Mining Characteristics
Mining has several characteristics, that is not renewable, has a higher relative risk, and its business has a relatively higher physical and social environmental impact than other commodities in general. Due to its non-renewable nature mining entrepreneurs are always looking for new (proven reserves). Reserves are shown to decrease with production and increase with the discovery.
There are several types of risks in the field of mining (exploration) related to uncertainty of inventory discovery (production), technological risks associated with cost uncertainty, market risks associated with price changes, and government policy risks associated with domestic taxes and pricing changes. These risks relate to the magnitudes affecting the business profits of production, prices, costs and taxes. Enterprises with a higher risk demand higher returns (Rate of Return).
The basis of public policy in the field of mining is that: the earth and water and the natural resources contained therein are controlled by the state and used for the greatest prosperity of the people. In the current era of decentralization mining activities are inseparably linked to policy making at the local level so that:
1. The central government should grant greater authority to regions to manage mining activities that involve as much as possible the participation of local communities.
2. If the risk is not great and the technology is controlled and the problem is only capital, then the funds can be collected through several ways, namely:
a. Some government revenues from the general mining sector are already providing many benefits (eg coal). The revenue can be used for exploration and investment in other mining sectors.
b. Establish State-Owned Enterprises in charge of managing mineral wealth in the area as optimally as possible by observing the principles of sustainability. Environmental aspects, both physical and social, must be considered in every mining contract and the mining entrepreneur must provide the cost to overcome the environmental problems.
3. According to economists Kaldor and Hicks an act is said to be beneficial if the group benefiting from its business can compensate for the group who suffered the losses resulting from the business so that the position of the second group is the ugliest as it was before the business and the first group is still profitable. The role of local government will be greater in handling the impacts of the mining environment, so that the strengthening of institutions at the local level will become increasingly significant.
4. Natural resources as a source for mining and energy activities are utilized from the ecological system therefore the fundamental requirement to be obeyed is not to violate the carrying capacity of the ecosystem. In order to make the most of the natural resources contained in the earth, the concept of eco-efficiency must be the ultimate reference of making the most of it and wasting or wasting as little as possible which also means minimizing waste. It can be concluded that eco-efficiency at the same time will improve economic efficiency. For that environmental economy needs to be taken into account in every mining activity.
The basis of public policy in the field of mining is that: the earth and water and the natural resources contained therein are controlled by the state and used for the greatest prosperity of the people. In the current era of decentralization mining activities are inseparably linked to policy making at the local level so that:
1. The central government should grant greater authority to regions to manage mining activities that involve as much as possible the participation of local communities.
2. If the risk is not great and the technology is controlled and the problem is only capital, then the funds can be collected through several ways, namely:
a. Some government revenues from the general mining sector are already providing many benefits (eg coal). The revenue can be used for exploration and investment in other mining sectors.
b. Establish State-Owned Enterprises in charge of managing mineral wealth in the area as optimally as possible by observing the principles of sustainability. Environmental aspects, both physical and social, must be considered in every mining contract and the mining entrepreneur must provide the cost to overcome the environmental problems.
3. According to economists Kaldor and Hicks an act is said to be beneficial if the group benefiting from its business can compensate for the group who suffered the losses resulting from the business so that the position of the second group is the ugliest as it was before the business and the first group is still profitable. The role of local government will be greater in handling the impacts of the mining environment, so that the strengthening of institutions at the local level will become increasingly significant.
4. Natural resources as a source for mining and energy activities are utilized from the ecological system therefore the fundamental requirement to be obeyed is not to violate the carrying capacity of the ecosystem. In order to make the most of the natural resources contained in the earth, the concept of eco-efficiency must be the ultimate reference of making the most of it and wasting or wasting as little as possible which also means minimizing waste. It can be concluded that eco-efficiency at the same time will improve economic efficiency. For that environmental economy needs to be taken into account in every mining activity.
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