DSS Tool Analysis System Implementation

Figure 4.17 Cost component form

4.2.2. DSS Tool Analysis

Until this research conducted, the implementation of government regulation of mine reclamation activity runs in under optimal way. It caused of inconsistency regulation that issued by the central government and local government, as the amount of reclamation bond is quite less than the environment cost that should be paid by Mine Company. The case happened in South Kalimantan where the local government regulate that every mining company should pay Rp. 50.000.000 per 2 ha of opened area or Rp 2.000 ton of coal for reclamation bond. This value is lesser than actual environmental cost impact that has to be released, which is about two hundred until three hundred million rupiah per hectare. By constructing this rehabilitation bond DSS Tool, central government especially DEMR try to arise a pilot project model of rehabilitation bond for mine reclamation activities. It will be socialized to local government to be used in order to give a good implementation of mine government regulation of reclamation bond fixed amount for Mining Authorization holders Kuasa Pertambangan KP, 52 Contract of Work for mineral mining Kontrak Karya KK and Work Agreement for Coal Mining Enterprises Perjanjian Karya Pengusahaan Pertambangan Batubara PKP2B. Herewith detail cost of mine facilities activity, following as Table 4.3 several activities determined from PT.NNT’s reclamation report. Facilities removal cost calculated in year 2001 with several types of building such as houses, building, camp, hall, plant and material used of it such as bricks, metal. Table 4.3 List of PT.NNT’s mine facilities removal cost Year I t e m Material Type Volume M3 Cost Demolition Cost 2001 International school Bricks 3,888 5 19,440 2001 Crusher structure Bricks 28,692 5 143,460 2001 Overland coarse ore conveyor Bricks 228,320 5 1,141,600 2001 Concentrate pump house Bricks 64 5 320 2001 Acetylenes plant storage Bricks 660 5 3,300 2001 Oxygen plant storage Bricks 432 5 2,160 2001 Power plant service bld Bricks 9,748 5 48,740 2001 Concentrate storage bld Bricks 30,360 5 151,800 2001 Concentrate dewatering facilities Bricks 12,228 5 61,140 2001 Office Bricks 852 5 4,260 2001 Administration offices Bricks 5,992 5 29,960 2001 House GMH Bricks 440 5 2,200 2001 House B Bricks 12,096 5 60,480 2001 House B1 Bricks 10,656 5 53,280 2001 House D Bricks 13,608 5 68,040 2001 House E3 Bricks 8,880 5 44,400 2001 House O Bricks 2,016 5 10,080 2001 Barracs Metal 49,056 5 245,280 2001 Global House Bricks 4,032 5 20,160 2001 Thiess camp Bricks 39,148 5 195,740 2001 Staff commissarydining kitchen Bricks 4,664 5 23,320 2001 Staff recreation hall Bricks 4,004 5 20,020 2001 Tennis court Bricks 3,032 5 15,160 2001 Public toilet soccer Bricks 332 5 1,660 2001 Multi purpose sport hall Bricks 3,628 5 18,140 2001 Water installation Bricks 16 5 80,220 2001 Water tank Metal 372 5 1,860 2001 Laundry Bricks 960 5 4,800 2001 Medical clinics Bricks 18,700 5 93,500 2002 None None 2003 None None 2004 None None 2005 None None Total Cost 2,564,520 53 The analysis of this rehabilitation bond system focuses on reclamation bond comparison and analysis between actual direct cost components content of reclamation cost with the planned one. Beside the mine report submission for reclamation bond planning, this application tries to calculate it with mine reclamation data report. The tolerance value for the comparison analysis is based on the percentage of reclamation bond amount that reported mining company close to the reclamation bond calculation using the number of escalation factor, which is represent using percent default value 10 to 20. The escalation factor is added value, which represent financial fluctuation such annual inflation factor. The category of comparison consists of ‘Good’ mark represented with green color, ‘Intermediate’ mark represented with yellow color and ‘Bad’ mark represented with red color. ‘Good’ mark stated that if the amount of actual reclamation bond from mining company is ranging between ±10 of calculated reclamation bond. ‘Intermediate’ mark stated that if the amount of actual reclamation bond from company is around 10-20 greater or less from calculated reclamation bond, and ‘Bad’ mark stated that if the amount of actual reclamation from mining company is greater or less than 20 from calculated reclamation bond. Based on data from PT.NNT’s reclamation activities period year 2001 to 2005 data, current actual reclamation bond from year 2001 to 2005 is about + 30,693,782.00 compared to calculated reclamation bond of the application is about 35,776,292.60 with variance around 5,082,510.6. According to the bond category constrain, this value is categorized as ‘Intermediate’. This indicate that the amount of total reclamation bond for 5 years period 2001 to 2005 still need to be corrected by the company throughout presentation or inviting them to give details explanation of the way they achieved that value. 