25 Years of Mineral Exploration and Discovery in Indonesia

JBURHAL O[ GEOCHtICAL EXPLORATION

ELSEVIER Journal of Geochemical Exploration 50 (1994) 13-90

25 Years of mineral exploration and discovery in Indonesia

Theo M. van Leeuwen P.T. Rio Tinto Indonesia, Cilandak Commercial Estate, Kotak Pos 7564/CCE. Jakarta 12075, Indonesia

( Received 4 September 1992; accepted after revision 26 October 1993)

Abstract

This paper traces the history of mineral exploration in Indonesia between 1967 and 1992, and discusses various technical aspects, such as area selection, exploration and discovery methods, and significant geologic features of the more important new discoveries.

Exploration activity over the past 25 years can be divided into four main phases. Phase I ( 1967- 1976) mostly involved investigations of mineral prospects and districts previously identified by the Dutch. These investigations resulted in many discoveries, including: a major copper-gold district (skarn-porphyry copper) in Irian Jaya, where exploration is still in progress (resources identified to date: 28 Mt Cu and 2,700 t Au); large nickel resources in Eastern Indonesia ( 13 Mt Ni); significant onshore and offshore tin resources in the Sumateran tin belt (0.13 Mt Sn); and large but low grade bauxite deposits in West Kalimantan ( 300 Mt A1203). Of the eight Contracts of Work signed between 1967 and 1972, six reached the mining stage. Phase 2 ( 1970-1975) consisted of an extensive porphyry copper search in the Sunda arc, the western arc of Sulawesi and the central belt of Irian Jaya. Best results were obtained from northern Sulawesi, where follow-up between 1976 and 1982 identified three potentially economic copper-gold deposits ( 1.7 Mt Cu and 140 t Au) and one subeconomic molybdenum porphyry system ( 0.8 Mt Mo). During Phase 3 ( 1981-1988 ) extensive coal exploration in South and East Kalimantan delineated over 5,000 Mt of coal of varying rank and quality, including 1,500 Mt as measured reserves in 17 deposits, eight of which have been developed to date. Phase 4 (1984-1990) involved a major gold rush, focused primarily on the Cenozoic magmatic belts of Kalimantan, Sulawesi, Moluccas and the Sunda arc. Over 80 primary and alluvial gold prospects were drill tested. Five of these were brought into production (two alluvial deposits, two new hard rock discoveries and one Dutch mine), containing approximately 135 tonnes of mineable gold, and several other projects are under development or undergoing feasibility studies. Total geological resources identified to date are estimated to contain about 700 tonnes of gold. Exploration during phase 4 also resulted in several gold-rich porphyry copper discoveries, including a major deposit in Sumbawa ( 2.7 Mt Cu and 250 t Au). Intermittent exploration for uranium, diamonds and lead/zinc since 1969 has been largely unsuccessful.

Exploration is now passing to the next phase, which is likely to be multi-commodity in nature with

0375-6742/94/$07.00 1994 Elsevier Science B.V. All rights reserved SSDI0375-6742(93) E0050-7

14 T.M. van Leeuwen / Journal of Geochemical Exploration 50 (1994) 13-90

a strong focus on gold, copper and coal. A number of deposits outlined during earlier phases will be developed.

The unprecedented high level of mineral exploration activity over the past 25 years can be attributed to Indonesia's mineral prospectivity and favourable investment climate. Given a continued competi- tive commercial environment and sustained commodity prices, the next 25 years should see further strong development of the country's mineral resources.

1. Introduction

The minerals industry in Indonesia has had a long and checkered history. Gold and silver have been worked for over 1,000 years, and records of tin and diamond production date back to the 18th century. The foundations of the present-day industry were laid by the Dutch, who undertook exploration and development between the 1840s and 1930s. During this period, Indonesia became the world's second largest producer of tin, as well as an exporter of small amounts of gold, silver, nickel, bauxite, and coal (Fig. ! ). However, the ravages of World War II and the post-war independence fighting left the mining sector in bad disrepair. The situation was further aggravated by the nationalization of all foreign enterprises between 1957 and 1960. By 1966, production of most minerals had fallen to below pre-war levels.

In 1967, the New Order Government under President Suharto carried out sweeping changes, which included the introduction of a Foreign Capital Investment Law and a revision of the Mining Law. Under these new laws foreign investment was permitted in the mining sector under a Contract of Work (COW) system, a "from the cradle to the grave" type arrangement, which had earlier been used in the oil industry. In order to speed up mineral exploration, the Government invited international tenders for the development of certain areas with tin and nickel potential, and shortly thereafter 53 blocks were opened for large scale "general mineral exploration" ( Sigit, 1972). This heraldeda period of unprecedented mineral exploration activity during the ensuing 25 years.

The industry has developed in four major, partly overlapping phases. The first involved exploration of mineral occurrences and regions previously identified by the Dutch, which commenced in 1967 and was largely completed by 1976. During phase 2, between 1969 and 1975, large scale reconnaissance surveys for porphyry copper deposits were undertaken. Detailed investigations of several prospects were carried out in the late 1970s and early 1980s. The porphyry copper search was followed by an intensive coal exploration campaign (phase 3) that began in 198 t and peaked around 1988. Phase 4 was part of the worldwide gold exploration boom of the 1980s, beginning in 1984 and continuing until 1989/90, when the stock market crash of 1987 and lower gold prices began to take their effect on the exploration industry.

The present paper is a revised and updated (September 1993) version of a paper presented at the 1991 Indonesian Mining Conference (Van Leeuwen, 1993). It traces the four main phases of exploration and also describes some less intense exploration activity (i.e., for diamonds, uranium, and lead/zinc). Area selection, exploration and discovery methods are discussed together with significant geologic features of the more important new discoveries.

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T.M. van Leeu wen / Journal of Geochemical Exploration 50 ( 1994 ) 13-90 17

The evolution of the COW system is also briefly discussed. Geographic localities mentioned in the text are shown in Fig. 2.

In order to put these activities in historic context, a brief outline of the relevant Dutch work is given for each. Comprehensive summaries of Dutch exploration and mining have been presented by Van Bemmelen (1949), Ter Braake ( ! 944) and Van der Ploeg ( 1945 ). Detailed information can be found in the "Jaarboek van het Mijnwezen" (Mining Year Books), published between 1872 and 1939.

For the post-Dutch period of mineral industry development the reader is referred to a collection of papers by Sigit (1989), which includes a comprehensive review of policies and legislation, the Indonesian Mineral Development Digest published by the Indonesian Mining Association in ! 988, and papers by McDivitt (1989) and Makarim ( 1989 ). Detailed analyses of the early COWs have been presented by Beals and Gillis (1980) and Mikesell (1983).

Information presented in this paper has been drawn from a number of sources, including published papers, mining year books (1970-1992) published by the Department of Mines and Energy, company relinquishment and termination reports on open file, unpublished reports and other information kept in the files of P.T. Rio Tinto Indonesia, stock market reports, mining magazines, and personal communications with many colleagues in the industry. With the exception of published papers, these sources are in most cases not quoted.

The paper is largely restricted to the exploration activities by foreign companies, which have dominated the industry, and, with a few exceptions, does not discuss the work done by Indonesian companies and institutions, foreign agencies, etc. Neither does it deal with exploration for mineral sands, chromite, manganese, and industrial minerals.

2. Phase 1: following in the footsteps of the Dutch

In 1967, when Indonesia was opened to foreign investment in mining, the first companies that came to the country were primarily interested in prospects and mineral districts identified by the Dutch, including the Ertsberg copper prospect in Irian Jaya, nickel laterite and ultramafic occurrences in eastern Indonesia, the Sumatera tin belt, and bauxite occurrences in western Indonesia. Between 1967 and 1971, one First Generation COW for copper (Ertsberg area) and seven Second Generation COWs for nickel (3), tin (3) and bauxite ( I ) were signed (Fig. 3).

