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Bauxite Industries FGIC2019 FGIC 2nd Conference on Governance and Integrity 2019 Volume 2019 Conference Paper Bauxite Industries: Lesson Learn from Governance Perspective Mohd Tamizi Mazlan, Khairil Anuar Bin Ramly @ Tamrin, and Nur Emilia Binti Abdullah Harun Faculty of Industrial Management, Universiti Malaysia Pahang, Lebuhraya Tun Razak, 26300 Gambang, Pahang, Malaysia Abstract The mining of bauxite in Malaysia, specifically in Kuantan Pahang is in-demand industry. Over the last three years, Bauxite has become a national issue where uncontrolled handling will lead to severe impacts on the environment and the local community. It started from the dumping of bauxite by miners who have illegally and uncontrollably mine the bauxite. Thus, this paper aimed to study on good governance perspective as it is an important element in ensuring the sustainability of an organization and strengthening the direction and objectives of business activity. Failure to set effective good governance will cause the organization to be in a volatile state and will lead to Corresponding Author: fraud and breach of trust. The impact of these governance failures is huge and may Mohd Tamizi Mazlan cause the company or organization to be adversely affected and will cause negative [email protected] perceptions from the community and stakeholders. This has led the government to set Received: 5 August 2019 a moratorium to stop the bauxite operations. Throughout the moratorium, the Water, Accepted: 14 August 2019 Land, and Natural Resources Minister revisits every single process and SOP to ensure Published: 18 August 2019 that all rules and regulations, procedures, and laws are in full application. This paper looks at a lesson that can be learned from the episode and hopes it will serve as a Publishing services provided by guide to be the best steps to be taken to ensure that governance upheld once Bauxite Knowledge E activity continues. Mohd Tamizi Mazlan et al. This article is distributed Keywords: bauxite operations, governance under the terms of the Creative Commons Attribution License, which permits unrestricted use and redistribution provided that the original author and source are credited. 1. Introduction Selection and Peer-review under the responsibility of the Early 2013, started small scale bauxite mining in Balok and later expanded to Sungai FGIC2019 Conference Karang, Bukit Goh and Bukit Sagu. Bauxite is the raw material that is converted to Committee. the aluminum’s metals. China, the country of alumina production capacity, has grown in tandem with smelter capacity in recent years. In order to meet the rapid growth of the industry, China decided to increase the import of raw material instead buy the end product of alumina from overseas countries due to the higher costs. For China, importing bauxite as raw material is more preferable since the country has its refineries and smelters to produce aluminum. Before China, import bauxite from How to cite this article: Mohd Tamizi Mazlan, Khairil Anuar Bin Ramly @ Tamrin, and Nur Emilia Binti Abdullah Harun, (2019), “Bauxite Industries: Lesson Learn from Governance Perspective” in FGIC 2nd Conference on Governance and Integrity 2019, KnE Social Sciences, pages 1214–1229. Page 1214 DOI 10.18502/kss.v3i22.5121 FGIC2019 Malaysia, Australia, and Indonesia was the major player exporting this mineral to China. Due to the expensive freight cost to export bauxite from Australia to China, they looking substitute for the import of bauxite where China determine Malaysia is a good position to replace Australia to be exporter for the raw material in meeting the rapid increase of this mineral in China. The demand for bauxite from Malaysia has been more increasing after the Indonesia government banned the mineral cargo ore and bauxite to China in order for the government of Indonesia to utilize the domestic of aluminum production. Bauxite mining and export has risen dramatically since the middle of 2014. According to records in 2015, bauxite minerals have been exported by 31.0 million tones via Kuantan Port. This industry contributed to a Gross Domestic Product (GDP) growth from 0.51% in 2017. It has also contributed to the state of Pahang with a total royalty collection of RM7.7 million for 2014 and RM47.8 million for 2015. Figure 1: Bauxite Exports Through Kuantan Port (Source from Kuantan Port Authority). Following the escalation of these activities, some issues and problems have arisen from bauxite mining and exports such as environmental pollution, road safety, and health threats to residents around bauxite mining areas. This has been exacerbated by several incidents that the Government and the public are aware of such ”red sea” and a life-threatening incident caused by lorries transporting bauxite. Other effects of this bauxite effect are as follows: • Contaminated ecosystems have the potential to produce an exposure that leads to direct effects or long-term effects on the health of the locals. Various health problems have been reported since these activities have grown. Although