Decision Support System for Rehabilitation Bond of Mining Area

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DECISION SUPPORT SYSTEM FOR

REHABILITATION BOND OF MINING AREA

DEDE IDA SUHENDRA

GRADUATE SCHOOL

BOGOR AGRICULTURAL UNIVERSITY

2007

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STATEMENT

I, Mr. Dede Ida Suhendra, herewith declare the thesis title:

‘Decision Support System for Rehabilitation Bond of Mining Area’

Contains correct results come in from my own work and it has not been published ever before. All data sources and information have used factual and clear methods in this research has been examined for its factualness.

Bogor, April 2007

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ABSTRACT

DEDE IDA SUHENDRA (2007). Decision Support System for Rehabilitation Bond of Mining Area. Under the supervision of HARTISARI H. and HASRUL L. AZAHARI.

Mining is an effort to remove in situ minerals resources, which is in exploitation stage that employ surface mining method is critical, yet mostly close to huge spatial opening, therefore suitable planning and operation is required to synchronize both of economical and environmental interests. Due to the prudent principle of the Government on a mining company, by regardless its principal and scale, the company is obliged to insure any spatial opening during their operation period by allocating appropriate fund in a certain Bank, as Reclamation Bond. Determining the Reclamation Bond needs both skill and expertise, otherwise it would consume time, even perfunctorily. Dealing with the necessity of Reclamation Bond assessment tool, this study attempted to develop a decision support system (DSS) approach to support fast and objective problem solution for evading disputability.

The objective of this project is to develop a Mining Rehabilitation Bond System, which can provide the additional tool for the Government as Decision Support System to evaluate any company planning concerning cost estimation either suitable or not to be agreed with, determining adequate amount direct cost and indirect cost and emphasizing mine stakeholder awareness of any decision support related to cost of mining reclamation activity

The Mining Rehabilitation Bond System is designed to support decision making, in order to minimize DSS implementation, data base manipulation through Visual Basic programming language. Beside direct cost analysis and indirect cost analysis, there is also manual analysis to perform additional data for structure demolition calculation and earth moving activities. The main focus of this system design is to estimate the amount of escalation per year that have to meet mining company’s reclamation cost planning.

Based on the result, the combination of DSS Tool and reclamation formula can produce application system for rehabilitation bond. This calculation system is used to evaluate Reclamation Bond for 5 (five) years and annual reclamation cost based on direct and indirect cost of reclamation activity. This application tries to attempt evaluating system of mining company’s reclamation data. The application system has several weaknesses such as haul distance and grade consideration that should be measured manually, need socialization to mining company association and never published yet.

The Mining Rehabilitation Bond System still needs to be tested for knowing its performance including its database system through several data from company (KK, KP and PKP2B) and the calculation of haul distance and grade of equipment needs digital input using spatial approach or digital map digitizer. Keyword: Mining Area, Reclamation Acitivity, Reclamation’s Direct Cost, Reclamation’s Indirect Cost, Rehabilitation Bond Application, Database and Implementation.

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DECISION SUPPORT SYSTEM FOR

REHABILITATION BOND OF MINING AREA

DEDE IDA SUHENDRA

A Thesis submitted for the degree of Master of Science of Bogor Agricultural University

GRADUATE SCHOOL

BOGOR AGRICULTURAL UNIVERSITY

2007

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Research Title : Decision Support System for Rehabilitation Bond of Mining Area

Student Name : Dede Ida Suhendra Student ID : G051030071

Study Program : Master of Science in Information Technology for Natural Resources Management

Approved by, Advisory Board

Dr. Ir. Hartrisari Hardjomidjojo, DEA Dr. Ing. Hasrul L. Azahari, M.Met.E Supervisor Co-Supervisor

Endorsed by,

Program Coordinator Dean of Graduate School

Dr. Ir. Tania June, M.Sc Prof. Dr. Ir. Khairil A. Notodiputro, MS

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CURRICULUM VITAE

Dede Ida Suhendra was born in Bandung, West Java, Indonesia at December 26, 1957. He received his undergraduate diploma from Bandung Institute of Technology (ITB), Faculty of Industrial Technology - Mining Technique Department majoring Exploration in 1983. He worked for oil and geothermal consultant project as geophysicist in PT Alico during 1984 to 1986, and has been working for Department of Energy and Mineral Resources since 1987.

In the year of 2003, Dede Ida Suhendra pursued his post graduate at MIT (Master of Science in Information Technology) for Natural Resources Management from Bogor Agricultural University and received his master degree in 2007 respectively. His thesis title was on “Decision Support System for Rehabilitation Bond of Mining Area”.

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ACKNOWLEDGEMENT

First of all I would like to grateful thanks to ALLAH SWT who The Most Merciful and Gracious for blazing me, and allowing me to complete my post graduate study. Furthermore, I realize the completion of this research would not have been possible if not through the kind assistance and technical support of several individual and organization.

I am thankful to Dr. Tania June, the Program Coordinator for her support and for allowing me to use the MIT facilities during my study. I would like to express my special appreciation to the following for their invaluable contributions at all stages towards and finishing this thesis, Dr. Hartrisari Hardjomidjojo, my primary supervisor who offered me not only excellent and patience guidance but also useful ideas; and Dr. Ing. Hasrul L. Azahari, the co-supervisor for his constructive discussion and suggestion. I would like to specially thank to my external examiner supervisor, Dr Gatot Haryo Pramono who spent his time in seminar, gave general assistance and suggestions. I also wish to thank all members of the staff of the MIT, including Mr Bambang, Ms Uma and Ms Devy for their help in numerous ways.

I thank the Directorate General of Mineral, Coal and Geothermal, particularly Ir. Soemarno Witoro S, Msi for allowing me to follow this study and to use technical data from various mining companies.

Thanks also to my course mates MIT-2003 Generation, especially appreciation is given to Ir. Andes Jayarsa, MSc and Ir. Iksal Yanuarsyah, MSc for the friendliness, giving me encouragement and supporting throughout this period.

Finally, my special gratitude is also extended to my lovely mother, my wife Lilis Mulyatie, my son Ilyasa Haqqani, and my daughters Nursyifaa Rabbani and the late Nursahla Hauzani for their moral support and understanding during this study.

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LIST OF CONTENTS

Page

STATEMENT ... i

ACKNOWLEDGEMENT ... ii

CURRICULUM VITAE ... iii

ABSTRACT ... iv

List of Contents ... vi

List of Figures ... viii

List of Tables ... ix

List of Appendixes ... x

I. INTRODUCTION ... 1

1.1. Background ... 1

1.1.1. Mining Management ... 2

1.1.1.1. Mining Enterprises ... 2

1.1.1.2. Government Functionality ... 3

1.1.1.3. Company Responsibilities ... 4

1.1.2. Mining Method ... 5

1.1.2.1. Surface Mining ... 5

1.1.2.2. Underground Mining ... 7

1.1.2.3. Mining Supporting Facility ... 8

1.1.3. Land Management ... 8

1.1.4. Mining Reclamation Bond ... 10

1.2. Problem Identification ... 11

1.3. Objectives ... 12

II. LITERATURE REVIEW ... 13

2.1. Reclamation Bond Provision ... 13

2.1.1. Direct Cost Component ... 14

2.1.1.1. Mine Facilities Removal ... 14

2.1.1.2. Material handling plan ... 15

2.1.1.3. Re-Vegetation ... 21

2.1.1.4. Other Direct Reclamation Cost ... 21

2.1.2. Indirect Cost Component ... 22

2.1.2.1. Mob-Demob of Heavy Equipments ... 22

2.1.2.2. Reclamation Planning ... 22

2.1.2.3. Administration Cost and Contractor Profit ... 24

2.1.2.4. Management Cost ... 25

2.1.3. Determining the Total Performance Bond Amount ... 26

2.2. Decision Support System ... 26

2.2.1. Data Management ... 28

2.2.2. Model Management ... 28

2.2.3. Knowledge Management ... 28

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III. METHODOLOGY ... 29

3.1. Time and Location Selection ... 29

3.2. Material and Tool ... 30

3.2.1. Hardware and Software Required ... 30

3.2.2. Data Requirement ... 30

3.3. Method ... 32

3.3.1. General Concept ... 32

3.3.2. Legal Aspect ... 33

3.3.3. Decision Support System (DSS) Analysis ... 33

3.3.3.1. Conceptual Process ... 33

3.3.3.2. User Need Analysis ... 34

3.3.3.3. DSS Construction ... 35

IV. RESULT AND DISCUSSION ... 37

4.1. System Analysis ... 37

4.1.1. Database Design ... 37

4.1.1.1. Process Modeling ... 37

4.1.1.2. Conceptual Model ... 38

4.1.1.3. Logical Model ... 40

4.1.1.4. Physical Model ... 41

4.1.2. User Interface Design ... 42

4.2. System Implementation ... 43

4.2.1. DSS Tool Application ... 43

4.2.2. DSS Tool Analysis ... 52

V. CONCLUSION AND RECOMMENDATION ... 58

5.1. Conclusion ... 58

5.2. Recommendation ... 59

REFERENCES ... 60

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LIST OF FIGURES

Page Figure 1.1 Land management principle of back filling of a coal surface

mining method (Adopted from Skelly and Loy, 1975) ... 6 Figure 1.2 The underground mining method profile of an ore mining

(Adopted from Microsoft ® Encarta 2005) ... 7 Figure 1.3 The Lay Out of a mining facility to support mining operation

(Adopted from http://www.nrcan.gc.ca/mms/mining/) ... 8 Figure 1.4 The land management mechanism of a back filling surface

mining method (Adopted from Skelly and Loy, 1975) ... 9 Figure 2.1 The relationship of reclamation planning cost and Direct

Cost

23 Figure 2.2 The relationship of overhead and contractor profit

and Direct Cost ... 24 Figure 2.3 The relationship of reclamation management cost

and Direct Cost ... 25 Figure 2.4 The conceptual model of a DSS, showing four main software

components facilitated by other parts of the system (Adapted from Turban, 2003) ...

