Geological Records – A legacy and future of exploration.

April 24, 2017 Ian Wollff Coal Asia publications 0

This article looks at the status of geological libraries that are an essential part of the nation’s wealth and a foundation for reinvigorating further exploration.
Exploration produces Geological Reports.
The Indonesian constitution recognizes that God placed minerals and coal in the earth for the benefit of the people. It seems God wanted Indonesian’s to learn about geology and strive to work together in order to find such deposits. Some are easier to find at the surface of the earth, while others can be extremely difficult to find, being deeply buried and hiding amongst barren rocks.
There are two main types of exploration. Greenfields is the high-risk work where the geological team is looking for an initial discovery, often exploring over a very large area. Brownfields has a lower risk profile, though may require a higher budget, where a deposit is identified from the earlier Greenfields work, and further exploration is undertaken in a smaller area to better define or expand upon the original discovery. In each case the main output is a geological report, including maps, sections, assays and assessment. It is essential that successive geological programs can refer to these earlier reports to design more exploration activities, that in turn may find new deposits. These successive exploration programs may be undertaken by the same company, or buy other parties, and may be spaced apart by many years. The latter exploration programs may rely upon the earlier geological reports to apply different geological theories, new exploration tools or simply with reinvigorated investors.
Resources are tonnage and grade estimates (based on reasonable data) of the commodity still in the ground. Reserves require a further economic and environmental appraisal, and are tonnage and grade estimates of the commodity that can be mined for a profit. A change in technology or commodity price can impact on this classification, such that a resource may be suitable to upgrade in status to a reserve, or that a reserve may be downgraded to a resource. Exploration reports may include resources and reserves that can add a further dimension to the nation’s potential wealth.
Some deposits, such as surficial lateritic nickel, bauxite or alluvial gold and tin may take only a few years to explore and define the resources and reserves. Coal typically has a positive outcrop profile, and thus surface mapping can be quickly be followed up by drilling, with relatively short time to define resources and reserves. Some gold mines can be first identified through following local miners or geochemical surveys, but then typically require a modest period to drill and define resources and reserves. However, some of the much larger or complex metallic deposits may take 10 – 15 years to discover, and another 5 years to adequately define resources and reserves. Typically, less than 3% of exploration programs shall directly find a mineral or coal deposit worthy of progressing to the feasibility stage, and even less will make it to a productive mine.
There is an ongoing effort by the Department of Geology to assess the nations resources of every kind of mineral and coal. This is a difficult task, and relies upon good geological reports. Such an assessment leads to developing mineral and coal policies that can help the growth of Indonesia. There is also an ongoing government program to define areas suitable for exploration as part of the nation’s spatial plan. Unfortunately, some government parties do not understand that essentially all of Indonesia is suitable for ongoing mineral and coal exploration. There is a misconception that some areas have been explored without finding suitable mineral or coal deposits, and thus need not be explored further. This is definitely not the case, as explorers know that many deposits can be discovered where others previously did not find them.
A rich history of exploration reports.
The initial exploration of Indonesia was undertaken by Dutch colonial companies. Large areas were mapped for oil exploration, coal was developed to support steam ships, tin was explored on and off shore, while a few gold and mineral mines were developed mainly in Java and Sumatra.
Following independence, Freeport was the first new mineral mining company to undertake significant exploration and mining. The Freeport discovery is a classic case of a literature search (1939 report), that lead to the undertaking of an exploration program (1963 onwards), and the ensuing mine. Later, regional exploration was undertaken by a number of collaborations between the Government and various countries (Australia, Japan, England etc) in Sumatra, Kalimantan and other islands. There were a few geological agencies, particularly LIPI, that undertook limited geological mapping and drilling throughout Indonesia. The Indonesian geological agency undertook literature research, had access to selected air stereo photos and limited regional topography maps. They conducted regional traverses and so produce the nation’s first systematic regional geological maps at a scale of 1:250,000. These maps and various public geological libraries were a strong bases for the latter mineral and coal exploration boom.
