A., and Hutagaol,

P.M., 2016. Mineral Fund and Regional Sustainable

Developmen (Case Studt of Bombana Regency,

Southeast Sulawesi Province). Australian Journal of

Basic and Applied Science. 10(6): 127-134. ISSN:

1991-8178 ; EISSN: 2309-8414.

Alwi, L.O., Dharmawan, A.H., Fauzi, A., Hutagaol, P.M.,

2016, Tata Kelola Kelembagaan Mineral Fund Dalam

Menunjang Pembangunan Berkelanjutan: Studi Kasus

Kabupaten Bombana Provinsi Sulawesi Tenggara.

Jurnal Ekonomi dan Kebijakan Publik. 7(1): 29-42.

Auty, M.R., 2003. Sustaining Development In Mineral

Economies : The Resouces Curse. [Thesis]. Routlegde.

London.

Budiati, L., 2012. Good Governace Dalam Pengelolaan

Lingkungan Hidup. Ghalia Indonesia.

Mining Beneﬁt Management for Sustainable Development

239

Burke, G., 2006. Opportunities for Environmental

Management in The Mining Sector in Asia (abstract).

The Journal of Environment & Development. 15(2):

224–235.

Collier, P., 2010. The Political Economy of Natural

Resources. Social Research. 77(4).

Desvisa, S., Chaerul, M., Sembiring, E., 2014. Multi

Kriteria Terhadap Pemilihan Sampah Organik

Dengan Menggunakan Metode Analytical Network

Process, Program Studi Magister Teknik Lingkungan,

Fakultas Teknik Sipil dan Lingkungan, Institut

Teknologi Bandung. Bandung.

Dharmawan, A.H., 2010. Mewujudkan Good Ecological

Governance Dalam Pengelolaa Sumberdaya Alam,

Pusat Studi Pembangunan Pertanian dan Perdesaan

LPM-IPB. Bogor.

Fauzi, A., 2014. Valuasi Ekonomi dan Penilaian

Kerusakan Sumberdaya Alam dan Lingkungan, IPB

Press. Bogor.

Frankel, J.A., 2012. The Natural Resouce Curse : A

Survey of Diagnoses and Some Prescriptions, Harvard

Kennedy School. John F. Kennedy School Goverment.

Humpreys, M., Sach, J.D., dan Stiglitz, J.E., 2007. Apakah

Masalah Kekayaan Sumberdaya Alam?, In Humpreys

(editors): Escaping The Resource Curse. Columbia

University Press. Columbia. p. 1-24.

Iswandi, R.M., Alwi, L.O., Baco, L., dan Yunus, L., 2018.

Sustainable Mining Management. International.

Journal of Civil Engineering and Technology

(IJCIET). 9(10): 707–717.

Iswandi, R.M., Yunus, L., Baco, L., Cahyono, E., dan

Alwi, L.O., 2015. Accesibilitas dan Region Economic

Potential at Rapid Growth Stategy Area. Journal

Avances in Enviromental Biologi. 9(5): 5151-557.

Iswandi, R.M., 2015. Natural Hazard Control in

Sustainable Mining Development. Recent Advances on

Enviromental and Life Science.

Iswandi, R.M., dan Alwi, L.O., 2014. Kebijakan dan

Strategi Pembangunan Pertambangan di Sekitar

Kawasan Pertambangan Emas menuju Pembangunan

Wilayah Tangguh dan Berkelanjutan. Prosiding

Seminar Nasional ASPI, Pekanbaru, Riau.

Iswandi, R.M., Alwi, L.O., dan Ido, I., 2014. Sustainable

Mineral Mining Enviromental Managemen Model.

Celebes International Conference on Earth Science

(CICES). Kendari.

McMohan, G., Subdibjo, E.R., Aden, J., Bouzaher, A.,

Dore, G., Kunanayagam, R., 2000. Mining and the

Environment in Indonesia: Long-term Trends and

Repercussions of the Asian Economic Crisis.

Environment and Social Development Unit (EASES),

East Asia and Pacific Region of the World Bank.

Washington, DC.

Rijanta, R., dan Baiquni, M., 2003. Otonomi Daerah,

Transisi Masyarakat dan Konflik Pengelolaan

Sumberdaya (Pemahaman Teoritis dan Pemaknaan

Empiris). Prosiding Lokakarya Nasional : Menuju

Pengelolaan Sumberdaya Wilayah Berbasis Ekosistem

Untuk Mereduksi Konflik Antar Daerah, Fakultas

Geografi Universitas Gadja Mada. 30 Agustus 2003,

Jogyakarta.

Rustiadi, E., Saefulhakim, S., dan Panuju, D.R., 2011.

Perencanaan Pengembangan Wilayah, Bogor. IPB

Press.

Sachs, J.D., and Warner, A., 2001. The Curse of Natural

Resources. European Economic Review. 45: 827-38.

Sulistyani, A.T., 2004. Kemitraan dan Model-Model

Pemberdayan. Guava Media. Yogyakarta.

Stiglitz, E.J., 2007. Making Globalization Work

(Menyiasati Globalisasi Munuju Dunia yang Lebih

Adil). Translated by Azwaldi, E. PT. Mizan Pustaka.

Bandung.

Williamson, O.E., 2000. The New Institutional

Economics: Taking Stock, Looking Ahead. Journal of

Economic Literature. 38: 595-613.

Yustika, E. 2012. Ekonomi Kelembagaan: Paradigma,

Teori, dan Kebijakan. Penerbit Erlangga. Jakarta.

ICNRSD 2018 - International Conference on Natural Resources and Sustainable Development

240