Looking Ahead - Mining and the Environment: From Ore to Metal - page 844

Government Regulation of the Mining Industry

Quite different trends are apparent in government regulation from one country to another.
In democratic countries, government regulations generally rel ect the perceptions and aspi-
rations of the population. When the mining industry is perceived to be a source of major
pollution, more stringent environmental regulations are likely. Where the industry is seen
to be overly proi teering or exploitative, higher payments to government in the form of
taxes or royalties are likely. In countries without well-developed democratic institutions,
government regulations may not rel ect community attitudes. This can cause problems for
companies seeking to satisfy conl icting requirements.
In countries with a long history of mining such as Australia, the rapid evolution of envi-
ronmental regulation that commenced in the early 1970s has now ceased. This is partly
due to the maturity of the industry and the coni dence, particularly among regulators, that
any environmental problems will be identii ed and overcome. In fact, for most mining
operations in Australia, environmental management has become routine. Another impor-
tant factor in the Australian industry has been the Minerals Council of Australia's Code
For Environmental Management. This Code, to which the majority of Australian min-
ing companies subscribe, involves a voluntary commitment to high standards of perfor-
mance, including 'continuing improvement' and 'public reporting'. As a result, the industry
in Australia generally performs at standards considerably higher than those mandated by
regulations. The success of 'self regulation' in Australia's mining industry does not appear
to have signii cantly inl uenced other countries.
In countries with a shorter mining history, the industry is less mature and the public
is likely to be less informed and more concerned about environmental impacts, particu-
larly in the presence of adversarial environmental NGOs. In these situations, environ-
mental regulations are still evolving. Indonesia is a good example of this situation, with
major new environmental regulations appearing regularly. Another feature of Indonesia's
regulatory system is the 'stick and carrot' approach wherein the government can penal-
ize breaches of regulations, but also provides awards for good performance ( Case 22.4 ).
Eventually, however, effective environmental regulation is dependent on government
monitoring and enforcement capacity, and the ability of the mining sector to i nance the
costs of compliance.
A particularly difi cult situation occurs where past mining operations have produced
catastrophic outcomes that have generated public outrage. The Philippines is a case in
point. This was one of the last countries to require sound environmental management of
mining operations and, by the time it did, the industry had almost disappeared because of
political interference, i nancial mismanagement and numerous incidents of environmental

In countries with a long history
of mining such as Australia, the
rapid evolution of environmental
regulation that commenced in
the early 1970s has now ceased.

A particularly diffi cult situation
occurs where past mining
operations have produced
catastrophic outcomes that have
generated public outrage.

CASE 22.4
The PROPER System (Program for Pollution Control Evaluation and Rating) in Indonesia

In the 1990s Indonesia introduced the PROPER system
to evaluate the environmental performance of industrial
operations. Each year a government team audits selected
operations, and publicly announces the outcome of its fi nd-
ing: 'gold' ranking is assigned to operations that go beyond

environmental compliance in all operational aspects (a
ranking that no company has achieved up to year 2008);
a 'black' ranking may lead to the suspension of operations
if the company cannot demonstrate signifi cant improve-
ment within 6 months. While participation in PROPER

is in theory voluntary, in practice it is not. The PROPER
system is yet another tool by the central government to
put pressure on multinational companies, admittedly for a
good cause.