During the 1980’s to 2013 era, private companies dominated the development of geological reports. These companies used the evolving tools of satellite imagery, GPS survey, advances in exploration geophysics and geochemistry. One of the most important advances was the development of geological theories of plate tectonics, epithermal and porphyry deposition modes etc. Advances in assaying, mining and processing also contributed to the viability of some geological targets, and so stimulated further exploration. The development of the timber industry allowed for easier access to various remote parts of Indonesia, and so further encouraged greenfield exploration. The development of the exploration board on some international stock exchanges was a significant factor in raising finances, and so stimulating competition for exploration ground between the established mining companies and start-ups. The Indonesian Mines Department established the well-accepted legal environment (COW) to support exploration and mining.
The introduction of the law 4/2009 saw a change in the legal environment that was deemed by companies to be less supportive of foreign investment in exploration and mining, but stimulated the local IUP exploration industry. The downturn in the commodity market and regulation effectively banning raw mineral exports (2014) meant there was less interest in exploration. The Indonesian government has continued to reduce the exploration undertaken by its State-Owned mining Enterprises (SOE’s). The government has continued a formal moratorium on issuing new exploration areas (though some Regencies have not fully complied with this moratorium), and the central government has failed to implement the regulated bidding process for issuing new exploration tenements. Despite this industry downturn and regulatory restrictions, there are many surviving COW (minerals & coal) plus around 6,000 – 10,000 IUP that are supposed to provide quarterly and annual exploration / mining reports to the government. In 2017, such reports are to comply with KCMI reporting standards.
Libraries for Geological Reports.
One review of the National law on libraries (Ministry of law and human rights UU 43/2007) emphasizes that libraries are based on the principals of lifelong learning, democracy, fairness, professionalism, transparency, measurability, and partnerships. Typical of such laws is that libraries that do not comply with this regulation are subject to administrative sanctions, and that local governments should issue further regulations in support of this library law. Unfortunately, this law does not adequately address the digital library. The implementing regulation (24/2014) on libraries outlines the different types of libraries, and the practical steps for their management and supervision. All documents over 50 years old are considered as significant for national culture, history and science.
There are several key government department libraries, stocked mainly with very old geological reports. In particular, the Geological Survey (Perpustikan Pusat Survey Geology), Geological research and development center (Pusat Penelitian dan Pengembangan Geologi). They tend to be well managed, good storage conditions, and accessible to the public. There are a few government research agencies (LIPI) etc. that maintain good geological sections to their libraries. Some other government bodies have supportive technical libraries, including the hydrological division in Bandung (sedimentary basins and other geological related studies), the Indonesian Petroleum Association (IPA) and Elnusa oil exploration library (sedimentary basin focus). The Forestry library in Jakarta and Bandung contain technical reports with some limited geological content. There are a number of University libraries (ITB) with general reference and research papers. These research papers are supposed to be digitize and available on line, but in practice most universities are “well behind” in updating their digital libraries. The Provincial and Regencies Mines Departments have a mixed collection of geological reports. There are a number of other agencies that provide a variety of maps to support exploration in an indirect manner. These include the digital REDD maps for forestry classification, Department of public works, Spatial Planning, and Trans-migration for soil types etc.
Universities that have a research agreement with the Mines Department are to lodge a copy of their report with the Mines Department. These reports have varying confidentiality agreements concerning public access.
Some of the more focused mineral exploration libraries are found as private collections. These include companies or specialists that have been exploring Indonesia themselves, and in conjunction with other private parties. Access to these private libraries is very restricted. There is a risk that these libraries may dissipate or disappear once the company or specialist leaves Indonesia or closes down. Fortunately, the geological survey library is open to receive donations of reference geological books, but not company reports.
There are also a number of International libraries that contain exploration and geological references on Indonesia. These include open sources stock exchange reports, universities, research centers. The open sourced google search has many reports stored in the “sky” libraries that may be free or obtained with a fee.

Where are the Mines Department geological reports?
During the great gold exploration boom of the 90’s there were many mineral Contracts of Work (COW) undertaking grass roots exploration over vast areas throughout Indonesia. Multiple copies of company quarterly and annual reports plus relinquishment reports were typically submitted in great detail and on time to the Mines Department. This resulted in vast storages of reports that overflowed the Mines Departments files, filled the halls, stair cases and in between desks to the point of being a fire hazard. The arrival of regional autonomy saw responsibility for coal & mineral exploration, plus mining, move these reports to the Regencies. The most recent change in regulations would suggest these reports, and more recent geological reports, should be passed on to the Provincial Mines Departments. The copies stored at the Bandung Mineral & Coal Resource Center (Pusat sumber daya mineral dan batubara dan panas bumi) are incomplete.
