PRIME NEWS POST 

The INDONESIAN (Jakarta )— Forum Sipil Bersuara (FORSIBER) is urging the Minister of Energy and Mineral Resources (ESDM) to conduct a comprehensive review of Ministerial Decree No. 174.K/MB.01/MEM.B/2024, particularly regarding the Community Mining Levy (Ipera) scheme — which is assessed as potentially burdening and even incapacitating cooperatives holding Community Mining Permits (IPR).

Hamdi Putra, Chairman of FORSIBER, acknowledged and appreciated the government’s intent to formalise community mining activities. However, that noble objective risks being undermined if the accompanying funding framework places excessive burdens on communities from the very moment they obtain their permits.

“The state opens the door to legality through the IPR — yet at the same time places an enormous burden right at the threshold. As a result, mining may become legal, but the people are left unable to actually operate it,” Hamdi Putra stated.

Under Ministerial Decree No. 174 of 2024, Ipera comprises three components: area management fees, business management fees, and environmental management fees. FORSIBER identifies the core issue in the environmental management fee requirement, which mandates IPR holders to pay 75% of their total environmental obligation in the first year — within 30 calendar days of permit issuance.

At that early stage, mining operations typically have not yet commenced, production has not started, minerals have not been sold, and no business cash flow has been established.

“Cooperatives are required to pay the majority of environmental fees before they have produced even a single gram of mineral. This creates a policy paradox that is economically difficult to justify,” he emphasised.

FORSIBER questions the economic analysis underlying these provisions. According to Hamdi, there has been no public disclosure regarding cooperatives’ capital capacity, access to financing, collateralisable assets, or the business risks borne by small-scale miners.

The organisation reaffirms its full support for environmental protection, reclamation, and post-mining restoration. The concern, however, is not with the obligation to pay — but with the timing and proportion of payments, which appear disconnected from the operational realities of community mining.

“We fully support environmental management and reclamation. But a legitimate obligation becomes an unfair policy when its implementation strips people of the ability to exercise the very rights the state has just granted them,” he said.

According to FORSIBER, the 75% upfront payment risks depleting cooperatives’ working capital — funds that should instead be used for equipment procurement, workplace safety, processing facilities construction, waste management, and initial operational costs.

Furthermore, this situation may force cooperatives to seek funding from outside investors or large capital providers. That, in turn, risks shifting economic control over community mining away from the people and toward financial backers.

“The IPR may remain in the cooperative’s name on paper — but economic control could pass to those providing the financing. If that happens, the social purpose of community mining policy loses all meaning,” Hamdi warned.

FORSIber argues that overly burdensome upfront payments could become a gateway for large capital to dominate the sector — leaving cooperatives as mere administrative permit holders while investors seize control of production, processing, marketing, and profits.

Accordingly, FORSIBER proposes a payment mechanism better aligned with business realities — including linking environmental fees to operational milestones, the actual area of land disturbed, production volumes, or a percentage of sales revenue. Hamdi noted that a similar approach is already applied to the business management fee component, calculated based on production and mineral sales value.

“The government can still ensure environmental protection without burdening cooperatives before they begin operations. Environmental funds can be collected gradually, in step with operational progress and financial capacity,” he explained.

Additionally, FORSIBER urges the government to account for the diversity across mining sites — including permit area, commodity type, mining methods, topography, land disturbance scale, and environmental risk levels — when determining payment obligations.

As a solution, FORSIBER submits five recommendations to the Minister of Energy and Mineral Resources:

1. Review the requirement to pay 75% of environmental fees in the first year;
2. Extend the current 30-day payment deadline following IPR issuance;
3. Adopt a phased payment system tied to operational progress and sales performance;
4. Establish dedicated guarantee and financing schemes for community mining cooperatives until they reach commercial production;
5. Develop shared processing facilities to reduce the burden of technology investment and waste management costs.

FORSIBER also calls on local governments to fully and transparently disclose Ipera calculations — including area size, reclamation plans, environmental monitoring costs, revegetation, land use arrangements, and allocation formulas based on permit coverage.

“Ipera must not remain an unexamined bill. Transparency is essential if this policy is to earn public trust,” Hamdi stressed.

In closing, Hamdi Putra reminded that the formalisation of community mining — transitioning from informal to legal, safe, and responsible governance — is a strategic national agenda that deserves collective support.

However, formalisation should not end with permit issuance alone.

“The state must not grant an IPR with one hand only to cripple it with the other through Ipera. If cooperatives are forced to surrender control of their mines to financiers just to meet a 30-day payment deadline, what emerges is not community mining sovereignty — but legality dominated by big capital,” he concluded.

Compiled from various news sources / Photo: Special / Google Docs