Coal mining in Indonesia : environmental impacts, sustainability, and economic development

The challenge facing Indonesia is to ensure that mining benefits not only the mining companies, but also the country as a whole. This paper provides an economic perspective on how to meet this challenge. The first part provides a profile of coal mining in the country, with emphasis upon Kalimantan Timur. Coal mining has expanded most rapidly in this province. This part of the paper begins by describing institutional features of the industry and the development of mining in Kalimantan Timur. It closes by discussing the benefits and costs, at national and provincial levels, of coal mining. The second part addresses six specific policy issues: competing land uses and the decision whether to mine, the environmental assessment process, water pollution during mining, land reclamation, compliance with environmental regulations, and rent capture and utilization. For each, the report assesses the current situation and offers policy recommendations for improved management. A final section summarizes the broad themes emerging from the study. (Author abstract)