The Geological Survey is undertaking a program to digitize its records. A special map scanner has been acquired. There are some 15,000 map titles for about 2 million pages to be scanned (including oil & gas) at the rate of about 300 per day. A special scanner for books (avoid binder issues) is being considered. The index for such geological library collections are well maintained, but not yet on the internet.
In reality it seems many of the company geological reports are lost. The security for such geological reports was sometimes very poor, wherein the reports could have been borrowed and not returned, stolen, or deteriorated due to poor storage control. There are some suspicions that many of the reports were stored in influential people’s homes for latter sale to interested parties, or simply sold as scrap paper for recycling.
Another side of these early 90’s gold rush era geological reports is that the companies had concerns that the Mines Department did not have adequate security over such geological reports. The fear was that other parties would get hold of the data and direct illegal miners to the choice places, or submit overlapping smaller tenement claims (KP). Some companies inserted their own forms of geological data security in one of two ways. One way was to submit a map showing stream sample sites in one report, and a latter report would provide the assay results. However, the numbering system for the sample site and assay were not easy to correlate, until the interpretative maps were produced upon relinquishment. Another way was to submit the reports on a digitally locked diskette, wherein the opening key was provided separately to the Director General. Unfortunately, such technology can degrade over time, along with software obsolesce and hardware changes, such that it is likely only a few of such reports can be read today.
Fortunately, many of the foreign companies operating in Indonesia were obliged to provide reasonably detailed reports that were published on the various stock exchanges. Even though most of these companies have since closed, it is assumed their geological reports may be archived, and thus some data from this exciting era may be recoverable. There should be sufficient surviving data on the names and areas of such historic Contract of Work and KP companies to enable an ESDM audit of surviving and lost geological reports.
Regulation on contents of Geological Reports.
The present wide variety, and often poor quality, of exploration and mining reporting has confounded the government for a long time in accessing reliable and consistent data. The government needs consistent and reliable data to develop policies and programs based on a reliable understanding of the nation’s resource potential. A draft ESDM regulation on the Technical Management of Mineral & Coal Mining 2017 [Pengelolaan Teknis Pertambangan Mineral dan Batubara] has been prepared. This 102 page draft regulation covers the work programs and reporting of exploration, feasibility studies, construction, production, processing, transport and mine closure. The first part of this regulation covers the planning, implementation and reporting on staged exploration and feasibility programs for coal, metal and non-metal minerals. The second part outlines how to undertake reports on commissioning, plus every possible mining and mineral processing system. It reads a bit like a basic school text book. The purpose of this regulation is apparently to provide a minimum standard for reporting of exploration, and mining to the government, and as a guide for the new group of Mines Inspectors. This is a technical implementation regulation that is to apply to IUP and COW tenement holders, and makes no distinction between domestic or FDI companies.
The scope of this reporting regulation is less than required by JORC or KCMI, but at times makes reference to such codes. The report mostly refers to ISO standards, including ISO for resources & reserves. The draft regulation is strongly focused on geological exploration and mining / processing, and makes little reference to other non-geological/mining issues that ultimately impact on a commercial feasibility study, such as AMDAL, Forestry, Spatial planning, permits etc. This regulation will oblige exploration & mining companies to more seriously undertake exploration and to use competent technical persons. Companies will come under greater pressure for higher exploration / mining reporting costs. The Indonesian Geological Association is lobbying for the KCMI code to be legally applicable.
At the recent February ESDM coffee morning the Director General indicated a preference for the development of a policy wherein all reports would be digital, and remove the need for paper reports.
The draft ESDM regulation does not address the issue of confidentiality between the company and the Government over the content of exploration reports. The ESDM insists on confidentiality, as per a contractor and owner relationship for IUP’s etc. However, many Indonesian companies are required by the IDX to issue monthly exploration reports to the public. In many international stock exchanges, there are strict provisions about transparency of exploration results that may not be consistent with the ESDM confidentiality requirements.
