Patience is a virtue: Problems of regulatory governance in the Indonesian mining sector

Mining investment in Indonesia has been at a standstill for a decade. Clearly. international mining companies regard the country as a high risk destination for capital. Yet Indonesia is one of the most highly mineralised countries in the world and has expressed a desire to increase investment in the sector in the coming years. As a first step in this direction the government has introduced a new mineral and coal mining law to replace the highly regarded Contract of Work system. The government argues that this new law will reinvigorate mining investment in the country. This paper suggests that the new mining law will do little to improve the situation. Indeed, it is unlikely that Indonesia will become a preferred destination for mining investment in the foreseeable future. Poor regulatory architecture, endemic corruption, and a lack of institutional capacity continue to be of concern to investors.     

Small–scale mining in South Africa: Past, present and future

Mining is an important part of the South African economy and has been the driver of much of the economic development of the country. However, the small–scale mining subsector still has to realise its full potential. A small–scale mine has been defined as a mining activity employing less than 50 people and with an annual turnover of less than 7.5 million Rand and includes artisanal mines. Small–scale miners are involved in many commodities but there appears to be a bias towards gold, diamonds and quarrying for construction materials, including brickclays. Small–scale mining is regulated by the same legislation (i.e., for the environment, labour, mineral rights, exploration and mining permitting, and skills development) as large–scale mining, though compliance is low, particularly where artisanal mining in concerned. The effective participation of small–scale miners in the mining sector is hampered by their lack of skills, i.e., technical, business and management, and their limited access to mineral deposits, capital and markets. Some of these hindrances have been inherited from the imbalances of the colonial and apartheid eras and continue to act as barriers, making entrance to the industry difficult. For those who have entered the industry out of desperation, as is the case with most artisanal miners, their activities result in negative impacts evident in the inefficient, unsafe and environmentally unfriendly operations. With the advent of the new political dispensation in South Africa, a new era is dawning for the country’s small–scale mining subsector. This has resulted in a change of attitude and new government policies which have led to special programmes being put in place to promote the subsector. Intervention strategies for the support of small–scale mining (some of which are already in operation) include programmes for kickstarting mineral beneficiation and value–addition projects, development of appropriate technologies and skills and technology transfer. Proponents of small–scale mining see a well–regulated industry as being the cornerstone of future rural economic development, particularly for previously disadvantaged communities in the poverty nodes.     

Brazil's mineral development: Potential and problems

Although Brazil is well endowed with natural resources, some of these are unexploited due to poor communications and political instability. The authors review present government policy and the situation with regard to oil and gas, iron ore, manganese and steel and other minerals, and conclude that Brazil has a bright economic future.     

Ghana: revival of the mineral sector

After almost two decades of decline, Ghana's mineral sector has rebounded significantly and is currently the main foreign exchange earner. Gold mining is the principal activity within the sector and accounted for 41 percent of total export earnings in 1996. This paper presents an overview of Ghana's mineral industry and covers mineral resources, production and reserves; mining investments; the role of mining in the economy; and the structure of the industry. An overview of the national mineral policy is also presented to depict the current regulatory and fiscal environment in which the industry operates. The spectacular reversal in mineral sector performance can be attributed to the adoption of World Bank recommendations in a new national mineral policy, the 1986 Minerals and Mining Law, aimed at revitalizing the sector.     

‘Reserves’ as a leading indicator to future mineral production

The factors which influence the size and value of mineral reserves are discussed and an example is given of a more rigorous system for measuring supplies of non-renewable resources.The extent to which reserves and resources of minerals can be used as leading indicators of future mineral production is examined and examples of the dangers of over-reliance on this factor are described.Key aspects, such as confidence limits, differences in the economic exploitability, the dynamic nature of reserves, and their variability in grade, are examined in some detail using the South African coal industry as an example.     

