East Kalimantan Environmentally Sustainable Development Strategy

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team to check on methane release at mining sites. The cost, in present value, required to reduce
emissions by reducing methane release from coal mines is around negative USD 2 to 3 per tCO2e
p.a. by 2030.
Encouraging operational efficiency could capture a reduction of 2.56 MtCO2e. Both
emissions from the mining process and the profitability of coal mining are mainly driven by the
consumption of fuel and electricity. Expert interviews suggest that East Kalimantan could reduce
energy consumption (and hence emissions and costs) by around 20 percent through operational
efficiency improvements. One step the provincial government could consider is training a new
provincial mining monitoring team to be able to recommend operational improvements during
their site visits. The members of the provincial mining monitoring team then will also assess
efficiency and suggest improvements to the mining companies. Examples of operational efficiency
initiatives include: reduce idle time of shovels, improve control of transport equipment, improve
fill factor for shovels, improve haul road, optimize truck dispatch, and improve fuel monitoring and
maintenance. Which initiatives are appropriate is dependent on the result of site assessment by
the provincial mining monitoring team. The cost, in present value, to implement all these steps to
improve operational efficiency is estimated at negative USD 4 to 6 per tCO2e p.a. by 2030.
Enforcing proper post-mining reclamation would save 2.01 MtCO2e. Although the
environmental impact of open pit mining is inevitable, the damage can be minimized through
implementation of best practices for reclamation. In violation of existing regulations, many miners
in East Kalimantan, especially the smaller ones, do not implement proper reclamation practices.
Interviews with industry participants and mining sector analysts suggest that around 20 percent
of big companies and 75 percent of small companies do not implement proper reclamation. Their
reasons vary. Many smaller miners don’t have the capital to finance reclamation activities. (An
upfront reclamation guarantee fund does exist, however in many cases it is not adequate to cover
the full cost of reclamation or it is simply not collected properly.) Some miners do not have the
required knowhow and skills to implement reclamation correctly. And, some do not implement
proper reclamation because they know that government has limited resources to monitor and
control them, and therefore the consequences of violating the reclamation provisions are limited.
Box 7 discusses the economic opportunity of post mining reclamation.
Three initiatives to enforce proper post-mining reclamation have been identified. First,
to address the problem of a lack of skills and knowhow, certified reclamation contractors can be
used. Miners with insufficient capability to do reclamation could contract one of the contractors
on a recommended shortlist. Second, to address the lack of financial resources, the reclamation
guarantee fund system can be adjusted. Instead of requiring applicants for mining permits to pay
small upfront guarantees, East Kalimantan can require them to pay the full reclamation costs in
advance to any certified reclamation contractor in East Kalimantan and attach the reclamation
contract to their permit application. Then, the East Kalimantan government will only need to hold
the certified reclamation contractors, instead of the applicants, responsible for implementing
proper reclamation. It will be easier for East Kalimantan to manage a few certified reclamation
contractors as opposed to thousands of mining companies. Third, to address the issue of lack of
enforcement, East Kalimantan could establish a new mine monitoring unit with sufficient resources
and regulatory authority.
DRAFT
To ensure successful reclamation (1) rehabilitation programs should be an integral part of operations
from the commencement of mining; (2) lands should be rehabilitated immediately upon the closure
of each mining pit; and (3) an extensive consultation process with community stakeholders should
start a few years before the closure of a mine. There are several successful reclamation examples in
East Kalimantan such as the Petangis coal mine in Paser rehabilitated by PT Kendilo and the PT KEM
gold mine in Kutai Barat. The Petangis mine rehabilitated its post mining lands into an eco-tourism
park, for which it received the Gold Flag environmental award from the Province of East Kalimantan.
To enforce proper reclamation, East Kalimantan will need to add 65 qualified personnel to a
provincial mine monitoring team. The estimated total cost, in present value, for these steps to enforce
reclamation would be around USD 6 to 22 per tCO2e p.a. by 2030.