Are Geological Reports a State Asset?
State assets can have a major impact on the ability for a government to perform its function over extended periods. It would seem in principal that geological data may fit this concept, as geological reports can lead to further exploration and ultimately to the discovery of new mineral resources for the benefit of the people.
The Directorate General of State Assets was established in 2006 as the ultimate state asset manager for Indonesia. It is required to implement state asset reform and adhere to the principals of good governance. State assets and are not narrowly defined, but are often considered that such state assets are owned by the government, while their function is to allow the government to provide public services, and may be used by government institutions and or is available for public / society use. The concept of State Asset management is a comprehensive process to gain the greatest life time effectiveness, utilization and return from such assets. The introduction of Regional Autonomy (Constitution No. 8/2008) raised many further legal issues over the responsibility of management of state assets.
It is difficult to find regulatory definitions of state assets, particularly outside the simple fields of land and buildings etc. Law 1/2004 concerning the State Treasury (article 1) defines State Property as all goods purchased or procured at the expense of the State Budget (APBN) or delivered from any other legal acquisition. It would appear that geological references acquired by the state for more than Rp1 mill ($100), or where the state spent a budget to support the development of a report (such as LIPI research), and those of historical significance (Dutch era or over 50 years) may be considered as state assets. But geological reports derived from COW or IUP sources may not be state assets, as such reports were not procured at state expense.
Valuation of Geological Data.
The implementing regulation on the management of libraries (24/2014) assigns administrative sanctions to the management of libraries. Furthermore, according to Act 1/2004 concerning State Treasury explanation notes: Article 59 explanation notes – “State loss may be resulted by violation of law or default by state official or non-treasurer civil servant in the context of implementation of administrative authority or..” This implies that State officials responsible for storage of some geological reports may be liable for state losses of geological data. By comparison, the department of environment has detailed regulations on determination the value of state losses for damage to the environment. However, there are no clear rules in determining the value of geological reports.
According to one international mineral property valuation expert, there are at least two ways to determine the value of the data. The first is the difference in the value of the mineral property with the geological data versus without the geological data. The second is by determination of how much it will cost to recreate the portions of the data that would still be useful at the current time. For example, how much it might cost to resample and assay old drill core.
It appears that in Australia, geological data is an asset separate to the mineral property asset. In the USA, geological data is often linked with the ownership of the tenement. It is generally understood that in Indonesia the Government and the company each independently hold the rights to data from relinquished tenements.
The Mining law (4/2009) requires that all new issues of exploration tenements are to be undertaken through a bidding process. One key element of this bidding process is that the Government shall supply geological data on the target area. Government funds to conduct exploration in developing such data have been ruled out. Thus, the main source of such geological data is from the various libraries. There are no implementing regulations to guide in the assignment of a value to such geological data. However, if the Provincial government fails to provide some key geological reports, then the Province could be missing out on potential extra revenues, or conversely if certain exploration reports are left out then the Province could perhaps be liable for negligence.
Proposed Report Recording System.
In 2016, the advisory team to the ESDM on minerals and coal (Komite Eksplorasi Nasional KEN) received strong support by the directorate of geology mid-level government administrators to conserve the geological data record through digitization etc. A budget of $200,000 was agreed, however the proposal received less enthusiastic support at higher levels, and later the KEN was disbanded.
The draft Technical Management of Mineral & Coal Mining regulation does not adequately deal with the government’s responsibility for collecting, filing and compiling such reports. Clearly there is a need for digitization and computerization on a large scale to deal with the numerous historical reports and maps, plus the thousands of IUP’s and other COW’s exploration reports across a wide range of minerals and coal.
The Geological Survey is considering various forms of software, including IBRA, a local software in development, while a number of proven commercial software packages are readily available on the market.
Recommendation.
The Indonesian Forum for Mineral Exploration and Development (EMD), and other industry based NGO’s plus industry professional associations, have undertaken various lobby efforts to the Mines Department to improve the Indonesian exploration industry. Such lobbies should continue directly to the Minister and ESDM. The concerned groups may consider including lobbies directed to the Director General of State Assets, Ministry of law and human rights (library law) and similar bodies to strengthen the government’s commitment to secure the many forms of geological data.