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Mining companies are recognising the need to manage social issues resulting from mining activities and to maximise development benefits. A case study from the Indonesian island of East Kalimantan suggests how to implement tri-sector partnerships (between companies, communities and government) when mines become uneconomic and have to close. A report commissioned by the World Bank's Business Partners for Development programme examines Kelian Equatorial Mining. KEM operates one of the world’s largest open-cut gold mines in a remote area of the island of East Kalimantan. The researcher shows how even in a conflict-prone context it is possible to get all relevant stakeholders to reach consensus and to collectively own unpleasant decisions and actions. KEM, which is 90 percent owned by Rio Tinto plc, was established under the repressive Suharto regime when benefits from such large enterprises benefited central government with little regard for local needs. The mine was scheduled to close in 2004. Local perceptions that communities have not benefited sufficiently from its operations came into the open after the collapse of the Suharto regime in 1998 with demands for local government and communities to play a greater role in decision-making. From 1999 to 2000, as mine-workers and local people became aware of the imminence of closure, conflict between the two sides led to a 40 day strike. Local people:
These tensions were problematic because the successful management of issues related to the closure – loss of local livelihoods, the safety of dams made from waste rocks, water quality and other environmental concerns – required the involvement of local communities and the government. For KEM a successful closure process in accordance with local law and international environmental standards was vital for continued operations elsewhere in Indonesia and for Rio Tinto’s global reputation. The priority was to establish an agreed grievance-resolution process. A Mine Closure Steering Committee (MCSC) was set up which led to local, provincial and national officials sitting down with the company and local people. The MCSC decided to establish separate working groups to look at dams, the environment, site uses and assets and community development and district planning. Key factors in the subsequent success of the tri-sector partnership are due to:
Thanks to the work of the MCSC most outstanding closure, employment, asset handover and environmental issues have been settled. In addition, KEM will construct and finance a dormitory and model farm alongside a school, provide agriculture extension officers, donate tractors and offer management training for small enterprises. As an important by-product, community institutions and government officials have learnt to work together. In terms of public-sector governance the partnership has provided a globally replicable template for mine closure by establishing procedural standards for the management of a wide range of labour, environmental, social and developmental issues. It has provided a model for participatory decision-making and accountable governance at a time of political and institutional changes across Indonesia.
Source(s): Funded by: The World Bank id21 Research Highlight: 8 September 2005
Further Information: Tel:
+27 (0)11 643 6604 African Institute of Corporate Citizenship, South Africa
Business Partners for Development / Natural Resources Cluster Contact the contributor: info@bpd-naturalresources.org Business Partners for Development Other related links:
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