Figure 3.1 The Mining Company PT Newmont Nusa Tenggara

Location Map ... 29

Figure 3.2 The general concept flowchart Rehabilitation mechanism ... 32

Figure 3.3 Conceptual of Input-Output Process in Reclamation Bond Determination ... 34 Figure 3.4 Diagram of User Needs Analysis 35

Figure 3.5 Flowchart of DSS Construction ... 35

Figure 4.1 Rehabilitation Bond Context Diagram ... 37

Figure 4.2 Rehabilitation Bond DFD Level 1 ... 38

Figure 4.3 Rehabilitation Bond ERD ... 39

Figure 4.4 Rehabilitation Bond ‘user login’ application ... 44

Figure 4.5 Rehabilitation Bond ‘main form’ application ... 44

Figure 4.6 Rehabilitation Bond ‘main form’ application ... 45

Figure 4.7 Mine facilities removal cost form ... 46

Figure 4.8 Material Handling Plan form ... 46

Figure 4.9 Additional Equipment Activity form ... 47

Figure 4.10 Revegetation Cost form ... 47

Figure 4.11 Indirect Cost form ... 48

Figure 4.12 Total Reclamation Cost form ... 49

Figure 4.13 Material Handling Recapitulation form ... 49

Figure 4.14 Reclamation Bond Calculation form ... 50

Figure 4.15 Financial Compulsory form ... 50

Figure 4.16 Equipment and Labour Cost form ... 51

Figure 4.17 Cost component form ... 52

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DECISION SUPPORT SYSTEM FOR

REHABILITATION BOND OF MINING AREA

DEDE IDA SUHENDRA

GRADUATE SCHOOL

BOGOR AGRICULTURAL UNIVERSITY

2007

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STATEMENT

I, Mr. Dede Ida Suhendra, herewith declare the thesis title:

‘Decision Support System for Rehabilitation Bond of Mining Area’

Bogor, April 2007

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ABSTRACT

DEDE IDA SUHENDRA (2007). Decision Support System for Rehabilitation Bond of Mining Area. Under the supervision of HARTISARI H. and HASRUL L. AZAHARI.

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DECISION SUPPORT SYSTEM FOR

REHABILITATION BOND OF MINING AREA

DEDE IDA SUHENDRA

A Thesis submitted for the degree of Master of Science of Bogor Agricultural University

GRADUATE SCHOOL

BOGOR AGRICULTURAL UNIVERSITY

2007

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Research Title : Decision Support System for Rehabilitation Bond of Mining Area

Student Name : Dede Ida Suhendra Student ID : G051030071

Study Program : Master of Science in Information Technology for Natural Resources Management

Approved by, Advisory Board

Dr. Ir. Hartrisari Hardjomidjojo, DEA Dr. Ing. Hasrul L. Azahari, M.Met.E Supervisor Co-Supervisor

Endorsed by,

Program Coordinator Dean of Graduate School

Dr. Ir. Tania June, M.Sc Prof. Dr. Ir. Khairil A. Notodiputro, MS

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CURRICULUM VITAE

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ACKNOWLEDGEMENT

I thank the Directorate General of Mineral, Coal and Geothermal, particularly Ir. Soemarno Witoro S, Msi for allowing me to follow this study and to use technical data from various mining companies.

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LIST OF CONTENTS

Page

STATEMENT ... i

ACKNOWLEDGEMENT ... ii

CURRICULUM VITAE ... iii

ABSTRACT ... iv

List of Contents ... vi

List of Figures ... viii

List of Tables ... ix

List of Appendixes ... x

I. INTRODUCTION ... 1

1.1. Background ... 1

1.1.1. Mining Management ... 2

1.1.1.1. Mining Enterprises ... 2

1.1.1.2. Government Functionality ... 3

1.1.1.3. Company Responsibilities ... 4

1.1.2. Mining Method ... 5

1.1.2.1. Surface Mining ... 5

1.1.2.2. Underground Mining ... 7

1.1.2.3. Mining Supporting Facility ... 8

1.1.3. Land Management ... 8

1.1.4. Mining Reclamation Bond ... 10

1.2. Problem Identification ... 11

1.3. Objectives ... 12

II. LITERATURE REVIEW ... 13

2.1. Reclamation Bond Provision ... 13

2.1.1. Direct Cost Component ... 14

2.1.1.1. Mine Facilities Removal ... 14

2.1.1.2. Material handling plan ... 15

2.1.1.3. Re-Vegetation ... 21

2.1.1.4. Other Direct Reclamation Cost ... 21

2.1.2. Indirect Cost Component ... 22

2.1.2.1. Mob-Demob of Heavy Equipments ... 22

2.1.2.2. Reclamation Planning ... 22

2.1.2.3. Administration Cost and Contractor Profit ... 24

2.1.2.4. Management Cost ... 25

2.1.3. Determining the Total Performance Bond Amount ... 26

2.2. Decision Support System ... 26

2.2.1. Data Management ... 28

2.2.2. Model Management ... 28

2.2.3. Knowledge Management ... 28

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III. METHODOLOGY ... 29

3.1. Time and Location Selection ... 29

3.2. Material and Tool ... 30

3.2.1. Hardware and Software Required ... 30

3.2.2. Data Requirement ... 30

3.3. Method ... 32

3.3.1. General Concept ... 32

3.3.2. Legal Aspect ... 33

3.3.3. Decision Support System (DSS) Analysis ... 33

3.3.3.1. Conceptual Process ... 33

3.3.3.2. User Need Analysis ... 34

3.3.3.3. DSS Construction ... 35

IV. RESULT AND DISCUSSION ... 37

4.1. System Analysis ... 37

4.1.1. Database Design ... 37

4.1.1.1. Process Modeling ... 37

4.1.1.2. Conceptual Model ... 38

4.1.1.3. Logical Model ... 40

4.1.1.4. Physical Model ... 41

4.1.2. User Interface Design ... 42

4.2. System Implementation ... 43

4.2.1. DSS Tool Application ... 43

4.2.2. DSS Tool Analysis ... 52

V. CONCLUSION AND RECOMMENDATION ... 58

5.1. Conclusion ... 58

5.2. Recommendation ... 59

REFERENCES ... 60

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LIST OF FIGURES

Page Figure 1.1 Land management principle of back filling of a coal surface

mining method (Adopted from Skelly and Loy, 1975) ... 6 Figure 1.2 The underground mining method profile of an ore mining

(Adopted from Microsoft ® Encarta 2005) ... 7 Figure 1.3 The Lay Out of a mining facility to support mining operation

(Adopted from http://www.nrcan.gc.ca/mms/mining/) ... 8 Figure 1.4 The land management mechanism of a back filling surface

mining method (Adopted from Skelly and Loy, 1975) ... 9 Figure 2.1 The relationship of reclamation planning cost and Direct

Cost

23 Figure 2.2 The relationship of overhead and contractor profit

and Direct Cost ... 24 Figure 2.3 The relationship of reclamation management cost

and Direct Cost ... 25 Figure 2.4 The conceptual model of a DSS, showing four main software

components facilitated by other parts of the system (Adapted from Turban, 2003) ...

