Development strategy to prevent mine accidents in surface coal mines in Indonesia

266 Pages·2014·7.13 MB·English

by  Herry Permana

Development strategy to prevent mine accidents
in surface coal mines in Indonesia

To the Faculty of Geosciences, Geoengineering and Mining
of the Technische Universität Bergakademie Freiberg
approved

THESIS

To attain the academic degree of
Doctor of Engineering
(Dr.-Ing.)

submitted

by M.Sc. Herry Permana
born on the 21.11.1971 in Tembilahan / Indonesia

Reviewers:
1. Prof. Dr. Carsten Drebenstedt, Freiberg
2. Prof. Dr. Peter Moser, Leoben
Additional reviewers:
3. Prof. Dr. Dahono Haryanto, Yogyakarta
4. Prof. Reinhard Schmidt, Freiberg

Date of defense: 10.04.2014
Declaration

I hereby declare that I completed this work without any improper help from a third party and
without using any aids other than those cited. All ideas derived directly or indirectly from
other sources are identified as such. In the selection and in the use of materials and in the
writing of the manuscript I received support from the following persons:
 Prof. Dr. Carsten Drebenstedt
Persons other than those above did not contribute to the writing of this thesis. I did not seek
the help of a professional doctorate-consultant. Only persons identified as having done so
received any financial payment from me for any work done for me.
This thesis has not previously been submitted to another examination authority in the same or
similar form in Germany or abroad.

14.01.2014 Herry Permana, M.Sc.
Date Signature

II
Acknowledgment

I would like to express first of my deepest thanks and greatest of Alhamdulillah (دمح لا لله ) to
my great of Allah SWT for His great helps to finish of my study.
I would like to express my deepest thanks and honor to my supervisor Prof. Dr. Carsten
Drebenstedt for your scientific supervision, dedicated guidance during my study in Freiberg,
Germany. Furthermore, his kindness, support, advices, and teaching are gratefully
acknowledged. And also great thanks to Prof. Dr. Peter Moser for suggestions, Prof. Reinhard
Schmidt, and Prof. Dr. Dietrich Stoyan for great advices, Prof. Dr. Dahono Haryanto for
reviews and suggestions, Prof. Dr. Jan C Bongaerts, Prof. Dr. Diana Grosse, and Prof. Dr.
Michael B. Hinner for class lectures and courses, Dr. Steffen Paessler for the information
about safety regulations in Germany.
I am also greatly thankful to all colleagues at the Chair of Surface Mining for kindness, and
encouragement during my study in Freiberg.
I am also said of my special and deepest thanks and gratitude to my institution of the Ministry
of Energy and Mineral Resources of the Republic of Indonesia for awarding me the
scholarship to do doctoral study in the Institut für Bergbau und Spezialtiefbau of TU
Bergakademie Freiberg, especially great thanks for Mrs. Indriyati, Mrs. Sumiaty Nadeak,
Mr. Zulkifli, and staffs. Many thanks are addressed to Directorate General of Mineral and
Coal, especially thanks to Mr. Dr. Thamrin Sihite, Mr. Edi Prasodjo, Mr. MS Marpaung, Mr.
S. Witoro S, Mr. S. Lubis, friends and colleagues for providing data, encouragement, and
kind advices. And also thanks to Indonesian Embassy members in Berlin for their help in
providing supports during the time I stayed in Freiberg.
I also address great thanks to the president directors in several companies of Adaro Indonesia,
Berau Coal, Trubaindo Coal Mining, and Kaltim Prima Coal of the surface coal mining
companies for the permission to do some case study of investigations, especially thanks to
Mr. H. Priyadi, Mr. H. Iswan Sudjarwo, Mr. H. Gatot Budi Kuncahyo, Mr. Louis Paerong,
Mr. Wahyu Hardjanto, Mr. R. Utoro, and Mr. Hendro Ichwanto in supported and facilitated
me to make the case study and document supports, and also thanks a lot to all staffs for
kindly helps. And aslo great thanks for support from Mr. Nurhadi S., Mr. Joko Basyuni.
I also thank for all international colleagues in Freiberg for their friendship and kind fully
assistances, Dr. Günter Lippmann, Dr. Corina Dunger, Wolfgang Gaßner, Elisabeth Grießl,
Martin Pfütze, Phongpat Sontamino, Dr.-Ing. Nils Hoth, Mrs. Karin Küttner, Mrs. Marion
Rüdiger, Robert Ritter, Andreas Keller, Richard Eichler, Andre Simon, Ehab Gomma,
Ayman Ahmed, Dr.-Ing. Slamet Widodo, Toni, Tri Winarno, Mira, Anisa, Heru, Ito, and
others.
I am also adressed of my sincere thanks to my parents and family, my parents in law, and all
members of my family for their supports, especially for Tata and Wisnu, Gemma and family,
Dimas and Family. I also dedicated to my beloved Abah (H. A. Soebari Husein)
Finally, my great thanks and honors to my lovely wife Ega Mega Asih, my lovely boys Biya,
Arya, and a little baby Fayyad for their great loves, patiences, advices, understanding,
tolerances, and continuous encouragements to make me strength during my study.
Hopefully this thesis can give some idea to further research.

