Mirza Fanzikri – Indonesia's push to turn illegal mines into community ventures risks simply recycling old abuses and stalling genuine prosperity for local communities as long as oversight remains weak.
In this year's annual State of the Nation address before the People's Consultative Assembly (MPR) on 15 August, President Prabowo Subianto warned that he would crack down on those who ran or owned illegal mining operations in the country, regardless of whether they were serving or retired generals from the military or police or politicians from his own Gerindra Party.
The president noted that there were approximately 1,063 illegal mining sites across Indonesia, which potentially cost the state at least 300 trillion rupiah (about US$19 billion).
However, instead of halting illegal mining activities entirely, Prabowo promised to transform some small-scale illegal mining operations involving ordinary citizens into community-based cooperatives.
Indonesia had already introduced a small-scale mining permit (Izin Pertambangan Rakyat, IPR) through Law No. 3 of 2020. As of 2022, the Indonesian government had designated 1,215 community mining areas (Wilayah Pertambangan Rakyat, WPR), covering a total area of 66,593.18 hectares, spread across 19 provinces, and issued 82 small-scale mining permits covering a total operational area of 62.31 hectares. Through such IPRs, individuals or cooperatives based near mining areas are able to mine for relevant resources.
Converting illegal mining activities into community-based operations could achieve two objectives: combating institutional rent seekers and distributing revenue fairly through the taxation system. But the effort is unlikely to be problem-free.
Despite the government's implementation of the IPR permit system, illegal mining activities continue to proliferate, primarily due to widespread collusion between state officials and entrepreneurs. Moreover, the rural poor often see gold mining, which requires little infrastructure and capital investments, as the only viable means of livelihood.?The surging global price of gold is reported to have sparked an increase in illegal small-scale gold mining activities, which are occurring in 190 regencies across 33 of Indonesia's 38 provinces. In one illegal exploration site in Aceh, more than a hundred excavators, who dig into mountains and rivers daily to find gold nuggets, are each required to pay "security money" to certain law enforcement officers, amounting to at least 30 million rupiah (approximately US$1,800) each month.
The community mining permit, designed only for residents of a mining region, is often exploited by those from outside the mining region due to inadequate law enforcement. Ultimately, the primary beneficiaries of these mining permits may be external investors and local elites. Consequently, instead of contributing to the prosperity of local communities, community mining paradoxically could help to perpetuate rent-seeking practices by local elites and their apparatuses.
Therefore, without rigorous law enforcement, community mining may merely be a new guise for such extractive practices.
Instead of contributing to the prosperity of local communities, community mining paradoxically could help to perpetuate rent-seeking practices by local elites and their apparatuses.
The idea that community mining will bring prosperity is also somewhat short-sighted, considering the long-term disaster risks that mining activities carry. There are numerous cases of soil damage resulting from the widespread use of excavators and hazardous chemicals in mining areas. In some instances, even licensed mining companies violate environmental laws with impunity. Land pollution and degradation of coastal waters have, in some cases, destroyed the economic production ecosystems of small communities, notably farmers and fishermen. For instance, in Bangka Belitung, tin mining has turned once-pristine islands into degraded fields. In a twist of fate, many locals who made a living through farming and fishing are now compelled to work as slaves in underground mines, where safety standards are often lax.
Unsurprisingly, this situation has made critics such as the Mining Advocacy Network (JATAM) pessimistic about Prabowo's commitment to take action against illegal mining activities. Others point to the mutually dependent power relations between ruling elites and the mining oligarchs to suggest that the Prabowo government may not be able to improve governance of the mining sector.
Yet, for community mining operations to be effective, there should be rigorous oversight. Since the Job Creation Law came into effect in 2020, the mining licensing authority, which had previously rested with local governments, was transferred to the central government. Consequently, many regional governments relinquished oversight, while the central government, for its part, lacks the capacity to adequately oversee mining activity throughout the country.
To ensure effective oversight, the government could delegate authority over community mining operations to local community leaders and professional consultants. These authorities could monitor safety standards and ecological issues and may be able to ensure that community mines and the proceeds from their activities remain in the hands of the cooperatives in question.
In addition, as suggested by the Indonesian Nickel Miners Association, the government could complement the community mining scheme by regulating the supply chain aspects, for example, by requiring that such mines can only sell their outputs to designated traders. This would help to pre-empt illegal trading of mined resources.
In sum, community mining is not a panacea for long-term community prosperity. Expanding community mining may have only limited economic benefits for communities in mining areas unless there is improved governance.
[Mirza Fanzikri is a PhD candidate in Political Science at Universitas Islam Internasional Indonesia and a lecturer at Ar-raniry Islamic State University, Indonesia.]
Source: https://fulcrum.sg/why-community-mining-is-no-panacea-for-illegal-mining