Figure 3.1 The Mining Company PT Newmont Nusa Tenggara

Location Map ... 29

Figure 3.2 The general concept flowchart Rehabilitation mechanism ... 32

Figure 3.3 Conceptual of Input-Output Process in Reclamation Bond Determination ... 34 Figure 3.4 Diagram of User Needs Analysis 35

Figure 3.5 Flowchart of DSS Construction ... 35

Figure 4.1 Rehabilitation Bond Context Diagram ... 37

Figure 4.2 Rehabilitation Bond DFD Level 1 ... 38

Figure 4.3 Rehabilitation Bond ERD ... 39

Figure 4.4 Rehabilitation Bond ‘user login’ application ... 44

Figure 4.5 Rehabilitation Bond ‘main form’ application ... 44

Figure 4.6 Rehabilitation Bond ‘main form’ application ... 45

Figure 4.7 Mine facilities removal cost form ... 46

Figure 4.8 Material Handling Plan form ... 46

Figure 4.9 Additional Equipment Activity form ... 47

Figure 4.10 Revegetation Cost form ... 47

Figure 4.11 Indirect Cost form ... 48

Figure 4.12 Total Reclamation Cost form ... 49

Figure 4.13 Material Handling Recapitulation form ... 49

Figure 4.14 Reclamation Bond Calculation form ... 50

Figure 4.15 Financial Compulsory form ... 50

Figure 4.16 Equipment and Labour Cost form ... 51

Figure 4.17 Cost component form ... 52

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LIST OF TABLES

Page Table 2.1 The commonly material used and the removal cost 14 Table 2.2 Relevant building and specific construction in a mining

operation (Means, 2000 ... 14

Table 2.3 Initial and final swells of selected material ... 16

Table 2.4 Heavy Duty / Construction Equipments Rental Prices (APKASI, October 2005) ... 20

Table 2.5 The Average of Heavy Equipment’s Lubricant and Fuel Consumptions ... 21

Table 4.1 Rehabilitation Bond logical data model ... 40

Table 4.2 Rehabilitation Bond physical design ... 41

Table 4.3 List of PT.NNT’s mine facilities removal cost ... 53

Table 4.4 List of PT.NNT’s Reclamation Bond ... 56

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LIST OF APPENDIXES

Page Appendix 1 Manual Reclamation Bond Software ... 62 Appendix 2 Material Handling Cost for PT. NNT ... 71 Appendix 3 Revegetation Cost for PT. NNT ... 72 Appendix 4 Other Reclamation Cost for PT. NNT ... 74 Appendix 5 Indirect Cost for PT. NNT ... 75

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I. INTRODUCTION

1.1. Background

The mandate of Act Number 11 Year 1967 concerning The Basic Provisions of Mining, on article (1) asserted that:” All minerals found within the Indonesian mining jurisdiction in the form of natural deposits as blessing of God Almighty are national wealth of the Indonesian people and shall, therefore, be controlled and utilized by the State for the maximum welfare of the people”.

Mining is an effort to remove in situ minerals resources, which is processed and refined into more valuable matters to become raw material for downstream industries. The operation could be conducted by surface and/or under-ground mining methods depend on natural deposit character by through several stages of mining operation. The stages consist of general survey, exploration, exploitation, processing and refining, transportation and sales; which can be operated either by a Government Agency, a state own company, a cooperative, a private body, or by way of people mining, through technically, economically and environmentally feasibility studies with respect to prevailing regulation. This activity is very potential to change the surrounding of environmental working area significantly, either positive or negative impacts. Positively, it could play a role as an agent of economical development. Contrary, it could be also as the source of environment deterioration, whether physical, chemical, biological, or social-economically if it is not managed appropriately. Improving the positive impact and to maintain the environment, a mining company is compulsory to conduct environmental management and environmental monitoring during the operation.

The mining operation, especially in exploitation stage that employ surface mining method is critical, yet mostly close to huge spatial opening, therefore suitable planning and operation is required to synchronize both of economical and environmental interests. Surface method has several subsequent steps, which are land clearing, topsoil removal, overburden/waste rock removal, minerals deposits excavation, and back filling. Those successive processes are driven eventually in accordance with post mining planning land-use agreement, either similar with

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previously usage or change to another more benefit one. Some diverting usages mined out area are used as water reservoir, tourism, fish cultivation, and sport facility. Otherwise, if there is not any benefit of mined out area, except deterioration for the environment, no mining activity might be much better.

1.1.1. Mining Management

In principle, since 1999 in line with regional autonomy policy, almost all of mining management has decentralized, except for the existing contract in respect of Foreign Capital Investment, which is still under Central Government authority until the licenses is finished.

1.1.1.1. Mining Enterprises

All investors are able to invest in mining sector, regardless nationality and company scale; could be in term of multinational company, State Own Company, private company, cooperation, or local community based. Due to this scheme, which refers to the prevailing regulation, mining enterprises and the type of license are classified as follow.

• Mining Authorization holders (Kuasa Pertambangan/KP) managed by National Agency, State Own Company, national company, and cooperation

• Contract of Work for mineral mining (Kontrak Karya/KK) and Work Agreement for Coal Mining Enterprises (Perjanjian Karya Pengusahaan Pertambangan Batubara/PKP2B), managed by multinational companies in term of Foreign Capital Investment Company (PMA) as contractor

• People based Mining, managed by local community on certain Area for People Mining, where determined by Local Government

The mining license is given in respect to mining activities stages successively in a definite period of time which each can be extended if necessary. The following are the stages with each duration permit.

• general survey, mainly for 1 year period and can be extended once for 1 year

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• exploration, mainly for 3 years period and can be extended twice for 1 year each

• exploitation, processing and refining, transportation and sales, for maximum 30 years period and can be extended twice for 10 years each This condition is omitted for the company in term of PMA, the license is given once as a package.

1.1.1.2. Government Functionality;

Actually, the Government functionality based on the prevailing policy is as follows:

a. Central Government

- Proposing, determining, and updating national mineral management policies, guideline, standardization, norms, criteria, and procedures; - Socialization and technical guidance for environment, safety, added

value and community development aspects, whether for local government, community and company;

- Supervising and evaluating local government official performances in conducting mining services both deskwork and fieldwork,

- Managing overlying license area between provinces and exceeding 12 miles of offshore area.

- Monitoring and evaluating contractors performance in conducting their becoming obligations comprises; environmental, safety, added value, community development, taxes and financial aspects, both deskwork and fieldwork,

b. Local Government

- Managing coal and minerals resources under their authorities’ area. - Monitoring and evaluating company performance in conducting their

becoming obligations comprises; environmental, safety, added value, community development, taxes and financial aspects, both deskwork and fieldwork,

- Socialization and technical guidance of each aspects whether to local government, community or to company.

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- Supervising the provincial and regional official in conducting mining services related to Regional Autonomy.

1.1.1.3. Company Responsibilities

a. Implementing Good Mining Practices

Good Mining Practices is conducted by implementing appropriate method and compliance of any related prevailing regulations to create accountable mining,

- Applying an effective and efficient mining method

- Environmental eligibility, based on Environmental Impact Assessment (EIM) to keep the environment components as ambient condition and to meet environmental policies.

- Added Value eligibility, concerning the company effort to improve their yield and condition such as conservation, quality, human aspect, community development and multiplying effect.

- Safety and health occupancy of the employee, to avoid mining accident.

- Standardization of any aspect of mining activities, whether operational procedure, equipment appropriateness, and official or operator competency; by referring to the national or international standards. - Economics eligibility to meet any finance and taxes obligations b. Fulfilling Taxes and Other Financial Obligation

- Deadrent in respect of the mining area

- Royalties in respect of the company’s production

- Corporate Income Tax in respect of income received or accrued by the contractor

- Personal Income Tax

- Income Tax under Article 23 and Article 26 of Income Tax Law Year 1994

- Value Added Tax and Sales Tax of Luxury Goods - Stamp Duty on Documents

- Import Duty on goods imported into Indonesia - Land and Building Tax in respect of:

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• The area of the mining area; and

• The utilization of land and building in the area where the contractor constructs facilities for its mining operations.

- Levies, taxes, charges and duties imposed by Regional Governments in Indonesia, which have been approved by the Central Government. - General administrative fees and charges for facilities or services

rendered and particular rights granted by the Government to the extent that such fees and charges have been approved by the Central Government

- Duties on the transfer of ownership for motor vehicles and ships or sea transportation.

- Capital goods and materials, imported by private Contractor Company within the context of the Agreement, are exempted from import Duty, Import Levies and Duty of Ownership Transfer according to the prevailing legislative rules.

- Allocating appropriate amount of fund in certain Bank, which have been approved by the Government as Mining Reclamation Bond, since it’s commencing up to decommissioning.

1.1.2. Mining Method

In principle, mining is classified into two main categories namely surface mining and underground mining. Implementations of these methods rely on the occurrences of mineral deposit, which are characteristics, kind of mineral, deposit type, position, spreading, and host-rock/ over-burden.

1.1.2.1. Surface Mining

Surface mining is excavation of mineral deposit at or near the surface, where the whole work is open to the atmosphere. The name is also designated by a modifying word or phrases depending on the mineral deposit types such as the following.

a. Open-pit/open-cut/open-cast/open-mine is open surface for removing metallic-minerals/ore deposit; for example Pomalaa nickel mine at

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South-East Sulawesi Province, Bintan alluminium mine at Kepulauan Riau Province, Eastberg cupper mine at Papua Province.

b. Quarry is excavation for economic-minerals/industrial-minerals; for example Tulungagung marble mine at East Java Province, Padalarang limestone mine at West Java Province, Karimun granite mine at Kepulauan Riau Province.

c. Strip mine is excavation for flat or slightly oblique of coal bed/seam/layer; for example Ombilin coal mine at West Sumatera, Tanjungenim coal mine at South Sumatera, Sangata coal mine at East Kalimantan,

d. Alluvial/placer mine is excavation for alluvium deposit of sand, gravel, or talus from which some valuable mineral is extracted; for example Logas gold mine at Riau Propince, Cilacap iron mine at Central Java Province, Martapura diamond mine at South Kalimantan Province.

e. Hydraulic mine, a placer mine worked by means of a stream of water directed against a bank of sand, gravel, or talus; soft rock similarly worked; for example almost all of ore tin mine on the islands of Bangka-Belitung Province.