III
Abstract

Most of mining operations in Indonesia use open pit mine methods, with truck and shovel
system and a large amount of manpower. The mining industry plays an important role
contributed to the national economy and development in Indonesia, otherwise the mine
accidents become as sensitive issue or problem. The main cause of mine accidents is still
dominant of the low safety awarenesses and accountabilities, and also improperly cost spent
on the occupational health and safety (OSH) programs. This thesis describes the concept
behind the return on prevention and workers‟ perception descriptive analyses of the
occupational health and safety in relation to improve safety performances. The proactive
action plan related to accidents prevention is as an essential step of the risk management
processes. Participation and intervention for all employees are important and urgent,
especially for the frontline workers, which are crucial in achieving good safety performances
with financial support properly. The main objective of this study evaluates of the workers‟
perception and cost spent on the occupational health and safety program at the companies in
relation to accident prevention efforts. In general, the several objectives are described to
evaluate of the mine accident rates, the validity and reliability tests of the questionnaires,
workers relationships and suggestions, interviews, observations, and the OSH cost
effectiveness. The methods of this study are assessed by the descriptive statistical analysis
approaches of the return on prevention with the microeconomic model of the net present
value, internal rate of return, and cost benefit analysis to justify the benefits return and the
break even point and interventions directly according to the workers‟ perception through
questionnaire, interview, and observation. The methodology is assessed by the gathering data
obtained from the companies through the surveys of the questionnaire, interview,
observation, and the money expenses in the occupational health and safety for the workers.
The valuation methods are used by the degree of significance of 95%, margin of error 5%,
with total number of respondents are 1,600 persons as sampling which representation of the
four surface coal mine companies in Indonesia. The seven elements are a basic assessment
approached of the training and education, personal protective equipment, preventive medical
check up, employment injury insurance, improvement existing technology, signalization, and
organization. The result shows the advantages using these analyses which described the
importance of the money invested on OSH and effectiveness of interventions by worker‟s
perception in order to prevent accidents at workplace. The effectiveness of interventions to
the environment working conditions and workers mindsets directly. The OSH cost invested
for workers, in general, will triggers the work performances to be better, and then the
occupational health and safety in a strong position to achieve the goals of the company.
Improvement safety awareness and accountability of workers shall reduce or prevent
accidents at work, and the company should be invested money in the OSH program with the
minimum amount is US $ 207.17 per employee or US $ 0.12 per ton of coal produced. The
investment of the people and money properly shall give significant impacts in preventing
accidents to achieve zero accident vision in order to protect people, property, process and
profit of the company for short or long term benefits, and will also give a good images for
sustainable in mining business.

Keywords: coal mining, mine accidents, prevention, return on prevention, microeconomic,
workers perception, occupational health and safety.