The only First Generation COW was signed by Freeport Sulphur in 1967 and contained the following major provisions: ( 1 ) the term of the agreement was for 30 years ( "the operating period") following the initiation of commercial production, which was preceded by an "exploration period" of two years, a "feasibility study period" of six months, and a ' 'construction period" of three years; (2) the company received a tax holiday for the first three years after the beginning of production and a reduced corporate income tax rate of 35 %; (3) it was exempted from royalties on copper and gold; and (4) it was given full control and management of all matters related to the exploration and mining operations. The contract was renegotiated between 1974 and 1984. Changes included a reduction of the tax holiday from three years to one year, the sale to the government of 8.5% of the total equity shares in Freeport Indonesia at book value, and payment of land rent and royalties.

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T.M. van Leeuwen / Journal of Geochemical Exploration 50 (1994) 13-90 19

The Freeport agreement attracted other mining companies to Indonesia, even though the terms of the Second Generation COWs were somewhat more onerous. Major differences included: (1) abolishment of the tax holiday; (2) increase in corporate tax rates; (3) payment of royalties, land rent and some other taxes; (4) addition of a two year "general survey period" and extension of the exploration and feasibility study periods by one year and six months respectively; (5) specification of the percentage of Indonesians to be employed; and (6) obligation to offer up to 20% of the equity shares to Indonesian nationals over a ten year period.

2.1. Copper (Ertsberg District)

The Dutch found copper in Sumatera, Java, Sulawesi and Timor, but none of these occurrences were of economic significance. Far more important was the discovery of Ertsberg ("ore mountain") (Fig. 3) by Jean Jacques Dozy, a young petroleum geologist, while climbing the highest, snow covered mountains in Irian Jaya in 1936. The orebody formed a spectacular outcrop, standing about 140 m above ground level in glaciated terrain at an altitude of 3,600 m. Dozy (1939) reported on his trip and included a brief reference to Ertsberg, noting its high copper content and traces of gold. Because of World War II and its aftermath, the report went unnoticed until 1959, when Forbes Wilson, manager of mineral exploration for Freeport Sulphur, saw it during a visit to Holland. Immediately recognizing the potential of Ertsberg, he mounted an expedition within a year to sample the deposit. A fascinating account of this expedition, which took place under extremely difficult conditions, is given by Wilson ( 1981 ) in his book "The Conquest of Copper Mountain".

Results of the investigations surpassed all expectations, showing Ertsberg to be the world's largest copper orebody exposed at the surface. Wilson recommended immediate further studies of the deposit, but technical and political problems delayed a detailed eval- uation of the deposit for seven years. By 1969, a helicopter supported drilling program had outlined 33 Mt at 2.5% Cu and 0.75 g/t Au and a preliminary feasibility study had been completed. Construction of an open pit mine (named "Gunung Biji", the Indonesian term for Ertsberg) began in 1970 and production started in late 1972.

Exploration drilling during 1975-1976 encountered a second orebody, named Gunung Biji Timur (Ertsberg East), located 1.3 km to the east of the original discovery. The area had already been noticed during the 1960 expedition as a heavily malachite-stained limestone cliff (Wilson, 1981 ). Subsequently, two ore zones were discovered below this deposit, viz the "intermediate ore zone" (IOZ) and the "deep ore zone" (DOZ), and a third deposit called Dom (meaning "cathedral" in Dutch) was found 1 km to the south. Drill testing of the Big Gossan deposit, which was initially investigated in 1974, began in 1991. Reserves outlined to date and development status for each of these deposits are given in Table 1.

The four deposits (Katchan, 1982; Soebagio and Budijono, 1989; Mertig et al., 1994) are all hosted in skarned sediments of Mesozoic to Tertiary age near a Pliocene intrusion containing weak porphYrY copper-style mineralization. They are unusual among major copper-gold skarn deposits in being associated with magnesian rather than predominantly calcic silicates (Sillitoe, 1994). Ertsberg occurs as a nearly-engulfed block of skarn sus- pended in the intrusion, and Ertsberg East/ IOZ/DOZ and Dora are located along the


Table I Copper and gold reserves of the Ertsberg district

Deposit Reserves Comments

Mt Cu (%) Au (g/t)

Gunung Bijih 33 2.27 0.47 (Ertsberg)

Mined by open pit methods from 1972 to 1989; 3 Mt left.

Gunung Bijih Timur 54 2.03 0.66 Block cave operations commenced IGBT) in 1980; 2 Mt left.

1OZ 27 1.68 0.56

DOZ 25 2.30 0.99

Dora 31 1.47 0.42

Grasberg 675 1.45 1.87

Production will start in 1994 by induced and sub-level caving. Reserves open to east, west and down dip.

Open stope production started in 1988.

Has not preceeded beyond the early development stages; will be mined by block caving methods.

Open pit mining began in December 1989; about 30 Mt mined to date.

Big Gossan In exploration stage (drilling and underground). Outlined resource: 12 Mt @ 4% Cu, 1.9 g/t Au.

Data source: P.T. Freeport Indonesia. Reserves as of January, 1993 (including historical production).

intrusive contact, whereas Big Gossan is a distal skarn controlle d by a steeply-dipping fault zone. The Ertsberg East/IOZ/DOZ deposit has a vertical extent of 1,500 m, making it one of world's largest copper-gold skarn ore bodies.

The original composition of the sediments (predominantly dolomitic limestones and sandstones) and their depth of burial at the time of skarn formation influenced the type of skarns developed. This in turn largely determined types of ore formed and the distribution of ore sulphides, which consist predominantly of bornite and chalcopyrite, and largely postdate the skarn formation.

One of the most recent discoveries, and arguably the most exiting one, is Grasberg, located 2.2 km northwest of Ertsberg, which differs from the other deposits in being a porphyry-type copper-gold deposit. The name Grasberg ("Grass Mountain") was given by Dozy (1939) to a "rather smooth grass-covered mountain, which forms a striking morphological element amidst the limestone mountains". Interestingly, Dozy's report contains several clues as to the presence of porphyry-style mineralization: (1) disseminated sulphides including chalcopyrite are described from a diorite sample; (2) several other samples are reported to contain abundant secondary biotite; and (3) Dozy noticed that the water of a creek draining Grasberg had a very pronounced iron taste.

T.M. van Leeuwen /Journal of Geochemical Exploration 50 (1994) 13-90 21

Freeport geologists investigated the occurrence in the mid-1970s. Outcrop samples yielded significant gold results, but copper values were very low. The possibility of porphyry copper-style mineralization occurring at depth was recognized, but no further work was undertaken at the time, as there appeared to be little chance of an enriched chalcocite blanket being present because of recent glaciation. A primary deposit was of little interest, because copper grades were expected to be less than 0.8% (as was the case for other known porphyry deposits in the region), and gold would not be a significant credit at the prevailing prices.

In the mid-1980s, Freeport's geological staff re-examined the outcrops at Grasberg. This time it was decided to drill test the near-surface gold potential and the deeper copper potential. The first vertical hole, drilled in early 1988, intersected 600 m averaging 1.65% Cu and 1.49 g/t Au: a world-class ore body had been discovered. Production commenced within two years. The geology of the deposit is discussed below together with that of other porphyry copper deposits in Indonesia.

Freeport' s exploration has been a remarkable success story. To date a total in-situ resource of approximately 28 Mt Cu and 2,700 t Au ( including 13 Mt Cu and 1366 t Au in mineable reserves; Table 1 ) has been found in what is one of the most remote and underdeveloped parts of the world. The bulk of the gold is contained in Grasberg, which has the largest published gold reserve of any single mine in the world. By 1996, the existing mines will produce 90,000 tpd, a staggering increase of 1,350% since production started in 1972, with annual production exceeding 40,000 t Cu, 35 t Au and 70 t Ag.

2.2. Nickel

Geologists of the Netherlands Indies Geological Survey who investigated the interior of eastern Sulawesi in 1909 and 1910 were the first to describe the ophiolite formations of this region and to recognize their nickel potential. They recommended a systematic survey, which was commenced by the Dutch government in 1916. Significant deposits of nickel laterite were discovered, but mostly of an uneconomic grade at the time (i.e., < 3% Ni). Small-scale mining was started by a private Dutch company at Pomalaa (Fig. 3) in 1937 and was continued by the Japanese during the Pacific War. Exploration, mining and export of nickel ore was resumed in 1959 by a private Indonesian company, which two years later was taken over by the Indonesian Government. Since 1968, the state mining company P.T. Aneka Tambang (ANTAM) has been operating the mine.