Assessing the impact of driverless haul trucks in Australian surface mining

Australia has been a leading mining nation and its mines continue to attract substantial investment due to its strong mineral endowment, mining tradition and high skills base. In recent years Australian mining companies have been facing higher labour costs, which need to be offset by other savings. Automating mine-site machinery offers one potential source of such savings.Underground mines pioneered automated technology largely for safety and mine accessibility reasons and to reduce operating costs. Yet these operations now represent a much smaller portion of the total ore tonnes mined due to the changing mining techniques meaning larger lower grade deposits are becoming economic. It appears the future of mine automation will be directed by surface mining as this maturing technology finds further applications above ground and in the next decade large scale open pit automation trials gain more momentum.This paper assesses the implications of introducing driverless haul trucks in a typical large remote Australian open-pit mine. Such automation will save employee and associated costs, increase operational productive hours and ultimately will reduce mine site workforce numbers. While there will be fewer jobs per mine, with reduced costs and higher productivity some previously uneconomic mines may again be profitable.The social implications of greater mine site automation are the reduction in population of remote mining towns and a decrease in the lower skilled labour requirements for the mining sector. There will be an increase in fly-in fly-out mining operations and companies will establish remote control centres for automated mines in larger cities. This may decrease overall labour requirements and so reduce employment in the sector; therefore, the government should be mindful of implementing policies that ensure a fair return on the economic rent of mineral leases.     

The Environmental sustainability of mining in Australia: key mega-trends and looming constraints

At first ‘sustainable mining’ could be perceived as a paradox—minerals are widely held to be finite resources with rising consumption causing pressure on known resources. The true sustainability of mineral resources, however, is a much more complex picture and involves exploration, technology, economics, social and environmental issues, and advancing scientific knowledge—predicting future sustainability is therefore not a simple task. This paper presents the results from a landmark study on historical trends in Australian mining, including ore milled, ore grades, open cut versus underground mining, overburden/waste rock and economic resources. When complete data sets are compiled for specific metals, particular issues stand out with respect to sustainability—technological breakthroughs (e.g. flotation, carbon-in-pulp), new discoveries (e.g. uranium or U), price changes (e.g. Au, boom/bust cycles), social issues (e.g. strikes), etc. All of these issues are of prime importance in moving towards a semi-quantitative sustainability model of mineral resources and the mining industry. For the future, critical issues will continue to be declining ore grades (also ore quality and impurities), increased waste rock and associated liabilities, known economic resources, potential breakthrough technologies, and broader environmental constraints (e.g. carbon costs, water). For this latter area, many companies now report annually on sustainability performance—facilitating analysis of environmental sustainability with respect to production performance. By linking these two commonly disparate aspects—mining production and environmental/sustainability data—it becomes possible to better understand environmental sustainability and predict future constraints such as water requirements, greenhouse emissions, energy and reagent inputs, and the like. This paper will therefore present a range of fundamental data and issues which help towards quantifying the resource and environmental sustainability of mining—with critical implications for the mining industry and society as a whole.     

Financial failures in mining : Implications for LDC mineral policies

The risk of financial failure among LDC mining projects, always significant, has apparently increased during recent years. This situation, which is unlikely to change in the near future, has important implications for LDC mineral policies. In particular, it can no longer be assumed that mining will generate significant government revenues, traditionally regarded as the single most important economic benefit arising from large-scale mining projects in LDCs. Many LDC governments consequently need to reassess their mineral policies and place greater stress on maximizing economic benefits which will accrue even where mines fail to generate significant profits. Two such benefits are discussed, and concrete policy measures are suggested to illustrate the initiatives available to LDCs.     

A review of mineral development and investment policies of Botswana

Botswana's mineral policy objective is primarily to maximize the national economic benefit from the development of mineral resources. In 1999, the government replaced the old mining code of 1977, which was out of tune with prevailing economic philosophies with a new mining code. Although, the old act had its shortcomings it served the country reasonably well for 20 years, during which time the country was transformed from being one of the poorest of the world's poor to a middle income country. One of the cornerstones of the new and old mining codes is that government does not subscribe to privately owned minerals rights. The Botswana government attempts to provide a fair balance between the various stakeholders. There are, however, areas in the mineral policy and mining codes that need to be critically reviewed as outlined in this paper.     

Resource diplomacy in a Canadian perspective

Concern for the supply of resources—renewable and nonrenewable—has been evident during the 1970s. All countries seek to increase the economic and social returns from the exploration, processing and distribution of minerals so as to improve the quality of life of their people. Proper resource management is imperative because of the interdependence of the mineral sector with other leading sectors of the economy and also because of the importance of minerals in the web of international economics. This paper emphasises the significance of recent international events as they affect the mineral industry and the Canadian position in the ever changing world of resource diplomacy.     

