Indonesia - Mining



Indonesia was a leading world supplier of oil and gas, which comprised the main engine of growth. In addition, though, Indonesia supplied 30% of the world's tin (10.5% of known reserves), 11% of nickel, 6% of copper, and 5% of gold, and was a leading Southeast Asian producer of cement, bauxite, and nitrogen fertilizer. Mining and cement comprised the country's third-leading industry in 2002, and in 2000, Indonesia also produced hydraulic cement, dolomite, feldspar, granite, gypsum, marble, nitrogen, salt, quartz sand, silica stone, sulfur, and zeolite.

The economic recovery of 2000—GDP grew by 4.8%—was slow, but more broadly based than that of 1999, which was based mainly on consumption. The mining and quarrying sector increased by 2.3% in 2000, having declined by 2.4% in 1999. In 2000, total exports increased by 27.5%, to $62 billion; the value of exports from the mining sector was $3 billion—copper ore and coal accounted for 93%, bauxite, dimension stone, nickel ore, and tin were other major export commodities. In 1999, the value of mining exports was 11% of total exports, and the mining industry contributed $1.5 billion to the economy.

Copper output (content in ore) was 1 million tons, up from 766,027 in 1999 and 529,121 in 1996. The Indonesian Environmental and Natural Resources Non-Governmental Forum filed a lawsuit against PT Freeport Indonesia Co., the second-largest producer, for environmental mismanagement and misinformation in the Wanagon Basin, next to Freeport's Grasberg Copper Mine in Irian Jaya. In May 2000, a period of excess rainfall caused a slippage of the mine waste stockpile; four employees were unaccounted for. After the accident, the government imposed a restriction on ore processing; the mine was cleared to return to full capacity in December. After completing its first full year of operation, the Batu Hijau copper and gold mine (Sumbawa Island), with reserves of 4 million tons of copper and 332 tons of gold, was to receive a $1 billion project fund financed through the Japanese, US, and German export banks. Copper production began at Tembagapura, Irian Jaya, in 1974.

Bauxite production was 1.55 million tons in 2000, 1.12 million in 1999, 809,000 in 1997, and 1.4 million tons in 1991. Indonesia possessed large deposits of high-grade bauxite, from mines in Kijang (Bintan Island) and Sumatra. Most of the output was exported to Japan; the remainder, to the US.

Tin mine output in 2000 was 51,629 tons. The chief deposits of tin were in Bangka, Belitung, and Singkep, islands off the east coast of Sumatra. Tin mining has, for several years, faced depleting resources, the decline of tin, community conflicts in several mining sites, and illegal mining and smuggling, the latter resulting in increased compensation to company contractors and high tin output from offshore mining. The existing resources of PT Koba Tin, which produced 11,000 tons of refined tin, had a mine life of eight years. The 65%-state-owned tin producer, PT Tambang Timah, which had a capacity of 60,000 tons per year, was listed on the London and Jakarta stock exchanges. Tambang expected that tin production would decline in 2001 and was exploring opportunities to mine tin in Burma, Cambodia, Malaysia, and Vietnam, and to explore for diamond and gold in Kalimantan and North Sumatra.

Gold mine output was 124,596 kg, up from 86,927 in 1997. Because of political uncertainty and illegal mining, Aurora Gold Ltd., of Australia, the largest gold producer in Indonesia, with annual capacity of 60 tons, decided to sell its 85% share in the Toka Tindung project, North Sulawesi, where it had discovered an indicated and inferred resource of 15.4 million tons of ore averaging 3 grams per ton of gold and 8 grams per ton of silver. Another Aurora prospect, Talawaan, had been heavily contaminated with mercury used by illegal miners. PT Newmont Pacific Nusantara decided to close its Greenfield explorations in Indonesia because of confusion about legal mining regulation and investment policies; it would keep its projects in North Sulawesi and West Nusa Tenggara operating. PT Newmont Minahasa Raya's Minahasa mine, on the northern tip of North Sulawesi, was forced to close several times in 2000 because of a continuing dispute with ex-landowners and a strike by mining contactors. In addition, the local government attempted to shut down the mine because of a dispute dealing with overburden tax compensation; the matter was settled out of court. Because of depletion of ore resources, Newmont Minahasa planned to cease operations at Minahasa in 2003. The company would not develop the nearby Lobongan gold deposit because of excessive illegal mining. Iriana Resources Corp., of Canada, announced that its Mafi gold exploration (Irian Jaya) had begun in 2000; initial assay samples contained 26.7 grams per ton of gold, 445 grams per ton of silver, and 10.4% lead, with possible occurrences of antimony and zinc in the area. Responding to demands of residents of Java and West Kalimantan, the Ministry of Energy and Mineral Resources (MEMR) ordered illegal gold miners to stop using mercury in their gold-processing activities, which had caused mercury levels in West Kalimantan rivers to be 10 times greater than the maximum allowed.