Figure 1.1 Land management principle of back filling of a coal surface mining method (Adopted from Skelly and Loy, 1975)

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1.1.2.2. Underground Mining

Underground mining is also known as a “deep” mine; it’s usually located several hundred meters beneath the earth’s surface by means of the certain opening hole to connect to the surface. The opening hole could be employed either for main entrance, main haulage, or supporting facility way, those provide work for material and labor transportation, ventilation, drainage.

a. Shafts, a vertical or incline opening hole.

b. Tunnel, a horizontal or gentle inclining hole through in both sides of foothill.

c. Drift a horizontal or slight inclining hole at or parallel to adjacent strike of the mineral/coal deposit. Strike is the longest part of the deposit.

d. Adit, a horizontal or gentle inclining hole through the foothill in one side, it’s a dead end tunnel.

The broken mineral or coal as product material is removed mechanically and transferred by shuttle car or conveyor to the surface.

Figure 1.2 The underground mining method profile of an ore mining (Adopted from Microsoft ® Encarta ® Reference Library 2005)

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1.1.2.3. Mining Supporting Facility

Both of surface and underground mining methods operation are supported by several interrelation facilities, such as; processing plant, official buildings, warehouse, workshop, stock pile, settling pond, tailing pond, polishing pond, dumping area, roads, emplacements, erosion controls, dock, jetty, conveyor, railway-tract, water channel, bridges, electricity transmission, dormitory, fencing and other related various ones.

Figure 1.3 The Lay Out of a mining facility to support mining operation (Adopted from http://www.nrcan.gc.ca/mms/mining/)

1.1.3. Land Management

Based on the character where the whole excavation is opened, surface mining is more extensive on spatial opening than underground mining, and tends to evoke morphological change. The surface mining is critical, therefore suitable planning and operation to synchronize both of environmental and economical interests on land usage in exploitation is required. Exploitation is one of mining operation stages, which mostly related to spatial opening, since the purpose of producing and utilizing minerals.

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Surface mining method exploitation stage occupies several subsequent steps as follows:

a. Land clearing, it’s an attempt to eliminate working area of vegetation coverage.

b. Topsoil removal, to strip an upper part of earth layer called humus, then be loaded, hauled and stocked on certain area or be spread directly to a reclamation area, as a growth medium to accelerate re-vegetation.

c. Overburden/waste rock removal is to strip or to dig the covered rock layer or host rock of valuable minerals, then be loaded and hauled to be dumped either on permanently or provisional dumping areas, or even be dumped directly to a mined out area as reclamation filling material.

d. Minerals deposit excavation, then be loaded and hauled to processing plant stockpile, becoming feed for processing and or refining/purification process. The mineral deposit, which at least one of its metal content could be extracted economically, is also called ore.

e. Back filling, it’s the reclamation process, especially conducted in coal mining by returning the over burden or the waste rock, whether derive from the dumping area or directly from the active area to the void mined area, then being re-contoured, covered by humus, and re-vegetation.

Figure 1.4 The land management mechanism of a back filling surface mining method (Adopted from Skelly and Loy, 1975)

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1.1.4. Mining Reclamation Bond

Due to the prudent principle of the Government on a mining company, by regardless its principal and scale, the company is obliged to insure any spatial opening during their operation period by allocating appropriate fund in a certain Bank, as Reclamation Bond. Every mining company is compulsory to reclaim their mined area during operation and it will have had to finish before decommissioning. The reclamation should be agreed by Local Regional Government, whether it is fit with existing General Planning of Regional Land-use (RUTRD) or diverting to another more benefit one. The bond should be an adequate amount; therefore on default condition, it would be sufficient for any third party to do so. This is determined based on the Government regulation, which has been stipulated by Directorate General of Geological and Mineral Resources Decree (DGMR) - Department of Energy and Mineral Resources (DEMR) No. 336.K/271/DDJP/1996 concerning Reclamation Bond.

The Reclamation Bond mechanism is proposed by the company to be consulted with the government in order to achieve an agreement. The Reclamation Bond that has been agreed then being saved by the company in a certain Bank on behalf of Head of Regional Government, prior DGMR representing Minister of DEMR. The company could withdraw the bond when any requirements are satisfied, otherwise as default condition the Government will conduct an action to determine a third party to do so. The amount of bond is based on annual company planning pertain mined area reclamation for every five years period, which consist of direct and indirect cost. These costs are allocated for appropriate mined and disturbed area management, mobilizing material sources, procurement vegetation types, engineering method and equipment. Concerning spatial management related to engineering method and equipment, the fund determination relies on equipments and employment cost, which has unique characteristics such as bulldozer, loader, dump truck, excavator, grader, etc. These could be considered as effective and efficient whether single or combination operational. Determining the Reclamation Bond needs both skill and expertise, otherwise it would consume time, even perfunctorily.

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Due to Regional Autonomy policy, since year 1999, the actual mineral resource management is belonging to the regional authority. However, in transition period, these would raise some technical problem, particularly in expertise-required aspects in determining the Reclamation Bond. The Central Government realizes that there is a need to provide a supporting tool to accelerate knowledge transformation and to improve the capability of Regional Government human resources. This tool whether in term of a guideline or an application program insists to be developed for synchronizing the mining management policies between Central and Regional Governments.

Dealing with the necessity of Reclamation Bond assessment tool, this study attempted to develop a decision supporting system (DSS) approach to support fast and objective problem solution for evading disputability, namely Mining Rehabilitation Bond System (MR BoS). This is an interactive, flexible, and adaptable computerized based information system, which re-useable and be replicable tool by using model and knowledge for solving comparable projects and replicated for concerned users. The components of Mining Rehabilitation Bond System, whether variable, parameter and criterion are input into the system, to be processed within available formula eventually resulted an adequate amount of fund and rendering interrelated maps. In principle this yield will have been a main consideration reference for the Reclamation Bond decision maker.

1.2. Problem Identification

Reclamation Bond is crucial policy in mining industry, which needs prudential and peer principal of both company and government as this decisive to drive the post mining environment condition. It has to be proposed and allocated by a company before conducting any production activity, after through evaluation by the government. Mining is an investment, which limited by time and production frameworks. Therefore if this were constraint, either would delay to inflict financial loss of company operations or be determined perfunctorily, which would be flaw mining environmental image.

In this case both skill and expertise of government officials are required, because Reclamation Bond is an integration of mining principle, environmental

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management planning, and cost estimation. The mining principle is also involved in form of land management, which mostly employs mechanical earth moving as well. Environmental management planning is a part of Environmental Impact Assessment, which performs the steps of mined out area management fit with post mining area usage. The cost estimation is based on any economical calculation in conducting both land and environmental managements technically in effective and efficient manners.

Regional Autonomy provision requires appropriate official capacity building, related to their authority and responsibility. Consuming time and costly are common obstacles of Regional Government in improving their official capacity. Based on this reason, some of them might release a contradictive Reclamation Bond provision according to their perception eventually to increase regional income. Therefore, it is necessary to develop an integrated and user-friendly tool to determine Reclamation Bond.

1.3. Objectives

The main objective of this project is to develop a Mining Rehabilitation Bond System, with specific purposes are:

1). To provide the additional tool for the Government as Decision Support System to evaluate any company planning concerning cost estimation in accordance with spatial management and material removal through any equipment employment, ether suitable or not to be agreed with.

2). Determining adequate amount of fund, which has to be saved by a mining company in certain Bank as Reclamation Bond, which classified into;

- Direct cost; mine facilities removal, land structuring, re-vegetation, erosion control, acid mine drainage mitigation; and

- Indirect cost; mobilization and demobilization of heavy equipments, establish reclamation planning, administration and contractor profitability as reclamation doer.

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II. LITERATURE REVIEW

Rehabilitation bonds and bank guarantees are broadly accepted as instruments available to governments to ensure completion of rehabilitation of mined areas. Bond and guarantees are seen to provide a financial incentive for the proper completion of rehabilitation work and to ensure that the cost of rehabilitation will be met by the miner rather than through public funding (McGill and Fox, 1998).

Several terms are commonly used to express this bond and guarantees including rehabilitation guarantee, rehabilitation bond, reclamation bond, performance bond etc. In this case, the differences between rehabilitation bond and reclamation bond merely by the author to distinguish between the name of application and the Government Provisions which has legal aspect. The Mining Rehabilitation Bond System is designed to support decision making of Reclamation Bond.

2.1. Reclamation Bond Provision

According to Director General of Geological and Mineral Resources Decree number: 336.K/271/DDJP/1996 concerning Reclamation Bond, asserted; “Reclamation Bond is a definite fund, which is provided by a mining company as a guarantee in conducting reclamation on mined area”, though “reclamation is an effort to restructure and improve condition upon a disturb land that is impacted by mining operation to fit either with previous or divert land use to be more useful one”, and “the adequate amount of bond is based on annual company planning pertain mined area reclamation for every five years period, with the premise would be conducted by the third party”.