Following the transfer of sovereignty in 1949, the Dutch shifted exploration activities to Irian Jaya, which remained under their rule until 1963. Nickel laterites were discovered in the Cyclops Mountains in 1949 and on Waigeo and neighbouring islands in 1956. Based on government-sponsored follow-up work in both regions, a group of Dutch companies together with the US Steel Corporation formed a company in 1960 to explore and develop these deposits. Preliminary investigations were promising, but local political conditions precluded further work at the time.

In 1967, the Indonesian Government called for bids for the exploration and development of areas of nickel laterite and/or ultrabasics identified by the Dutch. Three groups success- fully negotiated COWs, viz. Pacific Nickel Indonesia (PNI, a consortium headed by US Steel), INCO and INDECO (a Japanese consortium) for areas in Irian Jaya, eastern Sulaw- esi and northern Moluccas respectively (Fig. 3).


Table 2 Nickel resources of Indonesia

Deposit Resource Comments

Sulawesi Soroako

Pomalaa

Moluccas Tanjung Buli

( Halmahera )

Gebe

Obi

lrian Java Waigeo

Cyclops Mountains

Gag

S. Kalimantan Kukusan and S. Duwa

180 Mt @ 1.67% Ni (ox and sill (1972) ; probable-proven reserves in 1993:78 Mt @ 1.90% Ni.

129 Mt @ 1.4% Ni (ox and sill, including proven reserves (1992) of 4 Mt @ 2.40% Ni (sill.

18 Mt @ 2.61% Ni (sill (1992).

20 Mt @ 2.60% Ni (sill and 66 Mt @ 1.25% Ni (ox), including probable-proven reserves of 10 Mt @ 2.60% Ni (sill and 7 Mt @ 1.65% Ni Cox) (1992).

88 Mt @ 1.2% Ni Cox) (1977).

104 Mt @ 1.41% Ni Cox and sill (1972)

53 Mt @ 1.43% Ni Cox) (1972).

262 Mt @ 1.51% Ni Cox and sill (1974), including 79 @ 1.61% Ni (ox) and 19 Mt @ 2.35% Ni (sill (1990).

126 Mt @ 1.2% Ni (ox and sill (1974)

Sebuku 426 Mt @ 0.4% Ni (ox and sill (1974)

Dutch prospect. Exploration by INCO during 1969-1975 including 10.600 m of drilling; costs: US$ 27 (80) million. Production 1978-1992:343,700 t Ni.

Old Dutch mine; operated by ANTAM since 1968. Production 1960-1992:312,000 t Ni.

Moluccas deposits explored by INDECO involving 35,000 m of drilling. Gebe selected for detailed studies. Total expenditure 1969-1977: US$ 9 (26) million. Gebe subsequently explored and mined by ANTAM; production 1987-1992: 247,560 t Ni. Tanjung Buli explored by ANTAM since 1981.

All 3 deposits investigated by the Dutch. Subsequently evaluated by PNI; Gag selected for detailed studies; 17,000 m drilling; total expenditure: US$ 56 (133) million. Taken over by ANTAM in 1982.

Explored by ANTAM during 1972-1974. Laterites Fe-rich.

Data sources: Prijono, ( 1979); Slamet, ( 1991 ); INCO ( 1993); ANTAM (1993). Abbreviations: ox = oxide; sil = silicate; Mt = million dry tonnes. Expenditure: figures shown between brackets are in 1992 dollars. Resource: year of resource definition shown between brackets.

Exp lorat ion by the three compan ies fo l lowed a s imi lar pat tem (Reyno lds et al., 1973;

Harju, 1979): aerial photography , in INDECO's case combined with aeromagnet ics , was

fo l lowed by ground reconna issance o f areas wi th favourab le geo logy and morpho logy

se lected on the bas is o f l i terature research and photogeo log ica l interpretat ion. F irst pr ior i ty


targets were areas of ultrabasic rocks covered by little dissected old land surface. Hand augers and winkie drills were extensively used during this stage to determine quickly the near-surface extent of the laterites. This was done in conjunction with geologic mapping to determine, the character of the laterite surface, the size and distribution of areas of outcrop and boulder fields, and the nature of the bedrock. If a deposit had economic potential, further drilling was done with larger mechanical augers and truck mounted rigs. Test pits were used principally to obtain density data and detailed information concerning the laterite profile.

In a relatively short time all three companies identified substantial nickel iaterite resources in a number of deposits, which contain nickel-silicate ore and/or generally lower grade nickel-oxide ore (Table 2). The geology of one of these deposits, Soroako, has been described by Golightly (1979). Most of the deposits give rise to distinct vegetation anomalies, which can be readily identified by remote sensing methods (Taranik et al., 1978). Wahyu and Slamet (1992) note that at Gag the thickness of the laterite profile can be estimated from the degree of stunted growth and sparseness of the vegetation.

In 1973, INCO commenced construction of a mine at Soroako, and PNI and INDECO were about to develop the Gag and Gebe deposits respectively, when the first oil crisis took place. The escalation in oil prices had a dramatic impact on the viability of all three projects. The situation was further aggravated by the deterioration of the international nickel market, commencing in 1975. INCO countered the sharp increase in energy costs by building a hydroelectric plant and tripling annual production capacity to 45,000 tonnes of nickel matte. However, the company had to wait until 1988, following an improvement of the nickel market, to see its operations become profitable.

For Gag and Gebe no alternative energy sources were available. Both PNI (Havryluk, 1979) and INDECO carried out several feasibility studies, but invariably the conclusion was that it was not economical to process the ore on site. The Gag project studies showed an escalation in costs from US$ 700 million in 1978 to a staggering US$ 2 billion (2.75 billion in 1992 dollars) in 1981. As the Government did not allow export of unprocessed ore by foreign-owned companies, INDECO withdrew in 1977, followed by PNI in 1982. Their areas were subsequently assigned to ANTAM, which has been exploiting the Gebe deposit since 1979. One of the other INDECO areas, Teluk Buli on Halmahera (Fig. 3), explored by ANTAM since 1981, has reached the feasibility stage. Plans initiated in 1988 by ANTAM and Queensland Nickel to produce up to 4 Mt of ore at Gag were abandoned in 1992, based on the results of a detailed feasibility study.

Nickel resources identified to date amount to approximately 1,000 Mt with a total nickel content of 13 Mt (Slamet, 1991 ) (Table 2), making Indonesia the fifth largest source of nickel in the world after New Caledonia, Cuba, Canada and the USSR.

2.3. Tin

Tin mining is one of the oldest of Indonesia's industries. As early as 1710, the Dutch East Indies Company bought tin from the Sultan of Palembang, who recruited workers from southern China for his mines on Bangka, one of the Tin Islands located to the east of mainland Sumatera. In 1856, the mines became the property of the Dutch Government+ which operated them until the Japanese overran Bangka in February 1942. On the adjoining island of Belitung, the native population managed to conceal the presence of tin from the

24 T.M. van Leeuwen / Journal of Geochemical Exploration 50 (1994) 13 90

Dutch until 1851, and in 1887 tin mining operations also began on Singkep Island. Early Dutch mining activities were restricted to alluvial deposits, and it was not until 1906 that hard rock mining started at Kelapa Kampit on Belitung, followed by offshore tin mining in 1921. It is estimated that during the period 1710-1942 a total of 1.5 Mt of tin was produced.

During the Pacific War, the Japanese mined some alluvial deposits. Soon afterwards the Dutch resumed operations until 1958, when their concessions expired. Since that time the Government has been the main tin producer through its wholly owned company PN Tam- bang Timah. Following an international tender, three COWs were awarded between 1968 and 1971, viz. to Billiton, BHP and Koba Tin (CSR/Boral; since 1988 part of the Renison Goldfields group).