54 Figure 4.18. Equipment and Labour Cost form The government will store mining company reclamation bond and the stored bond included its annual bank interest will be accumulated into reclamation bond. If the company is default or not performing land reclamation as ruled by the government and company annual reclamation, the government will offer the reclamation work to third party through work tender. The tolerance in awarding company into ‘Good’, ‘Intermediate’ or ‘Bad’ is based on valid bank interest about 10. If the award is ‘Good’ then the company does not need to add their money, as the bank interests of reclamation bond will cover it. If the award is Intermediate, then mining company will add the remnant of that 10 and if the award is bad then the reclamation bond will be offered to third party. The variance value that shown on Figure 4.18 can be clearly explained if the reclamation bond separated into components of direct cost and indirect cost. Here with following the breakdown of PT.NNT’s reclamation bonds Table 4.4 and calculated reclamation bond Table 4.5 shows that the amount direct cost and indirect cost with the percentage in period 2001 to 2005. 55 Table 4.4 List of PT.NNT’s Reclamation Bond 2001 2002 2003 2004 2005 No. DESCRIPTION A Direct Cost A.1 Mine Facilities Remov. A.2 Manag. of Land Use 191,852 1,744,676 849,764 2,318,768 6,131,611 A.3 Revegetation 55,104 257,473 129,858 250,375 643,838 A.4 Prevent. Control. 1,928,115 2,159,467 2,976,022 3,133,454 3,281,065 Sub Total A 2,175,071 4,161,616 3,955,644 5,702,597 10,056,514 B Indirect Cost B.1 Equipment Mobil 20,000 0.92 21,000 0.50 22,050 0.56 23,153 0.41 24,310 0.24 B.2 Reclamation Plan 205,037 9.43 215,289 5.17 226,053 5.71 237,356 4.16 249,223 2.48 B.3 Contractors Profits 455,637 20.95 478,419 11.50 502,340 12.70 527,457 9.25 553,830 5.51 B.4 Supervision Cost 159,473 7.33 167,447 4.02 175,819 4.44 184,610 3.24 193,840 1.93 Sub Total B 840,147 38.63 882,155 21.20 926,262 23.42 972,576 17.05 1,021,203 10.15 Total A+B 3,015,218 5,043,771 4,881,906 6,675,173 11,077,717 Reclamation Bond 5 Years 30,693,785 Table 4.5 List of Calculated Rehabilitation Bond 2001 2002 2003 2004 2005 No. DESCRIPTION A Direct Cost A.1 Mine Facilities Remov. 2,564,520 A.2 Material Handling 256,769 2,143,531 994,314 2,584,006 6,231,400 A.3 Revegetation Cost 52,656 279,033 119,426 216,283 529,687 A.4 Other Direct Rec. Cost 1,928,115 2,159,467 2,976,022 3,133,454 3,281,065 Sub Total A 4,802,060 4,582,031 4,089,763 5,933,743 10,042,153 B Indirect Cost B.1 Equipment Mobil. 240,187 5.00 240,929 5.26 204,488 5.00 296,687 5.00 502,108 5.00 B.2 Reclamation Plan 222,749 4.64 223,293 4.87 195,368 4.78 264,230 4.45 401,284 4.00 B.3 Contractors Profits 334,100 6.96 334,939 7.31 293,032 7.17 396,374 6.68 602,027 5.99 B.4 Management Cost 175,240 3.65 175,685 3.83 152,753 3.73 209,639 3.53 326,169 3.25 Sub Total B 972,277 20.25 974,847 21.28 845,640 20.68 1,166,930 19.67 1,831,588 18.24 Total A+B 5,774,337 5,556,877 4,935,403 7,100,673 11,873,741 Reclamation Bond 5 Years 35,241,031 The comparison of the amount of reclamation bond conducted annually. Constant value of reclamation bond is straight form year 2002 to 2005 with small variance not more than one million dollar. High variance of annual reclamation cost in year 2001 shows that calculated reclamation cost is higher around 2.5 million dollar than PT.NNT report. The reason of mine facility mobilization and demobilization activity is usually happen in the beginning of exploitation phase and sometime need sub-contractors as partner to finish this activity. The report of technical mine activity in 2001 was submitted by PT.NNT in the beginning year 2001 has include reclamation activity and cost expenditure, exclude mine facilities removal caused of their activities started in year 1996 and mining lifetime around 40 years. Therefore mine facilities removal will plan closed to the end of mine 56 closure. This variance also implicates the value of indirect cost especially for equipment administration cost. The amount of indirect cost was based on total amount of direct cost. The percentage of indirect cost determined as normally rules that fixed in particular range by DEMR. For instance, the percentage of mobilization and demobilization of heavy equipment cost around 2.5 to 10 from total direct cost. Reclamation planning cost was determined around 2 to10 . Administration and contractor’s profit cost was determined around 3 to 14 and management fee was determined around 2 to 7 . This fixed range of indirect cost percentages used to determine the amount of indirect cost in Reclamation Bond Application. Comparing with PT.NNT’s reclamation report activities, the percentage of equipment mobilization placed in small value and closed to average about 0.53 per year, later the percentage of contractor’s profit exceeds from government regulation with highest value around 20.95 in year 2001.Therefore the possibility reason of these phenomena that happen in year 2001 caused of outsourcing supporting project of reclamation activity where implicate to the lower percentage of equipment mobilization and highest percentage of contractor’s profit. The evidence also can be looked up with the highest percentage of reclamation planning cost about 9.43 and supervision cost about 7.33 in year 2001. Meanwhile, the comparison in year 2002 later illustrates indifference calculation of reclamation bond. It was figured by the rate of total reclamation per year starting from 2002 up to 2005 with variance value not more than one million dollar such as 513,106 in year 2002, 53,497 in year 2003, 425,500 in year 2004 and 796,024 in year 2005. The highest value of previous variance placed in year 2005 with caused of the high difference in mobilization equipment rate and reclamation plan rate. 57

V. CONCLUSION AND RECOMMENDATION