Nickel mine output was 98,200 tons in 2000 and 74,063 in 1998. Nickel was produced in Soroako (North Sulawesi), Pomalaa (South Sulawesi), and the Maluku and Gebe islands, with some of the largest reserves in the world. Higher nickel prices and security concerns have hindered production. PT Weda Bay Nickel announced that indicated and inferred nickel and cobalt resources in Halmahera Island increased to 202 million tons. The inferred resource of the Santa Monica deposit was estimated to be 75.8 million tons containing 1.38% nickel and0.12% cobalt, and that of the Big Kahuna deposit was estimated to be 40.4 million tons at a grade of 1.32% nickel and 0.08% cobalt.

Iron ore was found in sizable quantities, but was commercially exploited only in central Java. There were fair to good reserves of gold, silver, iodine, diamond (industrial and gem quality), and phosphate rock, and considerable supplies of limestone, asphalt, bentonite, fireclay, and kaolin powder. Herald Resources Ltd., of Australia, announced the discovery of significant lead and zinc resources in the Dairi area, Bukit Barisan Highland; the exploration concentrated in the Anjing Hitam area, in the southeastern part of the Sopokomil/Bongkaras domal structure, and it was estimated that the deposit contained an indicated resource of 7.5 million tons of lead and zinc at 10.3% lead, 16.7% zinc, and 14 grams per ton of silver and an inferred resource of 2.5 million tons at 6.8% lead and 11.3% zinc. Despite some reserves, no manganese was mined in 1999 and 2000.

Concerns about political uncertainties continued to deter foreign investment, creating an inhospitable environment for investment and operations. Expansion plans were on hold until the economic climate improved. In 1999, the Indonesian parliament passed two laws, to be implemented in 2001—on regional political autonomy and fiscal decentralization—whose impact on investment rules and procedures remained unclear. Mining companies were confused about the connection between the two laws on general mining. The major problem was contradictions between the centralistic 1967 law on mining, and the decentralistic law of 1999. In 2001, the 1967 law would no longer have legal strength to protect mining operations, particularly on new investments. Also, another 1999 law, on forestry, prohibited open-cast mining, which would protect forests in 68% of the area of Irian Jaya potentially available for mining exploration; 58%, in Sumatra; 50%, in Maluku; and 39%, in Sulawesi. Many mining companies postponed their expansion and new investment projects until the government could provide legal protection that was clear and unequivocal. In 2000, mining companies that operated under contracts of work (COWs) spent $550 million, which was half the amount expended in 1999. In 2000, 30 mining contactors, 14 producing, and 16 exploration companies postponed their investment programs, and 18 COWs were terminated. MEMR and related departments drafted a new mining law/regulation to replace the 1967 law with an updated regulatory framework that recognized the changing role of government, especially with regard to implementation of regional autonomy and fiscal decentralization and further safeguard of the natural environment.

Indonesia's constitution places all natural resources in the soil and waters under the jurisdiction of the state. In 1999, the government increased taxes and royalties that created a less competitive investment environment. Restructuring and privatization of state-owned industries has been very slow, and new investment was still low. As the world's fourth most populous country, Indonesia could become one of the largest steel-consuming countries. However, its volatile political situation and uncertain economic climate hampered development. The state-owned general mining company, PT Aneka Tambang, has gone public on the Jakarta Stock Exchange.

User Contributions:

1
Yumil
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Apr 26, 2007 @ 9:09 am
Information about Iron Ore in Indonesia ( Sumatera & Kalimantan )
2
Susanto
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Jul 17, 2007 @ 2:02 am
Do you have any info on the where about of Zinc Ore in Indonesia especially java island thank you

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