Billiton and Koba Tin's targets were offshore and onshore placer deposits. All offshore and large parts of the onshore placers in Indonesia (Batchelor, 1979; Aleva, 1973, 1985) are paleoplacers, which have been protected against erosion by a cover of marine, littoral or paludal sediments. They were deposited and partly reworked from the Late Miocene to recent times. During this period there have been three major phases of erosion and sedi- mentation, characterized by distinctive climatic regimes, and accompanied by a progres- sively rising sea level that eventually submerged the present-day shelf platform area surrounding the Tin Islands.

There are three distinct types of cassiterite placers: ( I ) residual eluvial concentrations on interfluves and valley side slopes; (2) para-allochthonous placers, which directly overly the mostly weathered country rocks of valley bottoms; and (3) allochthonous alluvial deposits interbedded in the sedimentary valley fill. Type I and 2 placers are directly related to nearby primary mineralization associated with granite intrusions, whereas type 3 deposits consist primarily of reworked type 1 and 2 material.

Billiton selected an offshore area centred on the Pulau Tujuh islands ( Fig. 3 ), in the hope that the known ( in part tin-bearing) granites on these islands and on northern Bangka were linked in the intervening offshore area (Bon, 1979). A second area was chosen off the southwest coast of Kalimantan. Exploration in these remote and unprotected offshore areas was made possible by the development of a new exploration tool, named the "Sonia'" acoustic profiler, and by the use of two drill barges that contained some novel features enabling drilling operations to be carried out under rough weather conditions and in water deeper than 6 m (Bon, 1979).

The company adopted a three-stage exploration strategy. Firstly, the COW areas were scouted with Sonia to detect places where granitic basement would be present at a dredgeable depth. The selected areas were then profiled on a dense grid in order to detect buried valleys. Finally, the tin content of these valleys was tested by drilling.

Results of the reconnaissaince stage did not support the hypothesis of a continuous granite body between Bangka and the Pulau Tujuh islands, and consequently follow-up work was largely restricted to the latter area. By the end of 1976, several small to medium-sized tin deposits had been discovered around Cebia island, at a total cost of more than US$ 24 in 1992 dollars. They were thought to be of sufficient size and grade (on the order of 70 Mm ~ at 29 g/m ~ Sn) to justify a large dredging operation (Dieperink, 1979). However, as operations progressed, it became apparent that both grade and volume had been overvalued. This rendered the project uneconomic and resulted in its closure in late 1985, at which time a total of only 5,800 t of tin had been produced.


Koba Tin's principal target was alluvial tin in an old Dutch mining area on east Bangka (Fig. 3). Exploration commenced in late 1971, and trial mining was undertaken in 1973 to confirm old Dutch geological records and the company' s own drill results. Mining operations began in 1974 with gravel pumps, and since 1977 have also involved dredging. By the end of 1992, 69,000 tonnes of tin had been recovered and proven reserves were 39,000 tonnes.

The company's exploration (using seismic) in the east Bangka offshore area was less successful, partly because it targeted young V-shaped valleys and depressions that were unprospective, having been filled with muds during a transgressive phase younger than the main epoch of tin placer genesis. Better results could have been obtained had seismic profiles been interpreted to identify gravelly piedmont fan facies at the base of granite scarps ( type 1 ) or gravelly fill in bedrock valleys draining granitic terrain (type 2). Another lesson learnt was that offshore placers can have offshore sources entirely unrelated to onshore mineralization ( Batchelor, 1979, 1983 ). Total exploration costs for the onshore and offshore programs amounted to US$15 million in 1992 dollars.

BHP' s COW covered the whole of Belitung island (Fig. 3 ) and was for primary tin only. Primary tin mineralization on the Tin Islands ( e.g., Adam, 1960; Omer-Cooper et al., 1974: Sujitno et al., 1981; Van Wees and De Vente, 1984; Schwartz and Surjono, 1990a,b) is, at least in part, related to Triassic granites intruded into Permo-Carboniferous sandstones and shales with minor interbedded tuff and chert. Deposit types include: ( 1 ) greisen-bordered vein swarms and greisen in granite, commonly in association with tungsten; (2) stratabound "bedding-plane veins", which occur along sheared contacts between sedimentary beds of different competence and are characterized by the presence of abundant magnetite and pyrrhotite with lesser pyrite and base metal sulphides; (3) fault/fissure veins within the sedimentary sequence, which contain fluorite and tourmaline but no magnetite, and generally only minor sulphides; and 4) quartz stockworks ( + tungsten) in sandstone.

BHP's exploration program had as objectives to examine the Kelapa Kampit mine and explore for possible extensions with a view to re-opening the mine, and to search for other primary tin deposits. On the basis of a literature study, regional exploration techniques were selected, including aerial photography ( for location purposes and structural interpretation ), and airborne magnetics (because of the known association between magnetite and tin in bedding-plane veins). Follow-up targets consisted of known primary deposits, areas shed- ding alluvial cassiterite, and aeromagnetic anomalies. They were investigated by using ground magmatics, soil sampling ( Sn and As), and limited SP and IP, followed by trenching and pitting, and subsequently by drilling and/or excavation of adits (Omer-Cooper et al., 1974).

BHP's exploration, carried out between 1971 and 1976 at a cost of US$ 5 million in 1992 dollars, located several new areas of primary tin mineralization on the island. However, the most significant find was made within the Kelapa Kampit mine area itself, consisting of a tin deposit of 350,000 tonnes averaging 1.5% Sn, known as the Adit 22 or Nam Salu orebody (now largely mined out). The deposit is hosted by a steeply dipping tuffaceous horizon (named "Nam Sa|u Horizon") within the sedimentary formation. This horizon contains varying amounts of magnetite, pyrrhotite, pyrite, ilmenite, and siderite. It has a considerable strike extent, as indicated by aeromagnetic data and drilling. The discovery hole was sited on a combined magnetic low and Sn-in-soil anomaly to test the hypothesis that the Nam


Salu horizon might contain volcanogenic-style mineralization where a change from oxide (magnetite) to sulphide facies occurred.

The Nam Salu tin mineralization, the bedding-plane veins at Kelapa Kampit, the Selumar deposit (Van Wees and De Vente, 1984) and some other occurrences on Belitung exhibit geological characteristics similar to those recognized in exhalative massive sulphide deposits, including well-bedded, concordant, stratabound or stratiform character, sharp contacts, abundance of iron minerals (pyrite, magnetite, pyrrhotite), and the presence of bedded barite. This raises the possibility that sea floor exhalative hydrothermal processes may have played a significant role in their formation (Hutchinson, 1986). A different interpretation has been put forward by Schwartz and Surjono (1990b), who argue for a replacement origin of the Nam Salu tin mineralization.

BHP commenced underground operations at Kelapa Kampit in 1975, and open-pit development of the Nam Salu deposit followed four years later. The mine was closed in 1993 after ownership of the mine had changed hands twice (in 1984 to Preussag, and in 1986 to a domestic company).

2.4. Baux i te

The presence of bauxite was first recognized on Bintan, one of the Riau Islands, in 1925, and impure bauxites were subsequently found on other islands in the region. West and Southwest Kalimantan were thought by the Dutch to have potential, but no investigations were carried out (Van Bemmelen, 1949). Development of the Bintan deposit started in 1935, and the mine has been in production without interruption to the present.

In 1969, ALCOA was granted a bauxite COW covering approximately 500,000 km 2 in various parts of the Indonesian Archipelago (Fig. 3), more than one fifth of Indonesia's land surface. The areas around the Sunda Shelf in West Indonesia were obviously selected because of their long weathering history during the peneplanation of Sundaland, and the presence of known bauxite occurrences. Gunung Sewu (Central Java), Sumba and Muna were probably chosen because they contain extensive limestone karst on which terra rossa bauxite might have developed, and South Kalimantan because of its known iron laterite deposits ( under the right drainage and source conditions such deposits may change laterally to aluminous laterites). The reasons for selecting the rest of the areas are less obvious.

