Plans to grant universities permits to manage mining operations continue to face opposition. Universities are being doubted for their ability and capacity to manage the mining business.
Akbar Reza, a lecturer at the Faculty of Biology, Universitas Gadjah Mada, sees the proposal as an irony against the implementation of SDGs and Green Campus initiatives that many universities have promoted. Responding to this policy plan has divided university communities into two camps.
“In general, the Indonesian Rectors’ Forum tends to support it, while the Councils of Professors at several universities oppose it,” he said on Tuesday (Feb. 11).
Openly, Akbar Reza mentioned that some lecturers have sporadically expressed their stance, either in support or opposition. However, there has not yet been a comprehensive collective consolidation.
Regarding the issue of universities and the legitimacy of mining, he sees a clash between competence, morality, and an identity crisis.
The emerging “Mining for Campus” narrative is ironic compared to the SDGs and Green Campus narratives many universities have been championing and promoting. Many universities are striving to rank high in supporting Sustainable Development Goals (SDGs) and green metric rankings.
“However, if the same universities are involved in an extractive industry that damages the environment, it becomes a great irony, especially since universities are being encouraged to support the Net Zero 2060 target,” he said.
Regarding this policy plan, Akbar Reza is concerned that academics within universities might be used as tools for moral and intellectual legitimacy for the mining industry. Meanwhile, mining management is not just about financial capital but also involves technical competencies that not all academics possess.
Mining experts and academics were present at a discussion held by Bakul Pemimpi. During the debate, they examined the challenges and risks universities would face if forced into the mining business.
On a separate occasion, Zulfatun Mahmudah, a member of the Indonesian Mining Experts Association (Perhapi) in East Kutai, asserted that universities would make a major blunder if they insisted on managing mines.
She revealed three reasons why universities would struggle to manage mines: the lack of financial capability, operational capacity in mining, and the challenges of social and environmental issues.
According to her, mining requires a huge initial capital for exploration and extraction. This includes the reclamation guarantee, which must be deposited within 30 days after the reclamation plan document is submitted.
The next funding source is exploration, which requires significant funds for site mapping, determining coal quality and deposits, and environmental impact analysis.
Even if these two stages are met, mining and immediate profit-making are not guaranteed. Mining companies must incur further construction costs, including building processing facilities such as crushers and coal processing plants and hauling roads, which can be very expensive if the mine is far from distribution routes.
“The construction costs also include building offices and housing for employees since mines are usually located in remote areas. Imagine that the initial capital before mining even starts is already very expensive. For example, PT Kaltim Prima Coal spent 570 million USD in its initial construction phase or around 10 trillion rupiahs at the current exchange rate,” said Mahmudah.
According to her, the next significant cost is operational and mining safety. Even though mining generates profit, companies must also allocate funds for taxes and royalties.
“We must understand that export royalties are higher than domestic ones. This does not include profit sharing with central and local governments and even mandatory allocation for CSR and social responsibility,” she said.
Mahmudah mentioned that there are only two funding options: involving third parties, granting concession rights to investors where universities receive fees but lose full control over the mine, or taking out loans, which means assets must be pledged as collateral.
“The first option means universities become brokers. The second option carries the risk of a long break-even point (BEP) in the mining industry and the risk of losses due to coal price fluctuations,” she said.
Additionally, universities also face another risk: reputational damage. Universities could be seen as lacking independence because they are entangled in business interests.
“Universities will lose academic credibility due to conflicts of interest. They could be perceived as deviating from their original purpose as institutions of education and research,” Mahmudah explained.
She suggested that university leaders in the Rectors’ Forum should strengthen their roles in research, technological innovation, or sustainable mining education rather than becoming mining business players themselves.
Author: Agung Nugroho
Photo: Freepik