Harnessing the bonanza: economic liberalization and capacity building in the mineral sector

Over the past decade many developing and transition economies have liberalized their investment regimes for mining and privatized formerly state-owned mineral assets. In response, these economies have witnessed increased foreign investment in exploration and development, growth in the number and diversity of mineral projects, and the opening up of new channels for harnessing increased economic and social benefits from development in the minerals sector. The restructuring of fiscal and regulatory regimes to encourage foreign investment, and the associated influx of mining capital, technology and skills, is transforming traditional relationships between mining firms, local communities and the government. This transformation necessitates a re-evaluation of the most effective policy approaches to capture increased economic and social benefits from mineral production. This article considers effective mechanisms for improving the capacity of developing and transition countries to maximize the economic and social benefits of mineral production. Common challenges associated with minerals economies are reviewed. Consideration is given to the opportunities for harnessing foreign direct investment and the possibilities for creating new partnerships between local communities, industry, government, and multilateral development agencies through social investment projects. The article concludes with a series of recommendations for the design and implementation of policy approaches towards harnessing mineral production for economic and social benefit following the liberalization of investment regimes for mining.     

Understanding the regional context of sustainable concrete in Asia: Case studies in Mongolia and Singapore

In order to improve the sustainability of the Asian concrete industry, it is important to understand the effect of regional context considering the widely varying socio-economic conditions present in Asia. This research in Mongolia and Singapore was conducted as a continuation of previous studies in Japan, Thailand and South Korea in order to further contribute to understanding regional context, particularly geographic, climate, and economic factors. Geography and climate were found to strongly affect the means by which durability should be assured in each country, as Singapore has a tropical climate whereas Mongolia experiences a large temperature variation with extremely cold winters. The ability to access construction materials and resources was also related to geography, as Singapore, while resource poor, is an international shipping center, whereas Mongolia has abundant resources but few access routes for imports. Quality control issues in Mongolia could be understood in the context of the lower level of economic development, whereas in Singapore the high level of development has lead to an emphasis on green construction, with the government taking the lead in implementing new systems and technologies.     

Privatizing the minerals sector

The end of the Cold War presents new challenges for the dynamics associated with mineral resources development. Broader approaches are needed to help mineral rich developing countries develop their minerals sector. These countries need to embark upon programmes of policy reform and privatization in order to make their mineral resources industries more efficient and responsive to free market forces (such as supply and demand and price), and to turn mineral sector decision making over to the private sector. This article examines the use of policy reform and privatization strategies to increase mineral resource production in developing countries, thereby contributing to both developing country economic growth and developed country access to mineral supplies .     

Commodity booms and their impacts on the Western Australian economy: The iron ore case

Western Australia is a resource-rich province. Since the 1890s, resources booms have played a key role in the development of the state's economy. In the last few years, Western Australia's resources industry has continued to enjoy exceptional conditions created by strong international demand for commodities. This paper aims to examine the likely impact of this commodity boom in the iron ore sector on the Western Australian economy, using a general equilibrium approach. The modeling results indicate that the Western Australian economy will benefit from the expansion in iron ore exports and investment in terms of rising consumption and employment, although at the industry level there will be losers as well as winners.     

An economic analysis of different types of formal and informal entrepreneurs, recovering urban solid waste in Bangalore (India)

The recycling sector in India, which consists of a comprehensive trade and production sector, is rather complex. Nevertheless, it creates important benefits for both the economy and the environment. In order to comprehend the system, a case study has been performed on the recycling sector (paper, plastic, glass and non-ferrous metal) in Bangalore (India), focussing on the market structure, the scale of operation, employment effects, constraints, and recent developments. It was found that this highly competitive and labour-intensive industry is largely dependent on cheap labour and the supply of solid waste from the local trade system. Its mostly informal nature results from the ‘unregisteredness’ of the materials. Consequently, government involvement is avoided as much as possible. With present growth rates, prospects of recycling in Bangalore are advancing. Yet, problems such as lack of supply and loss of quality emerge. Therefore, quality control and market conditions should be improved.     

