AbstractsEconomics

Economic model of mine closure and its potential for economic transformation

by Toni




Institution: Technische Universit├Ąt Bergakademie Freiberg
Department: Geowissenschaften, Geotechnik und Bergbau
Degree: PhD
Year: 2015
Record ID: 1102962
Full text PDF: http://nbn-resolving.de/urn:nbn:de:bsz:105-qucosa-162978


Abstract

In Indonesia, the various mining commodities and the amount of resources and reserves are promising, as evidence there are numerous large-scale mining companies and small-scale mines in operation. In 2014 there were 41 companies that held the CoW (mineral contract of work) and 13 companies active in production; and 76 CCoW (coal contract of work) holders, and 57 companies active in production. As well as this, there are more than a thousand small-scale mining companies active for mining commodities. However, mining commodities provide a resource that is not renewable. This will potentially lead to prolonged problems when mining companies do not adhere to good mining practices, particularly in the closing stages of the mine. Mine closure is the final stage in the process of mining activity. In certain circumstances, closure activities can take a long time and of course can have huge costs. In fact, at this stage, the company is no longer making profit, only incurring costs for the project closure. To prevent problems that may arise after the mine is closed, such as abandoned post-mining land, and the bankruptcy of the company at the end of mining operations, etc., then through specific rules, ie rules of the Minister of Energy and Mineral Resources No. 18 of 2008, the mining company in Indonesia must provide a certain amount of money as a financial guarantee to finance the planned closure project; it must be approved by the government before entering this phase. However, problems are encountered in practice. The government may become overloaded because they have to quickly make a decision on the closure plan submitted by the company. So a tool is needed that can be used to assess the feasibility as soon as the mine closure plan is proposed by a company, these tools can provide an overview and a variety of options for decision making. In this dissertation methodology was developed to create a systems dynamic model of mine closure. The model developed can be applied to a variety of mining methods and for various mining commodities. The model can be used to determine the closure costs, to choose the closure project-financing scenario, and up to micro and macro economic analysis of mining activities in the region. In the case studies conducted in this dissertation, the best scenario of the mine closure planning is to include the everlasting fund in the form of time deposits, and convert the post-mining land for agriculture. The amount of deposit money is about USD 358,986,500 should be spare at the end of mine production, and the total of mine closure cost to be approximately USD 440,757,384. Agriculture, the economic sector as a substitute for the mining sector, the added value to the GRDP (Gross Regional Domestic Product) is about 0.25 % / a for the province, and 1.68 % for the regency, but the contribution of the mining sector to GRDP was 30% / a at province scale, and 90% / a at regency scale. So that the substitution value is less significant to GRDP growth. However, this scenario is the best scenario among others,…