Understanding social licenses to operate in Australia and Indonesia

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Securing a social license to operate (SLO) is essential for mining companies aiming to maintain public trust, environmental responsibility, and long-term viability. Our latest environmental blog explores the role of social licenses in both Australia and Indonesia–two of the world’s top coal producers–and compares how the two nations engage with communities, manage environmental impacts, and balance regulatory demands with economic growth.

Photo supplied by Sarah de Wet

What is a social license to operate (SLO)?

Before any mine can thrive, it must be accepted by the people it affects. Here’s what an SLO really means:

Definition: A social license to operate is the ongoing project acceptance by the community and other important stakeholders. It reflects not just compliance with regulations, but the trust and support of the local population.

Importance in mining: In the mining industry, SLOs are vital for maintaining reputation, reducing conflict, and avoiding delays. Without an SLO, operations may face legal challenges, protests, and even shutdowns.

Global relevance: Australia and Indonesia rank 4th and 5^th, respectively, in global coal production, each extracting over 500,000 Mt of coal per year, making the SLO conversation highly relevant to their economies.

Australia’s social license to operate

Australia’s mature mining sector is supported by strong regulatory oversight and well-structured community engagement. Here's how the country fosters its SLO:

Community engagement: Building trust through regular, transparent dialogue is key. Many Australian miners engage with local communities via Community Consultative Committees, open days, sponsorships, local employment, and infrastructure support.

Regulatory frameworks: Australia’s mining sector is governed by robust legislation at both state and federal levels, including the Environmental Protection and Biodiversity Conservation Act 1999 and the Mining Act 1992 (NSW).

Environmental concerns: Coal mining has environmental consequences, including habitat loss and greenhouse gas emissions. Companies must implement strict environmental management plans and progressive rehabilitation programs.

Economic contributions: The coal industry generated $91.4 billion in export revenue in 2023–24 and is a major employer in regional areas, highlighting the economic stakes involved in maintaining an SLO.

Australian case study examples

Successful

Rix’s Creek Mine, Singleton NSW. Known for its ongoing community engagement, which has helped maintain support when operating near the township of Singleton, NSW.
Mt Isa Mine, QLD. Actively involved in the community (with the mine located on the township's doorstep) in decision-making processes, maintaining open communication and transparency about their operations and future plans.

Unsuccessful

Multiple WA gold mines, including Wittenoom Asbestos Mines during the early 20^th century, the building of company towns, and leaving significant ghost towns after mine closure. Wittenoom Asbestos Mine in particular, led to significant health impacts and deaths of residents and workers.

Indonesia's social license to operate

Photo supplied by Sarah de Wet

Indonesia is improving its regulatory landscape and community engagement strategies, but challenges persist.

Regulatory changes: The Government Regulation No. 25/2024 amended previous mining laws to encourage good mining practices, simplify approvals, and boost downstream investment.

Community relations: Community engagement includes education initiatives (especially for women), nursery and fisheries support, and land rehabilitation. However, issues around land rights and benefit sharing often lead to conflict.

Environmental impact: Coal mining has resulted in deforestation and habitat loss for key species such as proboscis monkeys and orangutans. Impact studies and environmental partnerships (e.g. with universities researching acid mine drainage) aim to improve outcomes.

Economic impact: The mining industry contributes around 15% to Indonesia’s GDP, making it crucial to the country’s development. This aligns with GDP contribution from mining of other mining nations (12.2% GDP in Aus and 12% GDP In South America).

Image courtesy of Ali Jam Photography

Indonesia case study examples:

Successful: PT Kaltim Prima Coal, East Kalimantan – Commended for its comprehensive community development and environmental programs during mining, including turning the post-mining pond into a successful fishery involving local fish farmers and having significant input into local community improvement (e.g. school buildings and education).

Unsuccessful: PT Tripa Bara, West Sumatra – Despite having a government-approved clear and clean license, the company faced backlash due to a lack of local community support concerning pollution and disputes over land acquisition. (Nagari forest area has not been controlled and divided among indigenous tribes and communities as designed, managed, and regulated by customary law. In 2007, there was a cooperation agreement between PT Triba Bara and the customary head transferring 2000Ha of customary land to be mined.

Comparative analysis: Australia vs Indonesia

Understanding the differences between the two nations helps highlight best practices and areas for improvement. They include:

Regulatory differences: Australia’s framework is more stringent and transparent. Indonesia is evolving its policies to catch up with international best practices.

Community engagement strategies: Australia employs a more structured, consultative approach. Indonesia's engagement is less formal and must contend with diverse local contexts.

Environmental management: Both countries face significant environmental pressures, but Australia has more mature monitoring and rehabilitation programs. Indonesia often views Australia as a model for future development.

Economic contributions: While both economies depend heavily on mining, the sector’s importance to Indonesia is arguably greater due to its developing status. Australia’s mining industry is more integrated into global supply chains.

Conclusion

Both Australia and Indonesia recognise the importance of earning and maintaining their social licences to operate. For long-term success, mining companies must balance profitability with environmental stewardship and meaningful community engagement. As public scrutiny intensifies and environmental pressures mount, the mining sector's ability to retain its SLO will shape its future in both nations.

Ultimately, a strong SLO is not a one-off achievement but a continuous process of trust-building, accountability, and adaptation.

Partner with Atlantech

At Atlantech, we understand that earning a social license to operate requires more than just compliance – it takes vision, integrity, and making a meaningful connection with communities. Our team of mining engineers and environmental consultants helps clients navigate regulatory complexities, build local trust, and implement best-practice sustainability strategies. Contact us today to find out how we can support your next project, or visit www.atlantech.com.au for more information.