The new mining law application: how to overcome the challenges

The Indonesian Mining Association fears mining investment could fall below $1 billion this year due to uncertainty over the new law, although the government has said investment from mining, including geothermal, could surpass $2 billion.

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New Mining Law was signed on September by former Mining and Energy minister, Purnomo Yusgiantoro, which limits the use of contract mining to specific tasks. The regulation applies immediately to new mining project while existing mining company shall have three years period for adjustment.

The application of new mining law to existing mining company, IMO, will increase the need for huge, and I mean extra huge, capex especially within these three years period. There will be, at least, requirements of (1) capex to acquire new mining equipments to increase the production, and (2) capex to acquire mining equipments as replacement to contractor’s equipments.

Hiring new people with good competency will also become a great challenge. Other than the increasing of cost, the challenge lies in the organization structure complexity. Imagine moving contractor’s organization into the existing organization of mining companies. This will reduce the organization flexibility to adapt to changes in mining industry. Furthermore, this is somehow out of step with global trends. Mining companies globally are seeking ways to effectively slim down the organization.

How do we overcome the challenges and anticipated to changes?

To this matter, there are several strategic objectives that must be done to anticipate the changes, that will emphasize on (1) improve the organization development and human resources development, (2) enhance online collaboration as IT base function, (3) business process improvement, (4) increase customer delight, and (5) economic value added improvement.

Improve the organization development and human resources development. The elaboration of the organization culture actually lies within the organization vision. However, vision is not enough. Key to the success of organization development is the ability to translate the vision into operational terms through out the organization and act upon it. Along the way of developing the organization, human resources development shall also be developed. At minimum, I propose three stages implementation, which are recruitment and fulfill the organization requirement – from top to bottom, increase competency level and mitigate the effect of competency gap, and retain the best people. One stage can be added during five years to the end of the life of mine project that is selling the expertise of the best people.

Enhance online collaboration as IT base function. I truly believe that the IT key issue in the following years is to enable people to collaborate to manage single task or single project. Cross-function, cross-platform, and different time zone are challenges that people have to deal during the course of the project – this is where a collaboration tools is required and to be managed as the IT base function.

Business process improvement. The strategic initiatives are increase the production volume and reduce the cost.

Increase customer delight. Delight is beyond satisfaction. The key is to be able to predict the need of customers even before they realize that they need something.

Economic value added improvement. Two things only: prudent investment and manage cost and risk.

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Author: aryadn

blogger, microblogger, professional mining engineer, metallurgist by education, interested in mobile-street photography.