Following a detailed literature review, ALCOA selected a number of areas tor investi- gation by either rapid ground reconnaissance or reconnaissance from the air. The presence of concretionary bauxite float was initially considered to be the prime guide for finding deposits. This was correct where the overburden is thin, such as in the Riau Islands, Bangka and some parts of West Kalimantan, but was ineffective where the overburden is a few metres thick, such as at Tayan, West Kalimantan. Subsequently, morphology was proven to be a better guide, and from then on test pits were always dug for prospecting purposes on low, gently rounded hills regardless of suspected bedrock type.

By 1971, the original COW area had been reduced to about 19,000 km 2 in certain parts of West Kalimantan and the Riau Islands, which are precisely the areas identified by earlier Dutch workers as having the best bauxite potential. In 1975, the area was further reduced to 1,300 km 2 in West Kalimantan, where ALCOA had discovered large, low grade bauxite


deposits. These are predominantly associated with quartz-poor intrusions, which show the strongest lateritization along the contact zones (Gunawan and Valk, 1972).

Total proven reserves in 10 deposits amount to 1,300 Mt averaging 30% A1203 and 7.4% SiO2, including 800 Mt of recoverable reserves containing 40-43% A1203 and 2-4% reactive silica after washing and screening. Feasibility studies carried out in 1974 envisaged a bauxite mine in the Tayan area (Fig. 3), which contains the largest single deposit (270 Mt), an alumina plant in the same area, and a power station and smelter at Asahan in North Sumatera at an estimated total cost of US$ 3 billion in 1992 dollars. In 1977, ALCOA relinquished the COW after having determined that the project was not economically feasible, reportedly due to financing and marketing difficulties, and escalating costs. Total expenditure amounted to US$14 million (52 M in 1992 dollars).

The Tayan deposit is currently being investigated in more detail by ANTAM with the aim of replacing the bauxite reserves on Bintan island, which are expected to be exhausted by 2005.

2.5. Discussion

With the exception of the ongoing exploration in Freeport's COW area, phase 1 was largely completed by 1976 at an estimated cost of US$ 330 million in 1992 dollars. Since that time, exploration for tin, nickel and bauxite has been carried out exclusively by the state mining companies P.T. Tambang Timah and ANTAM. Simatupang (1979) and Suj itno and S imatupang ( 1981 ) discuss Timah's tin exploration programs during the 1970s, and a recent paper by Slamet ( 1991 ) gives an update on Indonesia's nickel industry.

Exploration during phase 1 was highly successful: large resources of copper (28 Mt), gold (2,700 t), nickel (13 Mt), tin (0.13 Mt) and alumina (300 Mt) were outlined, and six out of eight COWs reached the mining stage (including Gebe, which was taken over by ANTAM). However, the resulting mining activity has produced so far rather mixed results. Only the operations of Freeport (which is one of Indonesia's biggest taxpayers) and Koba Tin could be classified as successful. The other two tin mines (both now closed down) suffered losses, and INCO has yet to pay its first corporation tax. The longer term outlook for INCO's operations is, however, more favourable in view of the fact that the company is now one of the industry's lowest cost producers and has nickel resources that will last well into the next century.

3. Phase 2: the porphyry copper search

3.1. Regional surveys

Optimistic expectations for copper prices, the recognition in the late 1960s of the impor- tance of island arcs as a setting for porphyry copper deposits and the discoveries of this type of deposit in neighbouring Papua New Guinea and the Philippines, all combined with favourable COW terms spurred intensive exploration during the early 1970s. Three major international copper producers, RTZ/CRA, Kennecott and Newmont, dominated the search. They were j oined by Endeavour Resources ( an Australian junior company), and a Japanese

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consortium (Overseas Mineral Resources Development). Seven second generation COWs were signed between 1969 and 1972, and some exploration was also carried out through other arrangements, including joint ventures with ANTAM.

Exploration focused on the Barisan Range in Sumatera, northern Sulawesi and the central belt of Irian Jaya. Additional work was carried Out in Java, Central Sulawesi, the Lesser Sunda Islands and Halmahera (Fig. 4). As detailed geological maps were generally not available, these areas were selected on the basis of broad criteria, such as the widespread occurrence of Tertiary calc-alkaline rocks in an island arc or continental margin setting (in a few cases with known copper occurrences) and the possibility that the porphyry copper provinces of the Philippines and Papua New Guinea might extend into northern Sulawesi and Irian Jaya respectively.

Stream sediment sampling ( - 80 mesh), with a minimum sample density of one sample per 25 km 2, combined with float observation was the principal exploration tool, as this had proven successful in neighbouring countries with similar climatic and terrain conditions. Samples were assayed routinely for copper, lead and zinc, but rarely for gold. Because of the lack of reliable topographic and geologic maps, aerial photography or SLAR (in one case combined with aeromagnetics) were flown over selected areas prior to field work. With few exceptions, the survey areas were located in inaccessible, rugged mountainous terrain. This necessitated extensive use of helicopters, and in Irian Jaya of fixed-wing aircraft also, which added considerably to the exploration costs.

By the end of 1975, the regional search had covered vast tracts of land (about 215,000 km2). Only three significant mineralized districts were identified, Tapadaa, Tombulilato and Malala, all in northern Sulawesi (Fig. 4), and several very low grade porphyry copper occurrences were found in West Sumatera (Taylor and Van Leeuwen, 1980).

3.2. Prospect investigations

The northern Sulawesi districts were investigated in detail between 1973 and 1982. Due to poor outcrop, extensive pitting and contour trenching were used for mapping and sampling. Geophysical work was limited to ground magnetics, which proved not very useful. In most cases, drill targets were based on rock geochemistry, detailed geologic mapping and alteration studies. In contrast to the regional surveys, gold was commonly assayed, as by that time the use of gold as a pathfinder element had been recognized from exploration in other parts of the world.

The Tapadaa and Tombulilato districts were discovered in 1971-72 by P.T. Tropic Endeavour Indonesia (TEl). Each consists of a broad anomalous area, containing several discrete centres of copper-gold mineralization. Detailed follow-up was carried out by Kennecott from 1973 to 1976 in joint venture with TEl. Their work showed that primary copper mineralization was confined to small high-level quartz diorite bodies, and had locally undergone supergene enrichment (Lowder and Dow, 1977, 1978). Work focused on tile Tapadaa area, where only small and low grade reserves were identified (Appendix 1 ).

In 1976, Kennecott withdrew from the joint venture. Little additional work was carried out until 1980, when T.E.I became a subsidiary of Utah International. This company explored intensively in the Tombulilato district between 1980 and 1982, which resulted in several new discoveries, including Sungai Mak and Cabang Kanan. Total indicated and


inferred reserves outlined in the Tombulilato district at Cabang Kiri East, Sungai Mak and Kayubulan Ridge were 295 Mt averaging 0.57% Cu and 0.47 g/t Au (Appendix 1 ), half of which is amenable to mining by open cut. In late 1982, preliminary feasibility studies indicated that the project was not viable due to difficult terrain conditions, modest size and grade of individual deposits, and depressed copper prices.

At Tombulilato (Carlile and Kirkegaard, 1985; Carlile et al., 1990; Perello, 1994), eight mineralized intrusive bodies of Late Pliocene age occur within an area of 20 krn 2. Despite the close proximity, each has distinctive characteristics as well as similarities (Appendix 1 ). Alteration in the two major deposits (Cabang Kiri East and Sungai Mak) shows a common vertical zonation with various combinations of quartz, biotite, magnetite, albite, chlorite and amphibole being dominant at deeper levels, and argillic and advanced argillic assemblages occurring in the upper part of the system. Ore grade mineralization occurs in all alteration zones, but varies in style and grade depending on the alteration type. Supergene chalcocite is associated with argillic-advanced argillic alteration at Sungai Mak (where it forms a blanket up to 150 m thick), and to a lesser extent at Cabang Kiri East and Kayubulan Ridge. At Cabang Kiri East, average gold grades increase from 0,59 g/t in the upper part to 2 g/t in the lower part without any significant increase in copper grades.

The work undertaken on the Sulawesi porphyry copper prospects has shown that ( I ) ore grade mineralization can be (spatially) associated with advanced argillic alteration; t 2) distribution of gold in leached caps can be a reliable guide to primary copper ore at depth; (3) surface expressions of adjacent porphyry bodies can vary widely within a very short distance; (4) patterns of leaching and secondary enrichment may be controlled by features of the geology that cannot be seen or assessed at an early stage of exploration; and (5) the systems can show strong gold/copper zonations.