Realization of Reclamation Bond is based on the “Guideline of Established Annual Planning of Environmental Management regarding Determining of Reclamation Bond (DEMR, 1996)”. The components of Reclamation Bond could be classified into two main components those comprise of direct and indirect costs regarding establishment of company annual environmental management as basic of estimation.

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2.1.1. Direct Cost Component

The cost is prepared to cover mine facilities removal, material handling, re-vegetation, and supporting efforts for post mining condition; erosion control, acid mine drainage mitigation.

2.1.1.1. Mine Facilities Removal

This cost is proposed for removing or demolishing and disposal of any supporting facilities of mining operation, if not any exception for post mining usage of a certain items. There is not any specific calculation method could be implemented to whole mine facilities removal, since that almost developed by civil work. The structure demolition, disposal cost and equipments are decisive driven by their physical characteristics such as material types, foundation, and dimension.

Table 2.1 The commonly material used and the removal cost (Means, 2000)

Material Structure Based Type Cost ($) Units

Bricks 5 m3

Concrete 6 m3

Metal 5 m3

Iron Pipe / Water Channel 2.50 m3

Belt Conveyor 38.00 Ft

Wood / Electricity Pole 250 Ft

Wires 3.00 Ft

Shaped Concrete / Foundation 2.67 Ft

Table 2.2 Relevant building and specific construction in a mining operation (Means, 2000)

Building Based Types Specific Based Types

Offices Foundations

Warehouse Belt Conveyor

Workshop Railway Fuel Tank Water Channel

Primary Processing Bridges

Secondary Processing Electricity Transmission

Stacker Poles Loading Facility Fences

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According to Means (2000), the structure demolition and disposal cost is based on the material type in certain units as shown on Table 2.1, and the common building and other specific types that relevant to be built in a mining operation. The common material used and the removal cost is shown in Table 2.2.

2.1.1.2. Material Handling Plan

Land structuring or earthmoving consists of several operations, i.e. back filled of mined area, re-contouring, top soil spreading, erosion and surface water controls.

a. Earthmoving

The material-handling plan is determined by estimation of material volume to be done, haulage distance, road grade, and employed equipment types.

1) Waste rock volume estimation

Determination of material amount that must be handled (earthmoving volumes calculation) uses standards engineering methods. Volume calculation can be obtained by comparing the pre-reclamation and post-reclamation topography of the site. A series of pre-reclamation and post-reclamation cross sections can be used to calculate volumes by the average-end-area method as follow:

i=n

V =

∑

{[(

A(i)+A(i+1)

)

]

_{*Li +…..+}

[

(

A(n-1)+A(n)

)

]

_*L(n-1)

}

...1) i=1

V : Volume

Ai : Area of cross Ai section.

Li : Length between the section of area A (i) - A (i+1). n : Number of section

Material volume is defined according to its state in the earth moving process. There are three volume measurements, which are bank of cubic meters (BCM), loose cubic meters (LCM), and compacted cubic meters (CCM), which driven by a swell factor. Swell is the volume increasing resulting from a change of bank state to loose state. Some equipment manuals refer to a load factor, which is the loose density

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divided by the bank density. The following equation is used to determine the swell factor.

SF = [100 / (LD / BD)] – 100 ……….……….. 2)

SF : Swell Factor LD : Loose Density BD : Bank Density

Table 2.3 Initial and final swells of selected material

Material Types Initial Swell (%) Final Swell (%)

Mixed waste rock Siltstone

Sandstone

25-45 35-45 60-70

10-25 10-25 25-45

2) Haulage distance estimation

Haulage distance estimation is based on the reclamation and operation plans of the permit application. This includes haul-roads and routes designation for each area where backfilling, grading, topsoil replacement, or other earth moving activities occurred, identify the approximate centroid of each source material and its destination, and determine the centroid-to-centroid distance. Centroid is a surface expression of the center of mass.

3) Grade estimation

Haul road grade and its surface roughness conditions greatly impact equipment productivity and may confine the type of equipment to be employed. Most equipment productivity and guideline express these limitations in term of the total resistance of the haul, which is the sum of the rolling resistance and grade resistance.

TR = RR + GR ……….. 3)

TR : Total Resistance RR : Rolling Resistance GR : Grade Resistance

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4) Equipment selection

The following are the principle process in selecting appropriate equipments.

• Determines types of equipment such as bulldozer, scraper, excavator, dump truck, loader, grader or dragline.

• Determines model and capacity of equipments based on the reclamation plan information; concerning land management, material handling, and manual of equipments.

5) Land management

The land management in order to meet the reclamation plan has to select the appropriate equipment that is efficient and effective. Typical earthmoving activities together with equipment needed are described bellow.

• Spoil ridge reduction: to move tops of the spoil ridges into the valley between the ridges, the operations normally rely upon bulldozers.

• Final pit/highwall elimination; to fill the last pit with material, which its sources obtained from such following area.

- Adjacent spoil ridges or the area above the highwall, these usually by using bulldozer.

- Overburden stockpile; normally uses scrappers or combination of loaders and trucks to move material to the pit. When trucks and loaders are used, bulldozers spread the material in the pit area. If the pit is going to be reconfigured for retention as a permanent impoundment, bulldozers are normally used to reduce the highwall and spoil slopes into acceptable grades.

• Final grading; to re-contour backfilled area, excess spoil disposal structures and other disturbed areas, to facilitate proper drainage and the approved post mining land use and to prepare disturbed areas for topsoil redistribution These usually use scrapers, bulldozers and motor graders. In some cases, especially for sites formerly used as roads or support facilities, ripping with bulldozers

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may be required to reduce compaction in the root zone and provide a slightly rough surface to enhance topsoil adhesion.

• Topsoil redistribution: this considers soil horizon placement, soil depth, compaction, and drainage systems. The choice of equipment depends on grade, the haulage distance between stockpiles and placement areas, and the volume of material to be moved. These normally involving the use of scrapers, front-end loaders, trucks, bulldozers, and/or graders.

• Removal of diversions and siltation structures: to grade out diversions and excavated siltation structures, generally bulldozers is adequate to be used. In some cases, a hydraulic backhoe excavator or small dragline is required to dredge accumulated sediment.

• Covering of coal mine waste or other acid-toxic forming materials exposed: when the reclamation and operation plans require the application of cover material prior to revegetation, the similar equipment considerations as the topsoil redistribution activities discussed above apply to the transport and distribution of this material, i.e. include the covering of coarse coal mine refuse, slurry impoundments and coal stockpile pads.

b. Productivity and Equipment Cost Calculations

The development of the materials handling plan requires a determination of equipment productivity and earthmoving costs. Generally, the productivity of certain equipment is expressed in cubic meter per hour. Several factors relates to equipment productivity are capacity, cycle time, site conditions, and material characteristics. Actually, reclamation activities do not operate at 100% efficiency, it relies on complex factors such as operator skill, repairing and adjustments, and personnel and job layout delays. Human factor either addressed individual factor as part of the operator factor or combined in an Efficiency Factor. Despitefully, the site-specific conditions are as decisive

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factors. The total hours of an equipment usage determined by applying productivity rates to the amount of material removed.

The following are several formulas related to the capacity estimation for dozing, excavating, loading, and hauling of certain equipment to be adjusted with the selected equipment specification.

1) Estimation of Bulldozer production capacities q * 60 * b

Q = ………..……. 4) (D/F) + (D/R) + Z

Q : Production capacity (m³/hour) q : Blade capacity (m³)

b : Blade factor D : Dozing distance (m) F : Forward speed (m/mnt) R : Reverse speed (m/mnt) Z : Transmission (mnt)

2) Estimation of Excavator production capacities

q _{* 3600 * e}

Q = ………...……. 5)

Q : Production capacity (m³/hour) q : Bucket capacity (m³)

e : Correction factor Ct : Cycle time (sec)

3) Estimation of Dump Truck production capacities

q _{* 60 * d}

Q = …………...…… 6)

(n*Ct) + (D/V1) + (D/V2) + T1 +T2 Q : Production capacity (m³/hour) q : Haulage capacity (m³/hour) d : Correction factor

n : Loading rate number Ct : Loading Cycle time (sec) D : Haul distance (m/) V1 : Haul speed (mnt) V2 : Empty speed (m/mnt) T1 : Dumping time (mnt) T2 : Position time (mnt)

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4) Estimation of Wheel Loader production capacities q * 60 * w

Q = ………...……. 7) (D/F) + (D/R) + Z

Q : Production capacity (m³/hour) q : Bucket capacity (m³)

w : Correction factor D : Loading distance (m) F : Forward speed (m/mnt) R : Reverse speed (m/mnt) Z : Transmission (mnt)

Table 2.4 Heavy Duty / Construction Equipments Rental Prices (APKASI, October 2005)

Prices / Unit ($ US) No. Types Capacity _{Per Month /}

210 Hours Per Hours

1 Bulldozer 160 HP 6430 32

2 Bulldozer 200 HP 8064 40

3 Bulldozer 320 HP 12860 64

4 Bulldozer 425 HP 17161 86

5 Wheel Loader 1.5 m3 3871 19

6 Wheel Loader 2.5 m3 4516 23

7 Wheel Loader 3.0 m3 4710 24

8 Wheel Loader 4.0 m3 9419 47

9 Track Loader 2.3 m3 4301 21

10 Track Loader 2.8 m3 5161 26

11 Motor Grader 135 HP 5054 25

12 Motor Grader 150 HP 5591 28

13 Hyd Excavator 0.5 m3 3527 18

14 Hyd Excavator 0.9 m3 4516 23

15 Hyd Excavator 1.5 m3 6279 31

16 Hyd Excavator 2 m3 8344 42

17 Hyd Breaker 3000 9763 49

18 Back Hoe Loader 0.3 – 1 m3 3720 19

19 Dump Truck 20 Ton 3048 17

20 Dump Truck 12 Ton 2903 14

21 Dump Truck 8 Ton 1935 10

The required cost for material handling is based on the equipment productivity and number of equipments used, whether individual or/and combinations. While to determine the hourly cost of equipment during operation; it can adjust the components of the hourly costs in the Cost

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Reference Guide for Construction Equipment, for the number of shifts, oil and fuel costs, etc.

