Apindo: Insurers must understand mining business risks
Jakarta (ANTARA) - Chairman of the Mining Committee for the Energy and Mineral Resources Sector of the Indonesian Employers Association (Apindo), Hendra Sinadia, stated that it is crucial for the insurance industry to understand the characteristics of the mining business, which has very specific risk profiles.
“This can happen in all mining operations, so insurers need to understand the high-risk nature of the mining business,” Hendra said in Jakarta on Tuesday.
He acknowledged that there may currently be many disputes between mining companies and insurers.
Nevertheless, Hendra also urged mining companies to always implement good mining practices.
He explained that with changes in the environment due to global warming, the likelihood of disasters and natural calamities frequently affecting mining businesses has increased.
“What happened at Freeport’s underground mine, for example, due to hydrometeorological factors, cannot be avoided, just like the Toka Tindung mining company when it was hit by a landslide disaster; these are very possible occurrences,” he added.
Meanwhile, an observer from the Center for Energy Security Studies (CESS), Ali Ahmudi Achyak, assessed that in the mining industry, risks such as landslides, floods, mining accidents, and operational disruptions are indeed very high.
Ali stated that the mining sector currently faces challenges from various sides simultaneously, such as geological risks and natural disasters like landslides, floods, or mine slope failures; fluctuations in global commodity prices, particularly the significant increase in oil prices due to the Iran-US and Israel conflict; rising operational costs; and uncertainties in financing and insurance.
The mining industry has very specific risk characteristics, such as geotechnical issues and mine slope stability, extreme weather, heavy equipment failures, and disruptions in underground or open-pit mining operations.
“Insurance companies entering this sector should have underwriters and risk engineers who understand mining characteristics,” he explained.