Environmental Mitigation Cost for Mining Road Construction in Indonesia


According to IFC Standard Compliances

By Arif Permana, CCP

Jakarta, Indonesia



Project and its environment are connected each other, including for mining activities that require land clearing for support facilities area such as access road. For minimizing negative impact from project activities to the environment, it is required regulation from government and financial institution that obligate integration between planning mitigation for environment which refers to available standard compliances with project plan. In this paper the Author described the application of environmental compliance standard published by IFC using project case study for mining road in Indonesia. Cost associated for environment mitigation based on IFC standard compliance presented in estimation process following GAO steps process for order of magnitude comparison with available database.

Keywords: environmental, IFC standard compliances, mining road construction project, dust control, noise control, land use and erosion control, waste water impact and sediment control, GAO cost estimation process, environmental mitigation cost


In many countries, mining activities would affect the environment conditions in their vicinity from exploration to exploitation stage such as land clearing activity for roads, camps, processing plant and other facilities. This impact will have greater influence for forest environment and can’t be avoided since mining industry will take places mostly on this area. Road construction as one of mining key elements, damaging the forest since their location will lies over in length of forest footprint following the design requirements. Good road design will take into account this matter through the design process including additional cost for mitigation as the consequences, in order to have a minimum impact for forest destruction and the habitats. Generally the cost for environmental mitigation is not anticipated in common cost estimation process and put this cost as risk reserve. Therefore, it is very difficult to find environment cost record whereas cost for road directly connected with the environment. For Indonesia as the third rank of tropical forest in the World, mining activities either regulated or not regulated is one of operation industries that contribute to the forest destruction and required immediate action to prevent it from getting worst. One of significant action identified for prevention, is regulating mining activities by rules as mandatory condition, either by government (in this case the Indonesian Government) or by financial institution such as the World Bank. The term from the Indonesian Government will give any mining companies permit for land access and operation, while the World Bank through their International Finance Corporation (IFC) standard requirements for the access to investment capital. By using both strategies will encourage any mining companies apply environmental standards in their project investment process.

In this paper, the Author main target is giving brief description of IFC application in project cost limited for mining road during construction stage, as small contribution to all effort for problem solutions concerning mining and environmental problems. With project case study, the Author will provide answers for two specific research questions as follows:

  • What are the IFC standard compliances for mining road construction project?
  • How to calculate the cost of environmental mitigation for mining road construction project following IFC standard compliances.

IFC Standard Compliances for Mining Road Project

Brief Description of IFC Standard Compliances

IFC is a member organization of the World Bank members that focuses on the private sector for developing countries. IFC was founded in 1956 and currently has 184 member states including Indonesia with one main vision to ensure environmental sustainability.

IFC provides Environmental, Health and Safety (EHS) guidelines that can be easily accessed on their website. There are general and specific EHS guidelines for several industries including mining which contains EHS elements with performance indicators and monitoring actions. Depending on the project conditions, local standards sometimes also used as reference for consideration because generally IFC requirements are always higher than these standards, which will affect the project cost (in this case standards published by the Ministry of Environment Indonesia).  


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About the Author 

Arif Permana


Arif Permana
, CCP is a professional civil and cost engineer with extensive 20 years project experiences for infrastructures, telecommunication facilities, mining sectors and recently assigned to the design and construction of geotechnical investigation survey vessel. His interest is extended to environmental cost and engineering following the previous project with IFC environmental requirement from the World Bank, in addition to project management, project control, planning and scheduling, estimating, contract management civil engineering, marine engineering, and geotechnical investigation.

Arif can be contacted at [email protected]