Table 2.5 The Average of Heavy Equipment’s Lubricant and Fuel Consumptions

Consumption (Unit/hr)

No. Oil Type Unit

Excavator Bulldozer

Prices/ Unit ($ US)

1 Fuel Ltr 0.14 22.5 0.7

2 Engine Oil Ltr 0.108 0.1 2.5

3 Final Drive Oil Ltr 0.007 0.04 2.5

4 Hydraulic Oil Ltr 0.075 0.11 2.5

5 Swing Machine Oil Ltr 0.007 - 2.5

6 Transmission Oil Ltr - 0.15 2.5

7 Grease Kg 0.07 0.02 3.0

2.1.1.3. Re-vegetation

The initial re-vegetation process generally consists of seedbed preparation, including application of soil amendment to improve soil quality, seeding, planting, maintenance, and monitoring. The reclamation plan will specify the soil condition and specific plantation, which has been agreed. Generally the cost of each revegetation activities is determined per hectare.

2.1.1.4. Other Direct Reclamation Cost

Other direct reclamation cost depends on the site conditions and applicable requirements of the reclamation and operation plans, other necessary reclamation activities may include:

• Pumping and treating impounded waters

• Replacing wetlands

• Sealing underground mine entries and openings

• Plugging auger holes

• Sealing monitoring wells and other drilled holes.

• Constructing rock drains.

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• Maintaining roads during reclamation including grading, surfacing, ditches and culverts.

• Maintaining ponds.

• Evaluating and rehabilitating structures to be retained as part of the post-mining land use (ponds, roads, diversions, etc).

There is no established method of estimating costs for most of these activities; therefore a case-by-case basis calculation by using professional judgment is needed.

2.1.2. Indirect Cost Component

This cost is non-technical fund, which proposed to support the realization of reclamation planning.

2.1.2.1. Mobilization and Demobilization of Heavy Equipments

Mobilization and Demobilization (mob-demob) of heavy equipments is an allowance for the cost of moving equipment, to and from the reclamation site. The cost will be varied depend on such condition:

• the type and number of equipment,

• the haul distance to the site,

• the needing for special equipment;

• the presence of non standard features or condition,

• the remote location

• a necessity of separate mob-demob at a later one.

Generally the cost is range up to 10% of the total direct costs in accordance with its constraint that should be recognized, and normally is determined 2.5% of direct cost.

2.1.2.2. Reclamation Planning

The cost of reclamation planning is addressed to engineering redesign cost, in the event of bond forfeiture; due to the plans in the permit application may be not reflect site conditions at the time of bond. Necessary activities may include:

• Preparing maps and plans to show the extent of required reclamation.

• Surveying topsoil and overburden stockpiles to determine the amount of material available.

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• Analyzing topsoil and overburden stockpiles to determine whether special handling is necessary.

• Evaluating structures to assess the difficulty of demolition and removal.

• Evaluating impoundments and roads to determine any special reclamation needs (such as the presence of toxic materials), the feasibility of leaving those structures in place, and the reclamation needed to ensure stability and facilitate the post mining landuse.

• Assessing the condition of area reclaimed by the permitee to determine whether additional work is needed to complete the reclamation plan.

• Preparing contract documents.

Figure 2.1 The relationship of reclamation planning cost and Direct Cost Based on the manual chart of “Englemen’s Heavy Construction Cost File” (on Handbook for Calculation of Reclamation Bond Amounts - OSM US Department of the Interior, 2000), the cost of reclamation plan generally allocate in between 2.5%-6.0% of direct cost, whilst DEMR has been determined in between 2%-10% as shown on Figure 2.1. The following formula is derived from this chart.

Y = exp(13.8155105579643-1.15129254649702X) ; or

(LN(Y))=13.8155105579643-1.15129254649702X ... 8) Y : Direct Cost

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2.1.2.3. Administration Cost and Contractor Profit

The reclamation plan is designed likely to be conducted by a third party, thus overhead and profit for the contractor as reclamation doer have to be included in bond amount. This allowance is needed to anticipate when an uncertainty event or in default condition occurred.

Based on the manual chart of “Englemen’s Heavy Construction Cost File” (on Annual Plan of Environmental Management for Reclamation Bond, DEMR), the overhead and profit costs related to the direct cost is in between 3%-14% as classified follow:

• for Y

≤

21000, then X=14, and

• for Y

≥

100000000, then X=3, else

• for 21000

<

100000000, then X is determined by the following equation;

Y= exp(20.7232658369464-0.767528364331349X), or

(LN(Y))=20.7232658369464-0.767528364331349X ……...………..9)

Y : Direct cost (US$ million) X : Overhead and profit (%)

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2.1.2.4. Management Cost

Reclamation management cost is addressed to hire an independence project management firm related to inspect and supervise the reclamation contractor work performance. Some activities may include as additional work, such as dam inspection.

Based on the manually chart of “Englemen’s Heavy Construction Cost File” (on Annual Plan of Environmental Management for Reclamation Bond, DEMR), the fee is in between 2%-7% related to the direct cost is configured in equations and shown on chart below.

• for Y

≤

10000, then X = 7, and

• for Y

≥

100000000, then X = 2, else

• for 10000

<

100000000, then X is determined by the following equation;

Y = exp(22.1048168927428 - 1.84206807439524X), or

(LN(y)) = 22.1048168927428 - 1.84206807439524X …………………10)

Y : Direct cost (US$ million)

X : Reclamation management cost (%)

Figure 2.3 The relationship of reclamation management cost and Direct Cost

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2.1.3. Determining the Total Performance Bond Amount

Reclamation cost is total amount of direct and indirect cost components, whilst the Reclamation Bond is determined for its five years period. Therefore actual reclamation cost as the first annum bond must be in detail, and the calculation of each component can be expressed in a certain price per units. In the absence of major changes to the reclamation and operation plans, accordingly without redoing the both calculation, the cost of remaining fourth years can be estimated by considering a predicted annually escalation price or inflations.

Rc = DC + IC .……….…11)

RC : Reclamation Cost DC : Direct Cost

IC : Indirect Cost i= 5

Rb =

∑

[

(

1+E(i)

)

_{*Dc(i) + IC(i)}

]

...12) i=1

Rb : Reclamation Bond Ei : Escalation year i Dc(i) : Direct Cost year i IC(i) : Indirect Cost year i

2.2. Decision Support System

Decision theory is an essential branch of operations and resource management and its methodology has been developed at the intersection between applied mathematics and computer engineering. In the past, decision processes were considered to be simple rational mathematical optimizations, based on linear programming and graphical techniques. However, this oversimplification resulted in system representations which were far from real conditions and consequently of limited practical application. Since the end of 1950s, the Nobel prize-winner H. Simmon introduced the need to human capacity to process it. Simmon suggested the formulation of realistic goals that reflect satisfactory solution instead of optimal ones, and proposed adapting the decision procedure to human heuristic behavior, by introducing the concept of three interactive and iterative phases: intelligence, design, and choice phases. Together with the introduction of information technologies, decision theory has evolved and brought the

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construction of integrated Decision Support Systems (Hernandez and Carnelli, 1996).

Decision making can be a complicated process, because decision makers are faced with an ever-increasing number of alternatives, the relationships between the variables involved are complex, and frequent changes are occurring. Decision often must be made under time pressure, and several decisions may be interrelated (Turban, 2003).

Turban (2003) stated that Decision Support System (DSS) is a computer based information system that combines models and data to provide support for decision makers in solving non-structured and semi-structured or interdependent problems with extensive user involvement. DSS consist of the following four main components; Data Management, User Interface, Model Management, and Knowledge Management subsystems.

Figure 2.4 The DSS conceptual model, showing four main software components

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2.2.1. Data Management

The data management includes a specially constructed database or set of files that contain relevant data for the decision situation and is managed by a database management system (DBMS). Data can also be obtained directly from the corporate data warehouse, from regular databases, or from other sources.

2.2.2. Model Management

Model management includes software with financial, statistical, management science, or other quantitative models. These provide the systems analytical capabilities and an appropriate software management program to manage the models. Some of the models are preprogrammed, while others are built by the DSS builder or end user.