The Malala district, identified during regional stream sediment sampling by RTZ/CRA in 1973, returned anomalous base metal and molybdenum values in several streams. These were followed up in 1976, leading to the discovery of significant molybdenite mineralization. Detailed work (Appendix 1 ) was carried out during 1977-78 and 1980-81, by which time molybdenum, eagerly sought in the late 1970s, had been hit by a chronic oversupply situation. Due to modest size and low grade, the deposit was not economically viable, and consequently the COW was terminated in 1982.

Malala displays many features typical of the quartz monzonite or fluorine-poor style molybdenum deposits, including alteration types and vein paragenesis (Appendix 1 ), but differs in its tectonic setting, the late magmatic ( "deuteric" ) nature of the mineralization and associated alteration, and strong carbonate development (Van Leeuwen et al., 1994).

The Malala and Tombulilato porphyry deposits are of similar age (i.e., Pliocene) and are located relatively close to each other. However, they have contrasting tectonic settings. Malala is interpreted to occur in a continental margin setting and to have formed in a post- subduction environment, following the collision of several continental microplates with Sulawesi (Van Leeuwen et al., 1994), whereas the porphyry copper deposits are thought to have been emplaced in an island arc setting above two opposed subduction zones, following arc reversal (Kavalieris et al., 1992; Perello, 1994).

The detailed investigations of Tapadaa, Tombulilato and Malala were among the few highlights of Indonesian exploration during the second half of the 1970s. No new major surveys were undertaken. The marked drop in exploration can be attributed to a combination


of a moratorium on new COW applications from late 1972 to mid-1976, low commodity prices, and changes in the COW terms introduced in 1976. Among the new conditions of the so-called Third Generation COW were a 10% export tax on unprocessed minerals, a windfall profits tax, the transfer of at least 51% equity to Indonesian parties within ten years of production, and the obligation to establish processing, smelting and manufacturing facilities in Indonesia, if economically feasible.

However, during the same period the Indonesian Government, with the assistance of a number of foreign government agencies, increased the systematic geologic mapping programs in various parts of Indonesia, which commonly included geochemical surveys (Page et al., 1978; Page and Young, 1981). These led to the discovery of porphyry copper occurrences at Tangse in northern Sumatera (Young and Johari, 1978) and Kaputusan on Bacan Island (Pudjowalujo and Bering, 1984; Bering, 1986; Fig. 4, Appendix 1 )

The Tangse prospect (Fig. 4) was investigated by CRA in cooperation with P.N. Tam- bang Timah between 1979 and 1981. Copper-molybdenum mineralization is hosted by a multiphase quanz~liorite intrusion, emplaced along a segment of the Sumatran Fault Zone. Alteration at Tangse displays a discrete zonal distribution and a regular paragenetic sequence, with later feldspar destructive alteration superimposed on earlier biotite and chlorite-epidote assemblages. An interesting feature of the alteration is that the fluids that produced the late stage alteration were responsible for substantial remobilization and recon- centration of hypogene copper and molybdenum, resulting in both local enrichment and depletion in the abundances of ore metals relative to earlier alteration (Van Leeuwen et al., 1987). Although the mineralized system is large, grades are uneconomic (Appendix 1 ).

Results of an orientation survey at Tangse ( Force et al., 1984) indicated that soil sampling for rutile (a common alteration product in porphyry copper deposits) could be useful in delineating deeply weathered porphyry systems. In the absence of gold, it may be an effective surface technique, reducing the need for extensive trenching in the initial stage of exploration.

3.3. Post-phase 2 discoveries

By the early 1980s, porphyry copper deposits had fallen out of favour as an exploration target and gold had become the main focus of attention. The subsequent discoveries of Grasberg (see above), Bulagidun in northern Sulawesi, and Batu Hijau and Dodo-Elang in Sumbawa (Fig. 4; Appendix 1) showed this to be premature. The latter two were found during a regional exploration program for primary gold. Serendipity played a role in their discovery, as initial exploration focused on peripheral gold targets before the porphyry copper potential was recognized.

B ulagidun (Lubis et al., 1994) occurs in an area previously interpreted by TEl geologists to represent an area of high copper background. It differs from the other northern Sulawesi deposits mainly in being somewhat older (Late Miocene), being exclusively hosted by breccias, and containing tourmaline and K-feldspar as alteration products.

Grasberg (Van Nort et al., 1991 : MacDonald and Arnold, 1994) and Batu Hijau (Meld- rum et ai., 1994), the two largest porphyry copper deposits in Indonesia, are, like Cabang Kiri East, of the gold-rich type. They have a number of features in common: ( I ) multiple events of intrusion, alteration and mineralization have occurred; (2) the latest and weakest

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mineralized intrusive phase occurs in the centre of the stock; (3) the orebody is cylindrical to conical in shape with considerable depth extent ( + 1,500 m and + 650 m respectively); (4) copper-gold mineralization is associated with potassic alteration, both as disseminations and in veins; (5) pyrite is minor to absent in copper-bearing veins; (6) there is a positive correlation between copper and gold grades, and generally also between copper-gold grades and vein intensity, with gold to copper ratios increasing with depth; (7) magnetite is a common constituent of some quartz vein phases; and (8) an anomalous molybdenum zone occurs peripheral to the copper-gold ore zone. Some notable differences between the two deposits are: ( 1 ) anhydrite is strongly developed at Grasberg, but absent at Batu Hijau; (2) the quartz-magnetite veins at Grasberg are barren, whereas they are mineralized at Batu Hijau; and (3) advanced argillic assemblages are present in the upper part of the Batu Hijau deposit.

3.4. Discussion

The porphyry copper search and subsequent follow-up work between 1969 and 1982 are estimated to have cost on the order of US$ 80 million in 1992 dollars. Although this relatively high expenditure has not resulted in a mine, one or more of the Sulawesi deposits may still be developed in the future. Furthermore, the recent discoveries of Grasberg and Batu Hijau show that the porphyry copper search of the 1970s was not exhaustive, suggesting that potential remains for additional discoveries.

4. Phase 3: the coal revival

Indonesia possesses vast resources of coal and lignite totalling more than 30 billion tonnes. These occur mainly in the Tertiary basins of Sumatera and South and East Kali- mantan where measured reserves amount to 4.8 billion tonnes. Coal production commenced in 1846 in the Mahakam Coal Field, East Kalimantan, and increased steadily as new mines were developed in Sumatera and East Kalimantan. It reached a peak of 2 Mt pa just before the outbreak of the Pacific war in 1941, by which time about 40 Mt had been produced (Van Bemmelen, 1949).

The principal mines were Ombilin in West Sumatera and Bukit Asam in South Sumatera (Fig. 5), both operated by the Netherlands Indies Government. The first discovery was in the Ombilin area in 1868 by a Dutch mining engineer during a search for steaming coal to compete with mines in Sarawak and Brunei. Production started in 1891, reaching a maximum of 665,000 tonnes in 193 I. Coal mining in the Bukit Asam area commenced in 1919, although coal was reported from the area already in 1858. The highest output was reached in 1941 when 863,000 tonnes were produced. A number of smaller, privately owned mines operated in Kalimantan, but many were short-lived and produced less than 100,000 tonnes.

After the war there was a progressive decrease in coal production, and an all time low was reached in the early 1970s with an annual production of less than 200,000 tonnes from three Government owned mines, viz. Ombilin, Bukit Asam and Mahakam. There was a brief resurgence of interest in coal with the introduction of the "Iron and Steel Project" in


1956, which involved unsuccessful exploration for coking coal in southeast Kalimantan (Sigit, 1980).

Several factors contributed to the decline of Indonesia's coal industry in the three decades following the war, including the lack of capital and technical expertise, high production costs, and the discovery of cheap supplies of oil and gas within Indonesia. In 1971, the Government closed the Mahakam mine and two years later considered closing Ombilin and Bukit Asam too (Sigit, 1980; 1988a), but the 1973-74 oil crisis prompted the Government to review its position. The first step it took was to freeze all exploration for coal by private enterprise pending formulation of an energy policy. Two companies with prior exploration rights in Sumatera, RTZ/CRA and Shell Mijnbouw, were excluded from that ban.

