TEN years ago, bauxite mining activities in Kuantan expanded due to strong external demand. This led to serious negative environmental impacts and bauxite mining activities were halted in 2016.

The Pahang government at the time wanted to start a large-scale bauxite mining project, but the Environmental Impact Assessment (EIA) was not approved by the Environment Department.

Ten years on, it is worth revisiting Kuantan’s bauxite mining activities.

There needs to be a review the development of bauxite mining activities as well as the current status in Kuantan, reflecting on the lessons to be learnt by institutions, such as the importance of EIA, the establishment of mechanisms to retain the bonus earned from bauxite mining for future investment and the post-exit plan. 

The ‘earn the bonus’ mindset

Bauxite mining began to expand in Kuantan in 2014, with legal and illegal operators participating in the rent-seeking or speculative nature of the economic boom.

The geolocation of the mining is scattered but mainly in Bukit Goh and Bukit Saga, near the upper river of Kuantan.

The main motivation for the sudden (not in the state’s long-term plan) natural-based economic activity is external demand from China for raw material for aluminium and Indonesia’s ban on ore exports in January 2014.

As a result, Malaysia’s bauxite exports increased 12-fold in the first nine months of 2014 compared to the same period last year.

The bauxite activities were not identified in the previous local plan (Pahang Structure Plan 2020).

The importance of EIA

No EIA was carried out during the bauxite boom. The bonus of the bauxite boom has been the expansion of environmental and health damage to the citizens of Kuantan.

Air quality reading exceeded the Malaysian National Ambient Air Quality Standard, red dust was everywhere, as was the risk of drinking water contamination.

Although the concentration of aluminium in treated water was below the Provisional Tolerable Weekly Intake, the poor air quality and red dust were causing distress and mental health problems. 

The EIA plays an important role in the aftermath, although the question is why an EIA was not carried out in the first place.

The bauxite boom was halted in 2016 due to serious environmental damage, and EIA approval is required to obtain Operational Mining Scheme approval to resume bauxite activities under the new SOP.

The Pahang government decided to initiate a large-scale bauxite mining project (3,642,176ha) covering Bukit Goh and Bukit Kuantan.

However, the project did not pass the EIA and is unlikely to go ahead.

Invest or keep the bonus?

The bauxite mining activities contributed RM46.7 million in royalties to the state government in 2015. The revenue was still significant for the state government.

Based on the 2016 revenue budget, the revenue from bauxite mining activities was only about 0.06% of the state’s revenue.

However, the RM46.7 million amount was still significant compared to the budget surplus of RM1 million.

It is therefore expected that most of the revenue from natural resources will be used for various expenditures.

Perhaps the Pahang government should consider setting up a natural resource trust fund and allocating part of the natural resource revenue to the trust fund.

Lack of a post-exit plan

There is little prospect of the settlers returning the bauxite mining land to agriculture, as the residual toxins from bauxite mining would affect plant genetics.

The bauxite mining site is intended to be converted into a solar farm, but there is no feasibility study.

The state government’s large-scale bauxite mining project cannot go ahead either, as the EIA has been rejected.

There is also no post-exit plan to study the cost and methodology of rehabilitating the land after bauxite mining is finished and the post-economic activity of the land.

In conclusion, EIA is an important mechanism to protect society from environmental damage.

There is no natural resource trust fund set up to retain part of the revenue generated.

There is no post-exit plan at the beginning, so the bauxite mining land creates an opportunity cost. – January 8, 2024.

* Nick Tan Beng Teong graduated with Bachelor of Economics at University of Malaya. A member of Agora Society, Tan believes in policy reforms in order to build a better nation.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.