no detailed studies have been conducted on the special effects of bauxite on human health, all well aware of the dredging and mining activities will indeed freeze dust and dust, either from the surface and in the ground during dredging activities, DOI 10.18502/kss.v3i22.5121 Page 1215 FGIC2019 or during the transportation and transfer process from the mining site to port or collection center. • In general, such as other mining activities, bauxite also contains dust and soil dust. This landowner can be freed not only in the air but can accumulate and attach to the road surface, clothes or vehicles used by locals. Continual or continuous exposure to soil dust and dust in general at any given time may cause cough, sore throat, eyesores, or respiratory disorders. • Not all residents will experience these symptoms. However, the risk of these symptoms depends on the individual’s current health level, which will be easy for both children and those who are already suffering from lung diseases such as ’bronchial asthma’ or chronic obstructive airway disease), allergic rhinitis and rigid smokers. Excessive exposure to the content in bauxite is also said to be detrimental to the health of which the effects are the painful and reddish nose, cough, pain and redness on the skin, skin peeling and scratchiness. • Apart from health problems and water pollution, residents in Pahang are also fac- ing problems of infrastructure damage in residential areas resulting from bauxite mining activities. Infrastructure damage is potholes and uneven roads and non- compliance with road regulations. Since Bauxite operation commencing April 2015 to January 2016, the Pahang Road Transport Department (RTD) has recorded several cases involving bauxite transport vehicles which are overloaded by 194 cases while hazardous offenses are 915 cases. • This bauxite transport activity has also resulted in a fatal accident involving a teacher due to the collapse of the bauxite lorry tire that was removed at Jalan Pintasan, Kuantan on 22 December 2015. It stems from the increase and uncontrolled illegal miners. The illegal miners avoided regulated law and acted in place. They influence the settler and landowner by giving them money and thus create fast millionaire settler and landowner. The settler and landowner tend to surrender their land to the illegal miners to mines the bauxite. The illegal miners can control the transportation company to ensure the logistics transporta- tion of cargo to the port is not affected. In 2015, the transportation of the entire country mainly focused in Kuantan, Pahang to take the opportunity to receive a high pay from the illegal miners. Irresponsible action taken by illegal miners resulted in an environmental disaster. The Cabinet of Ministers at its meeting on 27 November 2015 has decided that the YB Minister of Natural Resources and Environment (now Water, Land, and Natural DOI 10.18502/kss.v3i22.5121 Page 1216 FGIC2019 Resources Minister) and YAB Menteri Besar of Pahang issued a joint press statement on the imposition of a moratorium on bauxite mining and export activities in Kuantan, Pahang. Also, the Ministry of Natural Resources and Environment (now the Ministry of Water, Land, and Natural Resources) was asked to make a thorough overhaul on mining legislation and mining licensing procedures and the Export License (AP). Such improved legislation and procedures need to be enforced after the moratorium expires. However, the duration of the implementation of the moratorium is subject to the compliance of the entrepreneur against the implementation of the environmental mitigation measures set by the Ministry. In this regard, the moratorium is implemented at the state level by order issued by the Mineral Director to every holder of a Bauxite Mining / Mining License under Section 7 (1) of the Mineral Development Act 1994, pursuant to the Minister’s instructions to the Director-General of Mineral Resources under Section 5 the same act. The imposition of a moratorium on mining activities and extraction of bauxite in Kuantan is divided into several steps: • Cessation of bauxite mining operations • Disposal of bauxite stockpile within Kuantan Port area and Kemaman Port • Cleaning and upgrading of Kuantan Port facilities • Stockpile transfer outside the port area to a central stockpile area to be deter- mined by the Pahang State Government Mineral activity belongs to the several government agencies where the law, act, and policies are already established. The mining industry falls under the purview of the Natural Resource & Environment Ministry (NRE). Anyhow as mining involves land, State Government has the authority on the matter of land use. Therefore, the federal agencies under the purview of the NRE such as the Department of Mineral & Geoscience (DMG) and the Department of Environment (DOE) provide the applications approval in exploration/prospecting and mining which comes under the State Authority with technical inputs. In 1988 the Federal Government established a council named National Mineral Council (NMC).
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