2.2.3. Knowledge Management

The knowledge management subsystem can support any of the other subsystems or act as an independent component, providing knowledge for the solution of the specific problem. This subsystem is available in only some DSSs. 2.2.4. User Interface

The user interface subsystem enables the user to communicate with and command the DSS. Most DSSs have graphical user interfaces.

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III. METHODOLOGY

This section describes the materials and the methods used in designing, creating and implementing Mining Rehabilitation Bond System of a mining area. 3.1. Time and Location Selection

The research has been conducted from April 2005 to January 2006 at Department of Energy and Mineral Resources (DEMR), Jakarta and MIT Research Laboratory, SEAMEO-BIOTROP, Bogor.

For the purpose of the research, PT. Newmont Nusa Tenggara (NNT) was used as study case (Figure 3.1), as suggested by DEMR, therefore the data was collected from this company as well. This is a surface mining company that exploits copper and gold located at Batu Hijau, West Sumbawa Regency - West Nusa Tenggara Province. It has almost 1,900 ha opening area, which consists of 28 ha main pit and supporting area for the rest, where should has warranty to manage annually.

The research area is delineated and focused on the development of DSS for determining Reclamation Bond of PT NNT. This system is supported by company mining data whether technical, non-technical, spatial, non spatial, and financial, which are manipulated and presented by using some empirical formula on a database and model based management systems.

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3.2. Material and Tool

3.2.1. Hardware and Software Required

As an integrative system, DSS tool is constructed by several components. This tool can properly work on recommended hardware below, perhaps with lack of weakness and troubleshooting.

a. Required Hardware.

• Desktop PC with Windows XP Home Edition OS

• Processor : Pentium III 450 MHz

• Memory : 128 MB of RAM

• Storage : 40 GB

• Plotter HP Design-jet 500 PS Pantone Digital Color

• Printer HP Desk-jet 3535

b. Software, to build the prototype of DSS tool by integrating some of the software, i.e.:

• Microsoft Visual Basic 6.0

Used for coding and constructing the prototype of DSS tool as the product of spatial information system.

• Microsoft Access

Powerful ‘Microsoft’ database application software, which is part of Office Suite, used to store and retrieve reclamation data.

• ESRI Arc View 3.2

This software used in spatial data preparation such administrative map, mining location map, road map, contour map, geological map, etc

• Esri MapObject 2.1

This ESRI’s product combined with Microsoft Visual Basic 6.0 used for building map application.

3.2.2. Data Requirement

Data required in this study consist of spatial data of project area which gathered from National Survey and Mapping Agency (BAKOSURTANAL) and DEMR and non spatial data gathered from reclamation division of DEMR.

a. Spatial Data

• Project Area Contour maps on scale 1:10.000

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• Mining Project Area layout map on scale 1:5.000

• Reclamation Planning Project Area map on scale 1:5.000 b. Non Spatial Data

• Technical Data

- Soil and rock types

- Slope (in percent) and distances (in kilometer) between any mining facilities, usually used to determine material handling equipment movement

- Building dimensions (in cubic meter) with material types (brick, concrete, metal, iron pipe, belt conveyor, wood, wires, etc) and physical structure characteristics, in order to determine mine facilities removal

- Heavy equipment types (dozer, ripper, excavator, grader, loader, scraper, dump truck, etc)

• Non Technical Data

- Specification of vegetation

- Price list of Heavy equipment rental - Cost of specific material and the removal - Price list of specific vegetation

- Price list of fertilizer

- Price list of fuel, oil and lubrication

- Additional banking information (billing rate, inflation rate, etc) c. Missalaneous Data

• Administrative; province and regional boundary map on scale 1:250.000 (BAKOSUR- TANAL, 1999)

• Road and river map on scale 1:250.000 (BAKOSURTANAL, 1999)

• Mining companies location and information

Administratively, PT.NNT is located at Batu Hijau, West Sumbawa Regency of West Nusa Tenggara Province. It has almost 1,900 ha opening area that consists of 28 ha main pit and the rest for supporting area, where should has warranty to manage annually. Technically, this is a surface mining company that exploit copper and gold. The data used for this research was acquired from DEMR in form of hard copy of mining company program in proposing their Reclamation Bond.

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3.3. Method

In order to develop reclamation bond computerized base system is need to breaking down problem into its component parts, examining those parts, and reconstituting them into a more efficient, effective whole. The systems analysis reclamation bond phase examines and documents the existing processing environment, examines the opportunities and alternatives, and develops the requirements for change.

3.3.1. General Concept

The general concept of Reclamation Bond determination can be figure out as seen on Figure 3.2. In principle, a mining company has to consider and compliance technical, economical, and environmental aspects in conducting activities. Therefore any steps of exploitation especially related to the spatial management are warranted to reclaim by saving a Reclamation Bond, which has been agreed by the government both of amount and the Bank.

Figure 3.2 The general concept flowchart of Reclamation Bond mechanism The process to determine Reclamation Bond has closed relationship with exploitation activities as well, since almost of anything that have been built and

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8. Labor Cost Module

This module can be used by the authorized user to add and edit labor cost for

each equipment used.

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Appendix 2. Material Handling Cost for PT. NNT

Year

Eartmoving_act

Equip_name

Fixed

cost

Labour

cost

Total

OH

Total_Cost

2001 Reshap. & Recont. ED285 Toe Bulldozer 86 2.5 700.32 61,978.33 2001 Subsoil Spreading ED285 toe Bulldozer 86 2.5 700.32 61,978.33 2001 Subsoil Spreading ED285 toe Hyd Excavator 42 2.5 720.58 32,066.01 2001 Subsoil Spreading ED285 toe Dump Truck 17 2.5 3501.60 68,281.21 2001 Topsoil Spreading ED285 toe Bulldozer 86 2.5 140.06 12,395.66 2001 Topsoil Spreading ED285 toe Hyd Excavator 42 2.5 144.12 6,413.20 2001 Topsoil Spreading ED285 toe Dump Truck 17 2.5 700.32 13,656.24 2002 Reshap. & Recont. ED360 toe Bulldozer 86 2.5 6065.36 536,784.33 2002 Subsoil Spreading ED360 toe Bulldozer 86 2.5 6065.36 536,784.33 2002 Subsoil Spreading ED360 toe Hyd Excavator 42 2.5 4737.04 210,798.43 2002 Subsoil Spreading ED360 toe Dump Truck 17 2.5 30326.80 591,372.57 2002 Topsoil Spreading ED360 toe Bulldozer 86 2.5 1213.07 107,356.86 2002 Topsoil Spreading ED360 toe Hyd Excavator 42 2.5 947.41 42,159.69 2002 Topsoil Spreading ED360 toe Dump Truck 17 2.5 6065.36 118,274.51 2003 Reshap. & Recont ED480 toe Bulldozer 86 2.5 2813.52 248,996.85 2003 Subsoil Spreading ED480 toe Bulldozer 86 2.5 2813.52 248,996.85 2003 Subsoil Spreading ED480 toe Hyd Excavator 42 2.5 2197.36 97,782.56 2003 Subsoil Spreading ED480 toe Dump Truck 17 2.5 14067.62 274,318.56 2003 Topsoil Spreading ED480 toe Bulldozer 86 2.5 562.70 49,799.37 2003 Topsoil Spreading ED480 toe Hyd Excavator 42 2.5 439.47 19,556.51 2003 Topsoil Spreading ED480 toe Dump Truck 17 2.5 2813.52 54,863.71 2004 Reshap. & Recont ED525-TD120 Bulldozer 86 2.5 7311.73 647,088.41 2004 Subsoil Spreading ED525 - TD120 Bulldozer 86 2.5 7311.73 647,088.41 2004 Subsoil Spreading ED525 - TD120 Hyd Excavator 42 2.5 5710.46 254,115.51 2004 Subsoil Spreading ED525 - TD120 Dump Truck 17 2.5 36558.67 712,894.02 2004 Topsoil Spreading ED525 - TD120 Bulldozer 86 2.5 1462.35 129,417.68 2004 Topsoil Spreading ED525 - TD120 Hyd Excavator 42 2.5 1142.09 50,823.10 2004 Topsoil Spreading ED525 - TD120 Dump Truck 17 2.5 7311.73 142,578.80 2005

Reshap. & Recont. ED370 -

ED480 Flats - TD180 Bulldozer 86 2.5 18414.01 1,629,639.96 2005

Subsoil Spreading ED370 - ED480

Flats - TD180 toe Bulldozer 86 2.5 18414.01 1,629,639.96 2005

Subsoil Spreading ED370 - ED480

Flats - TD180 toe Hyd Excavator 42 2.5 14381.33 639,969.40 2005

Subsoil Spreading ED370 - ED480

Flats - TD180 toe Dump Truck 14 2.5 92070.05 1,519,155.89 2005

Topsoil Spreading ED370 - ED480

Flats - TD180 toe Bulldozer 86 2.5 3682.80 325,927.99 2005

Topsoil Spreading ED370 - ED480

Flats - TD180 toe Hyd Excavator 42 2.5 2876.27 127,993.88 2005

Topsoil Spreading ED370 - ED480

Flats - TD180 toe Dump Truck 17 2.5 18414.01 359,073.21

(3)