Foreign direct investment and institutional obstacles: The case of Russian forestry

This article examines why, in spite of vast forest resources, Russia has been unable to attract foreign investors into its forest industry. A survey of 32 influential Western European forest companies indicates that purely economic factors, such as labour or raw material costs, are not the main reasons these companies refrain from investing. Instead, the companies identify a number of institutional factors: ambiguous legal systems; difficulties in negotiating with local authorities; unfair tax enforcement; and general political instability as the main impediments to FDI in the sector. These factors have led many companies to abandon previously considered investments in Russia, and also to terminate existing business relationships with Russian partners. The survey results also indicate that, while many investors in forestry were attracted by the potential for a growing Russian market in the early days of the transition period, they have become more and more aware of the many institutional obstacles challenging growth in the sector. The article concludes, therefore, that FDI in the Russian forestry sector is likely to remain low until a fundamental change takes place in the legal and political systems.     

The political significance of local agenda 21: The early stages of some European experience

Sustainable development, as it emerged in Agenda 21 from the Rio conference in 1992, will only be meaningful when it touches the lives of ordinary people; then it becomes a reality. Local Agenda 21 (LA21) seeks to achieve that objective. This article assesses the origins of LA21, reviews its social and political significance, and considers its prospects in the light of case study experience emerging from the UK, Germany and Norway, focusing on the role of local government as a major stakeholder in Agenda 21 (A21). The range of response to LA21 has proved to be varied. A successful transformation to a more sustainable world will require visionary political leadership, supportive administrations, networks of experience sharing, alliances with non-governmental organisations and local industry, and effective community mobilisation. All of that, in turn, requires equally supportive economic and social policy backing from national governments. This article will indicate that, not surprisingly, it is the domestic political context, nationally and locally, which in the main determines the speed and nature of response to LA21, now and in the future. By understanding and being aware of these contexts, factors impeding progress towards LA21 may be addressed, whilst at the same time retaining the diversity of response which is an essential part of local sustainability.     

Tin Availability in Market Economy Countries

The U.S. Department of Interior's Bureau of Mines determined costs associated with the production of tin from 18 market economy countries (MECs). The resource and relative economic positions of 146 tin deposits were evaluated. Demonstrated resources of recoverable tin metal are estimated to be 2.8 million metric tons. Over 70% of this material is recoverable from three south-east Asian countries - Malaysia, Thailand and Indonesia; all are members of the International Tin Agreement (ITA).
In the last five years, Brazil has become a major, low-cost tin producer. In light of their large resources Brazil has become a dominant MEC tin producer and one of the world's few tin producers that can prosper during a protracted period of low tin prices.     

Linkages to manufacturing in the resource sector: The case of the Angolan oil and gas industry

This paper discusses the current state and future prospects of backward production linkages to the manufacturing sector in the Angolan oil and gas industry. The paper finds that local value-added links are currently limited to labour and to a lesser degree in basic services. However, there is a realistic and strategic potential for local manufacturing linkages to expand in the oilfield services sector of the industry, which in turn can stimulate industrial development. For this to be achieved, the factors that are currently constraining the expansion and deepening of linkages have to be addressed, namely, a weak local content strategy, a weak local skills and industrial base and the integration of industrial and oil sector policies.     

Valuing regional geoscientific data acquisition programmes: addressing issues of quantification,uncertainty and risk

Geological surveys worldwide are involved with research in support of sustainable mineral resource development.The socio-economic benefits to be derived from these activities, however, continue to raise organisational and government sector questions. Fundamental questions include whether or not the resources committed are appropriate and in economic balance with the total benefits to be derived. Another question concerns the degree to which such services should be funded by the community at large. These questions in turn raise important issues regarding the role and cost of geological surveys, the impact of their services, and how they should maximise community benefit from their activities and expertise. To assess the value of geoscientific information,standard valuation processes need to be modified. This paper reports on a methodology designed to quantify the 'worth' of programmes upgrading regional geoscientific infrastructure. An interdisciplinary approach is used to measure the impact of geoscientific information using quantitative resource assessment, computer-based mineral potential modelling, statistical analysis and risk quantification to model decision-processes and assess the impact of additional data. These modelling stages are used to address problems of complexity,uncertainty and credibility in the valuation of geoscientific data. A case study demonstrates the application of the methodology to generate a dollar value for current regional data upgrade programmes in the Geological Survey of Queensland. The results obtained are used for strategic planning of future data acquisition programmes aimed at supporting mineral resource management and stimulating effective exploration activity.