IV
List of Contents

Title page .......................................................................................................................... I
Declaration ........................................................................................................................ II
Acknowledgment .............................................................................................................. III
Abstract ............................................................................................................................. IV
List of Contents ................................................................................................................ V
List of Figures ................................................................................................................... VIII
List of Tables .................................................................................................................... XI
List of Appendices ............................................................................................................ XIII
List of Abbreviations ........................................................................................................ XIV

1. Introduction ....................................................................................................... 1

1.1 Background ......................................................................................................... 1
1.2 Mine accidents .................................................................................................... 2
1.3 Problem statement ............................................................................................... 3
1.4 Thesis objective ................................................................................................... 5
1.5 Idea and structure of the thesis ............................................................................ 6

2. Mining overviews of Indonesia ........................................................................ 9

2.1 Introduction ......................................................................................................... 9
2.1.1 Geology ............................................................................................................ 9
2.1.2 Geography ........................................................................................................ 10
2.1.3 Demography ..................................................................................................... 11

2.2 Mineral and coal mining ..................................................................................... 11
2.2.1 Mineral resources and reserves ........................................................................ 11
2.2.2 Coal resources and reserves ............................................................................. 13
2.2.3 Types of coal .................................................................................................... 14

2.3 Regulation and policy ......................................................................................... 15
2.3.1 Regulation ........................................................................................................ 15
2.3.2 Mining safety policy ......................................................................................... 17
2.3.3 Energy mix policy related to coal consumption ............................................... 19
2.3.4 Istambul declaration on safety and health at work ........................................... 20

2.4 Transformation of the mining permission ........................................................... 21

2.5 Mining supervision .............................................................................................. 22

2.6 Mining operations ............................................................................................... 23

2.7 Investment, royalty, and coal price reference .................................................... 25
2.7.1 Mining investment ........................................................................................... 26
2.7.2 Royalty tariff .................................................................................................... 27
2.7.3 Coal price reference ......................................................................................... 29

V
2.8 Employment and injury insurance ...................................................................... 30
2.8.1 Employment ..................................................................................................... 30
2.8.2 Employment injury insurance .......................................................................... 33

2.9 Production and domestic market obligation (DMO) .......................................... 35
2.9.1 Coal production ................................................................................................ 35
2.9.2 Domestic market obligation (DMO) ................................................................ 39

2.10 Economic contribution ........................................................................................ 41

2.11 Mining impact to the society ............................................................................... 42
2.11.1 Safety in mining industry ................................................................................. 43
2.11.2 Sustainable development .................................................................................. 44

2.12 Accident statistics ................................................................................................ 46
2.12.1 Indonesia .......................................................................................................... 46
2.12.2 Coal mining fatalities from other countries ...................................................... 51
2.12.3 International labor organization (ILO), Eurostat, and OSHA (USA).............. 51

3. State of the Art .................................................................................................. 53

3.1 Basic term and definition .................................................................................... 53
3.1.1 Philosophy of safety ......................................................................................... 53
3.1.2 Definition related to accident ........................................................................... 53
3.1.3 Type of injury ................................................................................................... 55

3.2 Risk management process ................................................................................... 56
3.2.1 Risk assessment ................................................................................................ 57
3.2.2 Hierarchy control of hazards ............................................................................ 60
3.2.3 Accident causations .......................................................................................... 61

4. Methodology to prevent accidents ................................................................... 64

4.1 Safety performance assessment ........................................................................... 66
4.1.1 Lost time injury frequency rate ........................................................................ 66
4.1.2 Lost time injury severity rate ........................................................................... 66
4.1.3 Fatality rate ....................................................................................................... 66
4.1.4 Incident rate ...................................................................................................... 67
4.1.5 Accident cost .................................................................................................... 67

4.2 Descriptive statistic analysis .............................................................................. 69
4.2.1 General problem ............................................................................................... 69
4.2.2 Book references ................................................................................................ 70
4.2.3 Sampling ........................................................................................................... 71
4.2.4 Validity ............................................................................................................. 72
4.2.5 Reliability ......................................................................................................... 74

