Abstract

In many mining locations in Indonesia conflicts harmful to local people, have occurred due to misunderstandings and incomplete information received by groups of people in the community and/or the mining company. This paper discusses the community preparation which finally formed a local financial institution from 2009-2014; a process finally brought into being a series of pivotal local financial institutions. The ethnographic method has been employed in the collection of data. Although in 2014 this particular mining company ceased their activities, they left as a legacy several examples of best practice regarding community preparation. The mining company engaged local people from the outset, including the drafting of plans. As a result, to date there has been almost no conflict between local people and mining company. Local people consider that they have ownership of all the programs, and this has raised their sense of belonging and their feeling of power. One of the outstanding results of the discussions has been a decision to form a business entity in every village, abbreviated to Bumdeswhich stands for Badan Usaha Milik Desa. The presence of these local financial institutions in each village has reduced the bondage between people and merchants but not impaired their relationship. It has provided more opportunities to form new businesses. This research recommends underpinning community preparations before commencing the mining operations.The institutions act as channels of reciprocal communication of all parties, to enhance community involvement;over time these have improved the capacity and the capability of local people. Key words: Community preparation, mining, local financial institution, Bumdes

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