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Good Mining Practices Essential for The Development of ASGM Sector in Indonesia

Indonesia is home to one of the biggest industrial gold mines in the world. Over the last two decades, the country has also seen growing artisanal mining activity which boosts productivity in the Artisanal and Small-scale Gold Mining (ASGM) sector. The country's ASGM sector, produces approximately 50-100 tonnes of gold annually. This figure is worth US $ 3-5 billion (Anderson, C. 2020 in "ASGM in Indonesia, Issues, Challenges, Opportunity Webinar").

Despite the growth, however, the small-scale gold miners in Indonesia are still facing difficulties accessing formal gold markets. This condition has negatively affected the income from their gold production.

Director General of Minerals and Coal, Ministry of Energy and Mineral Resources Republic of Indonesia, Mr. Ridwan Djamaluddin, acknowledged that the issue pertaining to ASGM's legal status had remained one of the biggest challenges that needs to be addressed as it means that many of the potential economic benefits are lost. According to Mr. Ridwan, Indonesia has introduced Law No.33 / 2020 to address prevalent problems in the ASGM sector. The Law basically serves as a legal basis which protects community-based minings.

"The Indonesian government is committed to strengthen and protect community-based mining activities so that their existence can give more benefits," Mr. Ridwan said in his remarks during an international webinar “Exploring Opportunities in Gold Certification for ASGM Sector in Indonesia” on Wednesday, September 16, 2020.

Meanwhile, environmental issues are also a common problem in the ASGM sector. Deputy for Natural Resources Development Technology, Agency for the Assessment and Application of Technology of Indonesia (BPPT), Mr. Yudi Anantasena, highlighted the negative impact of the ASGM activity on the environment, citing a data from Inventory of Mercury Release in 2012 which reports that the ASGM sector in Indonesia contributed to the release of 195 tons of mercury per year - the largest release of mercury in the country. On a global scale, the country is reportedly among the top three emitters of the pollutant, according to data provided by planetGOLD. Therefore, reducing mercury pollution from the ASGM sector has become a priority agenda.

To address this issue, the government gave a mandate to BPPT to develop more environmentally friendly technology for small-scale mining activities, including the waste treatment management. Mr. Yudi told the audience that BPPT had introduced two alternative gold-processing technologies using gravity and leaching methods to eliminate the use of mercury in the mining practices.

Expert from Massey University, Mr. Christopher Anderson, said that miners were actually aware of the environmental problems caused by their mining practices. In North Maluku, for example, waste from small-scale mining that was channeled directly to the ocean had caused the death of fish.

Despite the awareness, he added, resistance to change had remained as ASGM communities were sceptical towards government-based projects. With that condition, Mr. Anderson said that changes must be driven by the gold market itself.

"The key point is that the gold market must promote change and reward miners who change their practices," Mr. Anderson said in the webinar.

Sharing the sentiment, Head of Standard and Certification, Alliance for Responsible Mining, Ms. Natalia Uribe Martinez, highlighted the importance of the fairmined scheme. With fairmined scheme, gold is produced in a way that protects both the miners and the environment. Based on her experience working in 10 standard certified mines in Peru, Colombia, and Mongolia, Ms. Martinez added, the scheme benefits miners in a way that they get fair price as well as healthy and efficient working conditions, while at the same time protecting the nature.

Meanwhile, Executive Director of the Artisanal Gold Council, Mr. Kevin Telmer, drew attention to integrate ASGM with large-scale mining as both serve equally important roles for the country. He added, small-scale and large-scale minings are, in fact, complementary industry segments although they are rarely seen as good partners.

Aiming to integrate the two industries so they could operate together, Telmer explained strategies used by Artisanal Gold Council to create engagement between ASGM and large-scale mining. The strategies include sharing models, co-existence, co-reliance, and co-development models.

In line with what the Artisanal Gold Council proposed, PT. Antam Tbk, Indonesia's state-owned mining company, has started cooperation schemes with small-scale gold miners in Manado through its subsidiary, Bukit Emas. General Manager, Logam Mulia Precious Metal Refinery Business Unit of PT. Aneka Tambang, Tbk. Muhammad Abi Anwar, said the business scheme that supports community-based miners had actually gone well until pandemic hit.

He added, currently Antam refines approximately 38 metric tonnes of gold or only 47.5 percent of its total 80 tonnes capacity, meaning that the ASGM sector could potentially fulfil the remaining capacity.

While cooperation between ASGM and large-scale mining is being encouraged, miners are also pushed to meet the standardization certification. Director of Standards Development of Mechanics, Energy, Electrotechnics, Transportation and Information Technology, National Standardization Agency of Indonesia, Mr Y. Kristianto Widiwardono, explained that the current Indonesian National Standard (SNI) certification is still limited to specify the gold grade in karat. Aiming to address issues in the gold mining sector, he proposed to add environment-related requirements that miners should comply in order to get the certification. This is to ensure that SNI is not merely certifying the quality of the product, but also the good mining practices.

To conclude, Indonesia's ASGM sector is showing progressive improvements and is ready for certification. As Mr. Telmer stated, “the ground is prepared” as the government has taken steps towards formalizing the sector and protecting human health and the environment. He is optimistic that with better mining practices, Indonesia's ASGM sector can optimize its economic potential-- while contributing to sustainable development.