Appendix 3. Revegetation Cost for PT. NNT

Year

Component

Sub Component

Unit

Needs

Unit

Cost

Reveg.

area

Cost ($)

2001 Seedling Polybag Provision Bag 1000 0.02 8 160.00

2001 Seedling Fertilizer Kg 2 0.24 8 3.84

2001 Planting Row Sprigging Cutting 5000 0.13 8 5,200.00 2001 Planting Ijuk Aprons m2 1200 0.69 8 6,624.00 2001 Planting Jute Netting m2 4200 0.27 8 9,072.00 2001 Planting Labour HOK 100 10 8 8,000.00 2001 Planting Seed Mix Kg 64 3.13 8 1,602.56 2001 Planting Hydromulch Kg 2000 0.52 8 8,320.00 2001 Planting Tackifier Kg 20 19 8 3,040.00

2001 Planting Labour HOK 10 10 8 800.00

2001 Planting Fertilizer

1000

Tablets 1 50 8 400.00

2001 Planting Labour HOK 20 10 8 1,600.00

2001 Maintain. & Monitor. Fertilizer Kg 400 0.24 8 768.00 2001 Maintain. & Monitor.

Replacement

Cutting Cutting 2000 0.13 8 2,080.00 2001 Maintain. & Monitor. Ijuk m2 200 0.69 8 1,104.00 2001 Maintain. & Monitor. Herbicide Liter 1 9.2 8 73.60 2001 Maintain. & Monitor. Soil Analysis Sample 3 92 8 2,208.00 2001 Maintain. & Monitor. Labour HOK 20 10 8 1,600.00 2002 Seedling Labour HOK 35 6 35.6 7,476.00 2002 Seedling

Polybag

Provisioning Bag 1000 0.02 35.6 712.00 2002 Seedling Fertilizer kg 2 0.24 35.6 17.09 2002 Planting Row Sprigging Cutting 5000 0.13 35.6 23,140.00 2002 Planting Ijuk Aprons m2 1200 0.69 35.6 29,476.80 2002 Planting Jute Netrting m2 4200 0.27 35.6 40,370.40 2002 Planting Labour HOK 100 10 35.6 35,600.00 2002 Planting Seed Mix kg 64 3.13 35.6 7,131.39 2002 Planting Hydromulch kg 2000 0.52 35.6 37,024.00 2002 Planting Tackifier kg 20 19 35.6 13,528.00 2002 Planting Fertilizer kg 400 0.24 35.6 3,417.60 2002 Planting Labour HOK 10 10 35.6 3,560.00 2002 Planting Fertilizer

1000

Tablets 20 50 35.6 35,600.00 2002 Planting Labour HOK 20 10 35.6 7,120.00 2002 Maintain. & Monitor. Fertilizer kg 400 0.24 35.6 3,417.60 2002 Maintain. & Monitor. Replacment Cutting Cutting 2000 0.13 35.6 9,256.00 2002 Maintain. & Monitor. Ijuk m2 200 0.69 35.6 4,912.80 2002 Maintain. & Monitor. Herbicide Liter 1 9.2 35.6 327.52 2002 Maintain. & Monitor. Soil Analysis Sample 3 92 35.6 9,825.60 2002 Maintain. & Monitor. Labour HOK 20 10 35.6 7,120.00 2003 Seedling

Main Stock

Seedling Labour HOK 35 6 17.1 3,591.00 2003 Seedling

Polybag

Provisioning Bag 1000 0.02 17.1 342.00 2003 Seedling Fertilizer kg 2 0.24 17.1 8.21 2003 Planting Row Sprigging Cutting 5000 0.13 17.1 11,115.00 2003 Planting Ijuk Aprons m2 1200 0.69 17.1 14,158.80 2003 Planting Jute Netting m2 4200 0.27 17.1 19,391.40 2003 Planting Seed Mix kg 64 3.13 17.1 3,425.47 2003 Planting Hydromulch kg 2000 0.52 17.1 17,784.00 2003 Planting Tackifier kg 20 19 17.1 6,498.00 2003 Planting Fertilizer kg 400 0.24 17.1 1,641.60 2003 Planting Labour HOK 10 10 17.1 1,710.00 2003 Planting Fertilizer

1000

(4)

Year

Component

Sub Component

Unit

Needs

Unit

Cost

Reveg.

area

Cost ($)

2003 Planting Labour HOK 20 10 17.1 3,420.00 2003 Maintain. & Monitor. Fertilizer Kg 400 0.24 17.1 1,641.60 2003 Maintain. & Monitor.

Replacement

Cutting Cutting 2000 0.13 17.1 4,446.00 2003 Maintain. & Monitor. Ijuk m2 200 0.69 17.1 2,359.80 2003 Maintain. & Monitor. Herbicide Liter 1 9.2 17.1 157.32 2003 Maintain. & Monitor. Soil Analysis Sample 3 92 17.1 4,719.60 2003 Maintain. & Monitor. Labour HOK 20 10 17.1 3,420.00 2003 Planting Fertilizer kg 400 0.24 17.1 1,641.60 2003 Planting Labour HOK 100 10 17.1 17,100.00 2004 Planting Hydromulch kg 2000 0.52 31.4 32,656.00 2004 Planting Tackifier kg 20 19 31.4 11,932.00 2004 Planting Fertilizer kg 400 0.24 31.4 3,014.40 2004 Planting Labour HOK 10 10 31.4 3,140.00 2004 Planting Fertilizer

1000

Tablets 1 50 31.4 1,570.00 2004 Planting Labour HOK 20 10 31.4 6,280.00 2004 Maintain. & Monitor. Fertilizer kg 400 0.24 31.4 3,014.40 2004 Maintain. & Monitor.

Replacement

Cuttings Cutting 2000 0.13 31.4 8,164.00 2004 Maintain. & Monitor. Ijuk m2 200 0.69 31.4 4,333.20 2004 Maintain. & Monitor. Herbicide Liter 1 9.2 31.4 288.88 2004 Maintain. & Monitor. Soil Analysis Sample 3 92 31.4 8,666.40 2004 Maintain. & Monitor. Labour HOK 20 10 31.4 6,280.00 2004 Seedling

Main Stock

Seedling Labour HOK 35 6 31.4 6,594.00 2004 Seedling

Polybag

Provisioning Bag 1000 0.02 31.4 628.00 2004 Seedling Fertilizer kg 2 0.24 31.4 15.07 2004 Planting Row Sprigging Cutting 5000 0.13 31.4 20,410.00 2004 Planting Ijuk Aprons m2 1200 0.69 31.4 25,999.20 2004 Planting Jute Netting m2 4200 0.27 31.4 35,607.60 2004 Planting Labour HOK 100 10 31.4 31,400.00 2004 Planting Seed Mix kg 64 3.13 31.4 6,290.05 2005 Seedling Main Stock Seed HOK 35 6 76.9 16,149.00 2005 Seedling Polybag Provision. Bag 1000 0.02 76.9 1,538.00 2005 Seedling Fertilizer kg 2 0.24 76.9 36.91 2005 Planting Row Spriging Cutting 5000 0.13 76.9 49,985.00 2005 Planting Ijuk Aprons m2 1200 0.69 76.9 63,673.20 2005 Planting Jute Netting m2 4200 0.27 76.9 87,204.60 2005 Planting Labour HOK 100 10 76.9 76,900.00 2005 Planting Seed Mix kg 64 3.13 76.9 15,404.61 2005 Planting Hydromulch kg 2000 0.52 76.9 79,976.00 2005 Planting Tackifier kg 20 19 76.9 29,222.00 2005 Planting Fertilizer kg 400 0.24 76.9 7,382.40 2005 Planting Labour HOK 10 10 76.9 7,690.00 2005 Planting Fertilizer

1000

Tablets 1 50 76.9 3,845.00 2005 Planting Labour HOK 20 10 76.9 15,380.00 2005 Maintain. & Monitor. Fertilizer kg 400 0.24 76.9 7,382.40 2005 Maintain. & Monitor.

Replacement

Cuttings Cutting 2000 0.13 76.9 19,994.00 2005 Maintain. & Monitor. Ijuk m2 200 0.69 76.9 10,612.20 2005 Maintain. & Monitor. Herbicide Liter 1 9.2 76.9 707.48 2005 Maintain. & Monitor. Soil Analysis Sample 3 92 76.9 21,224.40 2005 Maintain. & Monitor. Labour HOK 20 10 76.9 15,380.00

(5)

Appendix 4. Other Reclamation Cost for PT. NNT

Year

I t e m

C o s t

2001

Costs of Preventing and Controlling Acid Mine Drainage

1,928,115

2002

Costs of Preventing and Controlling Acid Mine Drainage

2,159,467

2003

Costs of Preventing and Controlling Acid Mine Drainage

2,976,022

2004

Costs of Preventing and Controlling Acid Mine Drainage

3,133,454

2005

Costs of Preventing and Controlling Acid Mine Drainage

3,281,065

(6)