The Biggest Challenge in the Mining Business World
With abundant natural resources, it is no wonder that the mining business in Indonesia is so lucrative. The prospect of profit from a mining business is quite promising. But when you look at the reality in the field, not always the mining business is always smooth in its journey.
Challenges and problems continue to come in succession, both due to internal and external factors outside the company. This also requires the management to be able to continue to think about a mature strategy, so that all the problems can be resolved. Then what are the challenges that often become the stumbling block of a mining business?
1. Market Price
The mining company’s revenue from the sale of its mining products depends heavily on market price movements. Unfortunately, the price of mining commodities is very volatile and every time is constantly changing. This market price movement is usually influenced by several factors.
The exchange rate of the U.S. dollar, which is the base currency in mining commodity trading transactions, is also unstable in value. The stronger the value of Uncle Sam’s country’s currency, the lower the price of mining commodities.
The reference market price of this mining commodity can also be influenced by the amount of demand in the market. High demand will make commodity prices also soar, which has become a principle in economics.
The production performance of mining companies also has a considerable influence on market price movements. When companies decide to boost their production, their commodity reserves will accumulate. This will be related to supply and demand that makes commodity prices move.
It is undeniable that the revenue from a mining business is quite high, including the turnover of money in it involves a very large amount. But to open a new mining business, a large capital is needed. This capital problem is also a challenge for entrepreneurs who want to enter the mining business.
In the world of mining, the level of difficulty in collecting the results of natural resources is certainly also a big influence on the capital needed. The deeper the minerals that want to be mined, the greater the technology, power and equipment needed. This includes the risks that may be posed. Therefore, the company needs to prepare a large capital so that the operation can be maintained.
3. Illegal Mining
Any produce that concerns the lives of many people, according to the law is controlled by the state. Therefore, every mining activity must first obtain official permission from the government. Unfortunately, although the rules and sanctions imposed are very clear and heavy, there are still many people who set up illegal mines.
This illegal mining certainly ignores existing regulations, including standard operating procedures. In the end, the negative impact is quite large. Indirectly, illegal mining that has a negative impact also makes the stigma of the mining world very bad. This can also affect commodity prices, as mining products sold can destroy market prices.
4. Environmental and Social Issues
The stigma is bad about the mining world because of rogue companies that do not work according to procedures, resulting in the environment being damaged. This is what makes the lay community, anti against mining activities. Whereas if following the procedure and responsible, then mining can provide welfare to the surrounding community.
If the procedure is carried out properly, the welfare of the surrounding community will undoubtedly increase. Thus, it can dismiss various social issues that often afflict the mining world.