RTZ/CRA commenced exploration of occurrences found during porphyry copper exploration in West Sumatera in 1972. One of these, named Sinamar (Fig. 5), was investigated in detail during the period 1973-1975, but was shown to be uneconomic because of its restricted size (90 Mt), poor coal quality and remote location.

Shell Mijnbouw signed an exploration agreement with the State coal mining company P.N. Batubara in 1973, covering 72,000 km 2 (Fig. 5). This was replaced by a production- sharing agreement in 1975. In 1974, the company embarked on a major exploration program involving aerial photography, geologic mapping, test pitting, and drilling (9 rigs supported by 3 helicopters). Six major deposits were identified within 20 km of Bukit Asam with total reserves of 2,000 Mt (Kloosterman and Brom, 1979). Shell Mijnbouw concluded that poor coal quality (high moisture and sodium contents) and difficult transportation conditions would not allow an export-oriented project. They withdrew in late 1978, having spent US$ 125 million in 1992 dollars.

In 1976, after several years of deliberations, the government announced its new energy policy, which called for the diversification of the domestic energy resources aimed at preserving more oil for export. Increased use of coal for power generation and fuel in the cement industry was a key element. Official forecasts at the time assumed an increase in domestic coal consumption from 1 Mt in 1980 to 7.5 Mt in 1990, and 12 Mt in 1995.

To meet these demands, it was decided to expand the production capacity of the Ombilin and Bukit Asam mines to 1.3 Mt and 3 Mt respectively, and to develop the coal resources of Kalimantan. The Bukit Asam expansion project received financial assistance from the World Bank.

4.1. Kalimantan coal program

To promote development of the Kalimantan coal resources, the Government invited a number of foreign companies to cooperate with P.N. Batubara (now named P.T. Tambang Batubara Bukit Asam) in exploring eight areas. The companies were mostly large oil and mining groups, including Agip, Arco, BP, CRA, Consol, Mobil Oil and Utah International. After protracted negotiations, the first agreement was signed in November 1981 with P.T. Arutmin Indonesia. Ten more agreements followed between 1981 and 1987, including two with domestic companies.

The coal agreements are similar to the COW agreements, the main differences being: ( l ) the State coal company holds title and has overall management of the operations; (2) it receives a 13.5% share of the annual coal production free of charge; and (3) the foreign


contractor provides all the financing of the project, but all purchased materials, supplies, plant and equipment become the property of the State company.

Two basic strategies were adopted by the coal contractors. Some companies focused initially on known coal occurrences to speed up mine development, and later carried out regional surveys, whereas others undertook reconnaissance surveys before selecting target areas. Surface geological mapping and coal outcrop sampling were the principal reconnaissance tool, because outcrop, particularly of coal, is usually good in the Tertiary basins of South and East Kalimantan. Mapping was conducted along roads, timber tracks and streams, as these provided both the easiest access and best rock exposures. Aerial photography and SLAR surveys generated reliable topographic maps, and also aided regional geologic mapping.

Follow-up work involved detailed geologic mapping and topographic surveys, coal outcrop sampling and drilling, the latter often combined with geophysical borehole logging. Drilling rigs varied from light weight portable units with a depth capacity of around 50 m to larger truck mounted rigs. In many cases exploration was facilitated by the presence of an extensive network of timber roads. Ground magnetics were effectively used in one case to outline areas of burned coal (Van Leeuwen and Muggeridge, 1987).

Geologically the Kalimantan deposits can be divided into Eocene and Miocene coals. The Eocene coals were formed during the early stage of a transgressive cycle in swamps that received clastic material from adjacent Pre-Tertiary basement highs and were inundated by the sea as the marine transgression progressed. Hence these coals are dirty (ash content 8-18 wt.%) and have variable sulphur contents. They are relatively hard (HGI < 42), but inherent moisture contents are low (3.5-7 wt.%) and calorific values (air dried basis) are relatively high (6,300-6,800 kcal/kg). The coal is usually developed in a single main seam consisting of two or more splits and varying from 3 to 8 metres in thickness.

The Miocene coals accumulated in fluvio-deltaic environments during the later part of a regressive cycle and are characterized by multiple seams. The coal basins are usually extensive because of the prograding nature of the delta systems. Much of the coal is of low to moderate rank, but characteristically has a low ash content and is usually also low in sulphur. The most outstanding example is coal at Paringin (Fig. 5), with only 1 wt.% ash and 0.1 wt.% sulphur, now marketed as "Enviro coal". Inherent moisture contents are generally in the 10-30 wt.% range and calorific values vary from 4,000 to 6,000 kcal/kg. Seam thicknesses are highly variable, reaching 30 m at Paringin. Higher rank coals are also present, but mostly as thin seams in the steeply dipping flanks of anticlinal structures, thus restricting their opencut potential. A notable exception is Pinang (Fig. 5), where several seams, up to 7 m thick, of superior quality coal (Table 3) occur in a favourable structural setting. Pinang was initially identified from vitrinite analysis of Dutch coal samples kept in the Bandung Museum, and an unpublished Dutch report (Van Leeuwen et al., 1988).

Between 1981 and 1990, over 30 deposits were drill tested, involving approximately 600,000 m of drilling. Details of the more significant deposits are shown in Table 3. Interestingly, the two economically most important deposits, Pinang and Satui (Fig. 5), had no previous history of exploration, although the presence of high quality coal had been noted by Dutch geologists during regional mapping programs. To date more than 5,000 Mt of coal resources of varying rank and quality have been outlined, including measured

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, 0.1% Cu over 0.6 1.2 km; followed by detailed trench sampling: > 0.3% Cu and > 0.2 ppm Au over 900 m X 300 m, with > 30 ppm Mo annular zone around the Cu/ Au anomaly. Drilling commenced in early 1991 and was still in progress in July 1993 (37,000 m in 50 holes).

Geology: Cu/Au mineralization is hosted by a tonalite intrusive complex, and diorite and meta-volcanic wallrocks. Orebody is cylindric to conical, and has a vertical extent of + 650 m. Bulk of the higher grade mineralization associated with tonalite stock showing pervasive secondary biotite alteration and quartz-sulphide+ magnetite veining. The potassic core zone grades outward into extensive propylitic alteration. Overprinted by widespread fracture controlled sericite-chiorite, and minor sericite and albite alteration. Sericite-kaolinite and kaolinite-alunite-pyrophyllite assemblages occur near surface. Less altered and mineralized


dykes intrude the centre of the tonalite stock, forming a geochemical low. Oxidation extends up to 85m below the surface, but supergene enrichment weakly developed (Meldrum et al. (1994).

Dodo-Elang

Histo~: In 1910, a Dutch soldier returned from the area with a quartz-pyrite sample assaying 2 g/t Au. No further work was undertaken by the Dutch. The prospect was identified independently during Newmont's 1987 regional reconnaissance stream sediment sampling program in west Sumbawa as the strongest multi-element geochemical anomaly in the COW. During 1988, extensive soil sampling and trenching identified a Au-bearing stock- work over an area of 700 mX200 m; drill tested in 1989 (2,286 m in 20 holes; overall grade < 1 g/t Au). Following the discovery of Batu Hijau, the geochemistry at Dodo was re-evaluated and porphyry-copper mineralization was subsequently found in the same area. Tested by 5 holes in 1991. Further drilling planned in 1993/94.

Geology: Andesitic volcanics are intruded by high-level granodiorites, and small bodies of diorite and feldspar porphyry. Alteration is widespread and intense. Potassic (2nd biotite), propylitic, phyllic and advanced argillic alteration styles have been observed, showing complex relationships. The advanced argillic alteration is accompanied by low grade Au- bearing quartz veins and stockworks containing pyrite and enargite. It appears to be superimposed on porphyry-style Cu-Au mineralization, which is widespread but generally of low grade. Better grades ( > 0.5% Cu and 0.5 g/t Au) mineralization intersected to date occurs in potassically altered rocks overprinted by chlorite-epidote alteration. The mineralization occurs both in quartz vein and as disseminations.

