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ulawesi is the 11th largest island in the world and an Indonesian region blessed with unique biodiversity which inhabit its pristine terrestrial, coastal and marine ecosystems. The region also has an incredible amount of mineral deposits underneath its 12.5 million hectares of forest, according to Forestry Ministry data from 2009.

Three types of resource extraction are predominant there, namely mineral extraction, timber-based concessions and plantations (including for palm oil). These, along with other types of land-use such as migration settlement and encroachment, have taken up to almost half of the total forest area in the region, as the Indonesian Forum for the Environment (Walhi) has found.

However, despite those tremendously rich resources and vast investments, communities in the region are still dramatically trapped in poverty. For example, the Central Statistics Agency, ranking 33 regions in terms of the highest poverty levels in 2011, listed every province on the island in its top 10.

This is sad but not surprising. The region, like many others in Indonesia, is also struggling with poor governance over resources and rampant elite profit-taking, which apparently are worsening in the wake of decentralization as local governments are given authority to make some maneuvers on resource utilization.

Since 2008, the small-scale mining industry has boomed in some provinces, notably Southeast Sulawesi and Gorontalo. In these provinces, new deposits of gold and nickel have been located and, wasting no time, district governments immediately issued hundreds of exploration and mining contracts (Kuasa Pertambangan or KP) and small-scale mining licenses (Izin Usaha Pertambangan or IUP) to individual groups and local enterprises.

However, without stringent controls, these small-scale mining contractors have instantly converted forested areas into deserts of open pits.

Through a joint program between the Australian National University, AusAID and the Haluoleo University, we visited some of these areas in Southeast Sulawesi. More specifically, we went to the southern region, where new gold mining areas were flooded with thousands of individual miners from both inside and outside of the province, and further northeast where hundreds of small-scale local enterprises were cutting, digging and loading raw materials from the land and taking them to awaiting ships along the coast.

As observed, small-scale mining activities did indeed bring some benefits to local communities. These include the provision of jobs, funding support for social and religious activities, royalty payments for communities whose land overlapped the concession areas and compensation payments for those community members directly impacted, both socially and environmentally, by mining.

Jobs offered by the enterprises were thought to be insecure and were thus accepted as a way to get extra cash. Yet for those who had spent their lives in unpaid domestic labor, being miners can be a once-in-a-lifetime opportunity. Jobs provided in the northeast area were quite limited as employers tend to recruit qualified staff and use minimal labor.

Other benefits are specifically associated with large-scale mining companies, such as frequent community consultation and capacity building, covering such things as providing capital to local micro-finance institutions, establishing public facilities — schools, hospitals, houses of worship, toilets, health centers and roads and bridges — through to organizing female empowerment training. Corporate social responsibility is more likely to be exercised by larger-scale operators.

Nonetheless, small-scale mining activities have also resulted in some serious downsides. Water, air and soil pollution, along with health problems such as respiratory infections, skin diseases and diarrhea, were some of the main concerns. The conversion of massive forests and habitats was blamed for some plants and animals appearing to have become rarer or possibly extinct.

Local farmers linked small-scale mining operations with crop failures due to soil degradation, while insufficient food supply was associated with land shortages. They worried that these issues, in the long term, could lead to a food crisis and continuing poverty. Some have had to switch to other jobs such as ojek (a motorcycle taxi driver), others have even become seaweed and sea cucumber cultivators, at the cost of the farming skills and the market networks they have built on for decades.

Topping all of this is the potential conflicts which can arise out of land grabbing, particularly for those who have ended up with unfair compensation. Such conflicts have been numerous, but have received minimal coverage and publicity. If left unresolved, it is possible that the scale of the problem will increase to a point that is similar to what has recently occurred in Mesuji in Sumatra.

It took district governments just two years to issue 268 KPs, IUPs and exploration licenses. Yet on the ground, some KP-holders do not actually possess licenses, just recognition letters from sub-district or village governments.

Some licensed concession-holders do not operate on the land themselves and have chosen to subcontract their activities in return for profit shares and minimum supervision hassles. Most of these license-holders have environmental impact management (AMDAL) documents, which require them to measure and report environmental impacts periodically. Yet, these are often not done.

Drainage systems, sediment ponds and terraces don’t exist or are in poor condition, with the mining areas literally being huge excavation pits with a small road only big enough for a truck to move in and out. When the rain comes, this pit turns into a giant pond. Only a few companies have an environmental division and mining specialists within their organizational structure.

Also, none of the license-holders have a mining closure plan. Some have only expressed their intention to rehabilitate the post-mining area or have considered using local government agencies to do this for them by paying negotiated costs.

Poor small-scale mining practices have been blamed on meager counseling provisions, monitoring and law enforcement from district authorities — particularly the district mineral resources offices and environmental impact management agencies. Yet when officers were confronted with such an accusation, things such as poor coordination due to regional competition for rents and backup from the local elite were uncovered as factors that undermined stringent control.

It is certainly not easy to deal with poor small-scale mining practices given the political-economic complexities. However, prompt actions are needed to bring such practices up to the level that can guarantee ecological stability and social equitability in the region. If the issues go unresolved, the future of the region is at stake. The role and commitment of local governments is vital in this regard, as small-scale mining is closely associated with their rent-seeking attempts.

It is particularly urgent that local government agencies improve their overall coordination in order to achieve the more efficient counseling provisions, increased monitoring and strengthened law enforcement needed to encourage better mining practices. Periodical monitoring is important to ensure that contractors comply with their commitment to lessen their environmental impact. Such monitoring can also secure working conditions for employees and fulfill their social responsibility. Sanctions over substandard compliancy need to be implemented as a disincentive for poor performance.

Local governments need to work shoulder-to-shoulder and make the best use of local stakeholders’ assets and expertise. Doing so will not only improve accountability, transparency and legitimacy of the approaches taken but will also fill in for the lack of competency of local authorities. The provincial governments can institutionalize stakeholder participation by establishing a formal independent body which district governments can expect strategic feedback from, as well as channeling corporate social responsibility funds or other capacity-building incentives.

The writer is a lecturer at the Haluoleo University, Kendari, Southeast Sulawesi and former recipient of Australian Partnership Award.