DEVELOPMENT IN INDONESIA

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1 THE HISTORY OF COAL DEVELOPMENT IN INDONESIA THE RUSH THAT NEVER ENDED East Asia Geology Exploration Technologies & Mines Bali, Indonesia May 2013 A H Osman FAusIMM(CP) MMICA FGS 1

2 TONY OSMAN FAusIMM(CP) MMICA FGS Geologist, Geophysicist, Mathematician. Worked in coal since 1969 specialising in Indonesian Coal Since Competent Person under JORC and first foreigner accredited under Indonesian KCMI Code. Member of PERHAPI, IAGI, Indonesian-Australian Business Council Asiaphile - Spirituality 2

3 FACTS ABOUT INDONESIA APPROX ISLANDS- KALIMANTAN (BORNEO) IS LARGEST MANY ETHNIC GROUPS WITH SEPARATE LANGUAGES, CULTURES NATIONAL MOTTO UNITY OUT OF DIVERSITY WORLD S MOST POPULOUS MUSLIM NATION- 220 MILLION 90% MUSLIM, 5% CHRISTIAN, BHUDDISM, HINDUISM, OTHERS CAPITAL JAKARTA (ON JAVA). INDEPENDENCE GAINED 1945 NATIONAL LANGUAGE IS BAHASA INDONESIA BUSINESS / INTERNATIONAL LANGUAGE IS ENGLISH CIVIL LAW JURISDICTION ( ROMAN-DUTCH LAW ORIGINS ) BUREAUCRATIC, PAPER WORK, STAMPS ETC NATIONAL CURRENCY RUPIAH (AUS$1.00 = Rp ) WORLD S LARGEST EXPORTER OF STEAM COAL EXPORT RESOURCES MOSTLY KALIMANTAN DOMESTIC RESOURCES MOSTLY SUMATRA 3

4 REGIONAL GEOLOGY OF INDONESIA Situated on SE extension of the Eurasian Plate Bounded to south and west by the Indo-Australian (Indian Ocean) Plate, to the east by the Philippine Sea and Pacific Plates Margins of plates are in collision Archipelago dominated by Sunda Shelf area (west), Sahul Shelf (east) and separated by a geologically complex region of deep sea basins and island arcs. 4

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7 INDONESIAN PRODUCTION SEE SLIDE 1940 : t 1973 : t 1981 : t 1996 : 46.2mt (export 35.5mt) 2000 : 79.3mt (export 53.9mt) 2012 : 386mt (export 319mt incl. 7mt coking; domestic 67mt) 7

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9 INDONESIAN COAL HISTORY-1 Early 1800 s : First records-sumatra 1846 : First attempts mining Borneo (Kalimantan) : Mining commences Sumatra 1967 : General mining law under President Soeharto (11 / 1967) 1970 s : First attempt to re-establish coal industry- Coal Production Sharing-Shell 1978 : Blocks of coal areas put up for bidding, Kalimantan & Sumatra 9

10 INDONESIAN COAL HISTORY , Nov 2 Three coal blocks awarded to PT ARUTMIN, PT Utah, AGIP/CONSOL JV First Gen. Coal Co-operation Agreements (Later Coal Contracts of work) PT ARUTMIN 1.26 million ha. (largest coal area ever) Total production Indonesia tonnes 1982 : Other First Genn. C C A s signed Later, Second & Third Generation CCoW s signed 1999 : Regional Autonomy Legislation 2009 : New Mining Act (CoW s & KP s go, replaced by IUP s) 10

11 INDONESIAN ECONOMIC CORRIDORS 1 11

12 INDONESIAN ECONOMIC CORRIDOR 2 KALIMANTAN ECONOMIC CORRIDOR Centre for Production & Processing on National Mining & Energy Reserves SUMATRA ECONOMIC CORRIDOR Centre of Production & Processing of Natural Resources & as Nations Energy Reserves 12

13 KALIMANTAN ECONOMIC CORRIDOR 13

14 SUMATRA COAL

15 SUMATRA COAL - 2 Even though Sumatra has a very large coal reserves, its coal production is very low, at approximately 20million tons per year or approximately 6% of total coal production in Indonesia. Of the 10 largest coal producing companies in Indonesia, only 1 company operates in Sumatera. Challenges of coal production in Sumatra are : 1. Most of coal mining activities are located in the middle of the island, away from sea ports & coastline & also away from transportation network like railways. This makes transportation to the port inefficient because the condition of the current land transport infrastructure is not good enough. This causes higher costs for transportation from the mines 15

16 SUMATRA COAL 3 2. Average coal reserves in Sumatra have lower quality (Low Calorie Value CV) compared to coal from Kalimantan. Total coal reserves of low CV in Sumatra reached 47%, while in Kalimantan only 5% 3. Basic supporting infrastructure for coal mining is still inadequate. The option for use of railway for transporting coal is extremely limited. The highways used to transport the coal are often damaged. Limited port capacity causes bottleneck for the development of coal industry 4. Difficulties in land acquisition, the low quality of human resources, and the lack of clear government policy regarding the use of coal continue to cause challenges. 16

17 CURRENT PROBLEM OVERLAPPING CONCESSION AREA 1 Clean & Clear (CNC) VS Non Clean & Clear (Non CNC) due to regional authorities not being able to distinguish boundaries of the many concessions being granted / to be granted. 17

18 CURRENT PROBLEM OVERLAPPING CONCESSION AREA 2 18

19 CURRENT MATTERS Conflicts of interpretations occur over provisions of regional autonomy & forestry legislation combined with frequent changes to provisions to the mining & related acts These conflicts are viewed by some as not conducive to current exploration activities Small to medium sized mineral & coal exploration companies believe they are disadvantaged by above A lobby group established via forum for Exploration & Mining Development Indonesia (EMD Indonesia) to assist in alleviation of above problems Potential for future discoveries of coal & mineral deposits generally considered to be good. 19

20 REFERENCES Anon, 2012 :Indonesian Coal Book 2012 / 2013 Coord. Min. Eco. Affairs : 2011 Masterplan Acceleration & Expansion of Indonesia Economic Development Darman, H & Hasan Sidi, F. : 2000, An Outline of The Geology of Indonesia IAGI Osman A.H., 2013 : The Development of The Indonesian Coal Industry Bull AusIMM, June 2013 pp38-40 (in preparation) Sukmandaru Prihatmoko et al. :2005, Indonesian Mineral & Coal Discoveries IAGI Van Bemmelen, R W : 1949, The Geology of Indonesia Vol II Economic Geology 20

21 ACKNOWLEDGMENT Information & assistance is gratefully acknowledged from : Mr. Supriatna Suhala, Executive Director of the Indonesian Coal Mining Association Mr. Malcolm Baillie, Chair EMD Indonesia Mr. Dale Sims, Deputy Chair, AusIMM Task Force Asia Linda Kusumo for secretarial support 21

22 Call for papers now open Submission deadline - 16 September 2013 Submit a 300 word abstract online. The Themes Efficiently linking exploration and mining geology fundamentals for better projects Beyond the assay building holistic rock property models for mining From grade control to material type prediction geology for integrated planning From drill hole to product reconciliation in the 21st century Mine geology and the future technology, automation, applied research and innovation Education, interface and knowledge management gaining skills and communicating opportunity Visit: For all enquires please contact Sienna Deano, Coordinator, Events The AusIMM E: sdeano@ausimm.com.au I Ph: I W:

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