Appendi x 2. Resources, exploration history and geology for selected alluvial gold deposits in Indonesia. Locations are shown in Fig. 8

Monterado

Resource: Proven-probable reserves: 35 Mm 3 @ 169 mg/m 3 Au (1989). Histo~: Mined by immigrants from South China between 1720 and 1850. Their kongsi

operations were replaced by concessions administrated by the Dutch in 1853. Investigated by the Geological Survey in early 1970s using bangka drills and resistivity profiling; 1.5 Mm ~ @ 186 mg/m 3 Au outlined. Scout drilling by BP Minerals in 1984, followed by grid drilling in 1986. Feasibility study and decision to mine in 1987; based on reserves of 36 Mm 3 @ 193 mg/m 3 Au outlined by 936 holes on 200 x 50/100 m grid, and interpreted to occur in a simple sheet-like body. Subsequent in-fill drilling (2,000 holes) in 22% of the area showed the deposit to be more complex and of lower grade. If remaining area drilled in same detail, average grade expected to decline to 125-148 mg/m 3 Au. Start up in 1989 with 2 bucketwheel suction dredges. From the ~tart the operations were hampered by adverse ground conditions (including logs) and frequent mechanical failures. The mine was closed in 1990 after having produced 595 kg of gold. Re-opened by a domestic company in 1992.

Geology: The deposit extends over some 17 km of the course of the present Raya river,


close to the headwaters. It consists of irregular channels and pods of auriferous material which have limited lateral continuity. Higher grades largely confined to basal coarse sediments, the distribution of which is intimately related to irregular bedrock topography. There is evidence of reworking of older Au-bearing sediments. Gold fineness is in the range of 800 to 850.

Sungai Raya

Resource: 72 Mm 3 @ 171 mg/m 3 Au; mineable: 27 Mm 3 @ 362 mg/m 3 Au of wash material (1989).

History: Deposit located downstream of Monterado. Investigated by the Geological Survey in the early 1970s; 12.5 Mm 3 @ 121 mg/m 3 Au outlined. A mechanical bangka rig program was started by Duval in 1987, initially on a widely spaced pattern. Fill-in drilling along and between lines was undertaken to a density of holes spaced 100 m apart on lines separated by 200 m or 300 m. A feasibility study was undertaken in 1989. Duval withdraw in the same year after having spent US$ 7.5 million. In 1992 TRC Resources acquired an 85% interest in the project.

Geology: The deposit occurs in the paleo-Raya alluvial fan system, which is about 50,000 years old based on C-dating of timber. Gold-bearing ( + 100 mg/m 3) basal horizon consists of coarse sand with occasional cobbels (rare in the downstream half of the deposit) and wedges out to the flanks of the deposit. It contains a series of richer zones both along and accross the basal horizon corresponding to original channels. The overlying sediments, 0.3 to more than 6m thick, become increasingly fine towards the top of the sequence, and contain much lower grades of gold. Bedrock is relatively smooth. The deposit has been dissected by recent drainage channels. Gold particle size is mostly in the 250-450/~m range. The finess is 850. Zircon and ilmenite are significant by-products (399 and 232 g / m 3 respectively in the ore zone).

Kapuas

Resource: Indicated: 16 Mm 3 @ 157 mg/m 3 Au (1992). History: Small scale mining has been carried out in the COW area by local people for

many centuries probably, but certainly quite extensively over the last two decades. Over 30 separate mining areas are now recognized ranging in size from 2 hectares up to over 100 hectares. Since 1982 P.T. Sanggau Mining-Mineral company in association with a number of international companies has carried out quite extensive exploration programs on a number of the better known and larger terrace deposit. Since Ashton's involvement with the COW in 1989, extensive channel sampling has been carried out over all areas exposed by local miners. The best results to date have come from drilling a well developed palaeochannel deposit located in a palaeomeander. The deposit, formed downstream from a tight bend in the palaeomeander, has approx, dimensions of 3,000 m long, 800 m wide and 10 m thick. A total of 47 bangka and 63 RC air core holes on lines at 400 m with 100 m hole spacing have so far been drilled. Ongoing exploration is concentrating on the modern Kapuas River where reflective seismic surveys are planned to evaluate possible deposits under the bed of the river. Expenditure 1987-92: US$ 3 M.


Geology: Higher level and low lying Pleistocene alluvial gold deposits occur adjacent to the Kapuas River throughout the 120 km length of the COW area. ,These deposits are remnants of what was once a much more extensive gravel blanket developed in a fluvial tract in an E-W trenching graben-like structure at the W-end of the Melawi basin. In the period of maximum lowering of sea level during the Wisconsin glaciation, entrenchment of the Proto Kapuas occurred. This was subsequently filled with sediment derived largely from erosion of older Pleistocene terrace material. It is within the older Pleistocene terrace and younger palaeochannel alluvium that gold occurs.

Ellahula

Resource: Proven + probable: 9.6 Mm 3 of wash @ 333 mg/m 3 Au; stripping ratio 1.3:1 ; Inferred: 60 Mm 3 of wash @ 313 mg/m 3 Au (1992).

History: Dutch dredging operation produced 60 kg between 1904 and 1908. COW signed by East West Minerals in 1987. Bangka drill program started in 1987 (approx. 1,200 holes, 11,000 m). Pre-feasibility studies carried out between 1989 and 1992; the basic concept for exploitation is dry mining by standard earth moving equipment into a mobile plant.

Geology: The deposit consists of remnants of an extensive auriferous gravel sheet laid down over a 200 km section before the Melawi River cut down to its present level, forming terraces up to 20-30 m and locally 100 m above the river bed. The gravels have been derived from a distant source and are well sorted. Thickness is generally about 3 m. These resources are covered by clay and silt with overburden to pay gravel ratios ranging from 0.7 to 2.6. The gold occurs in a particle size range from 0.1 to 0.5 mm. Gold values do not appear to be concentrated in channels. Zircon is a significant byproduct.

Ampalit

Resource: 11.7 Mm 3 of wash @ 321 mg / m 3 Au and 1 : 2 stripping ratio in river channel + 6 Mm 3 in terraces (1986).

History: Rumours of local people mining alluvial Au near Kasongan were checked by geologists of Pelsart and Jason Mining in 1984. This indicated presence of extensive auriferous alluvials. Work started early 1985. 1986 reserves on which decision to mine was based, were originally delineated by 760 bangka holes drilled at 25 m centres along lines spaced at 400 m and 23 caisson lined pits. Reserves subsequently reduced by infill drilling. Start up in late 1988 with 2 bucket wheel suction dredges, one for stripping, the other for mining the ore zone. Mining of terraces by dry methods. From the outset Au recovery was considerably lower than predicted from the drilling, partly due to excessive clay and very small gold particle sizes. Dredging operations closed at the end of 1992 following exhaustion of mineable reserves. Total production 1.5 t Au (i.e.,


Channel Au particles are smaller and purer than the terrace Au (80-140/zm and 970 fine as against 0.3-0.8 mm and 860 fine). Channel Au may have a colloidal origin (see text).

Cembaga Buang

Resource: Proven: 14 Mm 3 of wash @ 249 mg/m 3 Au; Possible: 9.4 Mm 3 of wash @ 193 mg/m 3 Au.

History: A scout bangka drilling program (430 holes on 400 m line spacings at 25 m intervals) was carried out by Pelsart/Jason in 1987 after recognition that Au being shed from terraces at Ampalit could produce rich reworked Au-bearing alluvium in the Cembaga Buang. This together with pitting indicated a reserve of 27.8 Mm 3 @ 233 mg/m 3 Au. Further defined by infill drilling over 60% of the deposit (2059 holes). Dry mining of selective targets is being considered, as the river is not amenable to dredging.

Geology: The placer deposits consists of Au-bearing alluvium infilling two series of paleochannels of Plitr-Pleistocene and Late Pleistocene age respec

Documents

25 Years of Mineral Exploration and Discovery in Indonesia