4.3 Return on prevention ........................................................................................... 75
4.3.1 Time value of money ........................................................................................ 77
4.3.2 Net present value (NPV) .................................................................................. 78
4.3.3 Internal rate of return (IRR) ............................................................................. 79
4.3.4 Payback period (PP) ......................................................................................... 80
4.3.5 Net benefit-cost (Net B/C) ............................................................................... 80
VI
5. Case studies to surface coal mine companies .................................................. 82

5.1 Application of the methodology .......................................................................... 82
5.1.1 Sampling ........................................................................................................... 82
5.1.2 Validity test calculation .................................................................................... 82
5.1.3 Reliability test calculation ................................................................................ 84
5.1.4 Return on prevention ........................................................................................ 88

5.2 Contract generation of the coal mining companies ............................................. 91

5.3 Respondent distribution and OSH costs of the seven basic elements ............... 91
5.3.1 Respondents distribution .................................................................................. 91
5.3.2 OSH costs of the seven basic elements ............................................................ 96

6. Assessment and Discussion of the investigation results ................................. 100

6.1 Assessment of the lost time injury frequency and severity rates ........................ 100
6.2 Measurement of the validity and reliability tests ................................................ 104
6.3 Assessment of the descriptive statistics .............................................................. 109
6.3.1 Questionnaire ................................................................................................... 110
6.3.2 Assessment of the closed questions ................................................................. 117
6.3.3 Suggestions summary ....................................................................................... 121
6.3.4 Interview ........................................................................................................... 124
6.3.5 Observation ...................................................................................................... 128

6.4 Assessment of the return on prevention .............................................................. 130
6.4.1 Net present value (NPV) .................................................................................. 130
6.4.2 Internal rate of return (IRR) ............................................................................. 132
6.4.3 Net benefit-cost ratio (Net B/C ratio) ............................................................... 136

7. Conclusion and Recommendation ................................................................... 138

7.1 Conclusion ........................................................................................................... 138
7.2 Recommendations for further research ............................................................... 140

References ........................................................................................................................... 141

Appendices .......................................................................................................................... 147

VII
List of Figures

Figure 1.1: Comparison between coal productions and mine accidents .......................................... 2
Figure 1.2: The mine accidents in Indonesia ................................................................................... 3
Figure 1.3: Development the strategic concept to prevent accidents .............................................. 6
Figure 2.1: Geology map of Indonesia[16] ...................................................................................... 10
Figure 2.2: Minerals strategic map of Indonesia[18] ....................................................................... 12
Figure 2.3: Coal resource and reserve map of Indonesia[21] .......................................................... 14
Figure 2.4: Coal types of Indonesia ............................................................................................... 14
Figure 2.5: Implementation of the Mining Law No. 4 of 2009[7] .................................................. 19
Figure 2.6: Energy mix policy of Indonesia[25] .............................................................................. 20
Figure 2.7: Mining supervision (illustrate from the Mining Law no. 4 of 2009)[7] ....................... 23
Figure 2.8: Open pit mines cycle processes in Indonesia[28] .......................................................... 24
Figure 2.9: Good mining practices (GMP) of Indonesia[7] ............................................................ 25
Figure 2.10: Investment of the minerals and coal mining companies ........................................... 26
Figure 2.11: The minerals and coal mining companies in update of August 2010 ....................... 27
Figure 2.12: The non taxes of the state revenue from minerals and coal mining .......................... 29
Figure 2.13: Coal price references of Indonesia from 2009 - 2011 ............................................... 30
Figure 2.14: Indonesian employment ............................................................................................ 31
Figure 2.15: Employment of the minerals and coal mining companies ........................................ 32
Figure 2.16: Social security insurance scheme in Indonesia[34] ..................................................... 33
Figure 2.17: The active members of EII vs the total employment of Indonesia ............................ 35
Figure 2.18: The claim payments vs the accident cases ................................................................ 35
Figure 2.19: Indonesian coal production from1996 to 2012 ......................................................... 36
Figure 2.20: Top 24 coal producers in Indonesia .......................................................................... 37
Figure 2.21: The contribution of the coal produced by the top four companies ............................ 38
Figure 2.22: Minerals production of Indonesia from 1996 to 2011 ............................................... 39
Figure 2.23: Indonesian coal market outlook[43] ............................................................................ 40
Figure 2.24: Sustainable development[45] ...................................................................................... 45
Figure 2.25: Working accident rates by the main industries in Indonesia, 2010 ........................... 47
Figure 2.26: The mine accident rates of the mineral and coal mining industries in Indonesia ..... 48
Figure 2.27: The statistic of injuries of the mineral and coal mining industries in Indonesia ....... 49
VIII
Figure 2.28: The mining fatality distributions in Indonesia .......................................................... 49
Figure 2.29: Fatal mine accident in the mineral mine operation ................................................... 50
Figure 2.30: Fatal mine accident in the coal mine operation....................................................... 50
Figure 3.1: Risk management process (based on ISO 31000)[56]................................................... 57
Figure 3.2: Hierarchy control of hazards[65] ................................................................................... 61
Figure 3.3: The ILCI loss causation model[68] ............................................................................... 63
Figure 3.4: Reason's swiss cheese model[70] .................................................................................. 63
Figure 4.1: The illustration of the accident costs[73] ...................................................................... 68
Figure 4.2: Injuries/Illness versus cost[71] ...................................................................................... 69
Figure 4.3: Scatter diagrams of the correlation[80] ......................................................................... 73
Figure 5.1: The correlation values calculated using the Excel software ....................................... 83
Figure 5.2: Respondents distribution of Adaro Indonesia ............................................................. 92
Figure 5.3: Respondents distribution of Berau Coal ...................................................................... 93
Figure 5.4: Respondents distribution of Trubaindo Coal Mining .................................................. 94
Figure 5.5: Respondents distribution of Kaltim Prima Coal ......................................................... 95
Figure 6.1: The lost time injury frequency rates of Adaro Indonesia .......................................... 101
Figure 6.2: Lost time injury severity rates of Adaro Indonesia ................................................... 101
Figure 6.3: The LTIFRs are based on the cause accident factors ................................................ 102
Figure 6.4: Comparison of the frequency rates ............................................................................ 103
Figure 6.5: Comparison of the severity rates ............................................................................... 104
Figure 6.6: Respondents perception of the mining company types ............................................. 110
Figure 6.7: Respondents perception by the job professions ........................................................ 111
Figure 6.8: Respondents perception of department groups ......................................................... 112
Figure 6.9: Respondents perception of educational backgrounds ............................................... 113
Figure 6.10: Respondents perception of marriage status ............................................................. 113
Figure 6.11: Respondents perception of work experiences ......................................................... 114
Figure 6.12: Respondents perception by the age of respondents ................................................. 115
Figure 6.13: Respondents perception of Adaro Indonesia ........................................................... 115
Figure 6.14: Respondents perception of four mine companies ................................................... 116
Figure 6.15: The questionnaire filling processes ......................................................................... 117
Figure 6.16: Respondents suggested for Adaro Indonesia........................................................... 121
Figure 6.17: The OSH organization improvement efforts of Adaro Indonesia ........................... 122
Figure 6.18: Respondents suggestion to prevent accidents ......................................................... 123
Figure 6.19: The OSH organization improvement efforts to prevent accidents .......................... 124
IX
Figure 6.20: Interview rating of the respondents ......................................................................... 127
Figure 6.21: Focus group interview ............................................................................................. 128
Figure 6.22: Field observation results .......................................................................................... 130
Figure 6.23: Comparison of the NPV values of the four mine companies .................................. 132
Figure 6.24: The IRR (%) position on the graph with NPV equal zero ...................................... 133
Figure 6.25: Comparison break even points (BEP) of the four companies ................................. 134
Figure 6.26: The OSH costs required, invested, and calculated .................................................. 136
Figure 6.27: Comparison of the Net benefit-cost ratio results ..................................................... 137
X