Diamonds Are Forever – the long Cempaka diamond story. Vol 122
Introduction.
Alluvial diamonds have been mined from Kalimantan as early as about 600 by the Dayaks. Mining and trading were continued by the Malays, Chinese, Portuguese, English and Dutch. In 1970, PT. Aneka Tambang started the modern era of exploration in the South Kalimantan Cempaka district. Much of the history of diamond exploration in Kalimantan can be found in “The Enigmatic Sundaland Diamonds – a Review by Theo van Leeuwen (2014), that contains an excellent summary of the numerous diamond sites around Indonesia. “The Diamond Deposits of Kalimantan, Borneo” by L.K. Spencer, S.David Dikinis, Peter C. Keller, and Robert E. Kane (1988) provides a more focused account of the start of the recent exploration programs in the Cempaka alluvial diamond field.
This article was prepared from a number of public documents, plus personal communication with Charles Watson, Lee Spencer and Pak Kuncoro Hadi.
The Mine.
In 1965 the Belgian Government formed a joint venture with Aneka Tambang, and explored fan conglomerates along the western flanks of the Meratus Mountains. A large recovery plant was built though poor records suggests 100 carats were recovered over 20 years. The decree of the Board of Directors of PT Aneka Tambang Number 54 dated March 21, 1974 Article 1, states that PT Aneka Tambang included the “diamond mining unit” in Cempaka (South Kalimantan).
In 1985, Acorn Securities Ltd [an Australian company together with Keymead P/L] formed a JV with Aneka Tambang. They undertook a banka drill program, targeting buried paleochannels in the edge of the swamps, downstream of the local workings. This was followed by a 2,000m3 bulk sample that was processed in a jig plant. Some 600 carats of gem diamonds were recovered with gold and platinum by product. In 1988 a Feasibility Study was completed by Alluvial Dredges of Scotland.
In June 1994, a Memorandum of Understanding between PT Antam, Malaysia Mining Corporation Berhad (MMC) and Ashton Mining Limited (Ashton) established an unincorporated joint venture to be known as “the Cempaka and Danau Seran Joint Venture. Further exploration and a feasibility study of the Danau Seran paleochannel deposit recommended to use a bucket ladder dredge to remove some 800,000m3 of overburden and gravels per annum for 5 years to produce approximately 100,000 carats (ct) per annum of gem quality diamonds, plus a larger dredge to mine the adjacent Cempaka paleochannel at an annual rate of 200,000 ct. On the 19th February 1998, a 7th Generation Contract of Work was issued to PT. Galuh Cempaka for alluvial diamonds owned 80% by Ashton MMC P/L and 20% PT. Aneka Tambang Tbk. The initial area was 3,920 ha. Ashton carried out an 18-month trial dredging operation at Cempaka beginning in 1999. The dredge recovered around 4,000 carats in 9 months of 2000, then stopped due to low grades. The largest diamond recovered weighed more than 20 carats, diamond grades were disappointingly low at 0.008 carat per cubic metre.
In April 2001, Rio Tinto (RTP-N) acquired Ashton in a hostile takeover. Rio ceased the operations at Cempaka, and put its interest up for sale. In September 2001, the Toronto based firm BM Diamondcorp and its subsidiary Aston-MMC P/L, under its former name Battlefield Minerals, struck a deal to acquire the 80% interest in the Cempaka project. The remaining 20% interest was retained by Aneka Tambang. As part of the deal, BM acquired the project’s bucket-line production dredge, which had a handling capacity of 2.3 million tonnes per year and included an onboard, modular, 120-tonne-per-hour, dense-media-separation (DMS) treatment plant and an X-ray recovery unit. As part of its Cempaka purchase, BM acquired an inventory of 4,460 carats. These were shipped to Antwerp, Belgium, for evaluation. From the first two tenders of these diamonds in 2002, BM received about US$193 per carat. Diamond sales for part of 2002 totalled 4,061 carats for proceeds of US$758,000. These tenders were the first-ever official sale of Indonesian diamonds on which a 5% royalty was paid to the Indonesian government. In 2002, a further banka drill program was undertaken. A prefeasibility study by BM in the first quarter concluded that the Danau Seran south channel could be dry-mined economically. It was proposed to start commercial production in the first half of 2003 at the annual rate of 35,000-45,000 carats.
It appears that in August 2004, BDI Mining Corp listed on the Toronto Stock Exchange [TSE] with Galuh Cempaka being one of its main operating subsidiaries. The history of such corporate transactions is less clear today, as such companies have since delisted from the TSE.
Earlier (1989) PT. Indo Mineratama was established to provide geological and engineering services to the alluvial mining industry, and a heavy mineral laboratory was established on Banka Island. Management was undertaken by Harry Suharsono, Lee Spencer and Charles Watson with Freddy Situmorang (finance). They undertook diamond alluvial exploration programs for PT. Matapura Intan Nusa, just south (downstream) of Galuh Cempaka, and off shore with Ocean Resources, along with other projects around Indonesia.
In 2004 PT. Indo Mineratama undertook contract exploration in Galuh Cempaka, with banka drilling in the deep swamp. At Danau Seran a test pit 40m by 8m was dug using a clamshell crane. The bottom gravels were surveyed and the excavated gravels taken to a nearby standard 10m3 hour alluvial jig process plant. A total of 5345.9m3 of gravel yielded 1050.96 carats of diamonds, 470 gm gold and 178 gm platinum. Traces of other heavy minerals included ilmenite, chromite and rutile. Detailed studies of the diamonds concluded they were of sufficient gem quality to be saleable.
Full-scale operations started in 2004, with an on-shore process plant run by diamond experts from South African. The spacing of rare large diamonds was particularly difficult to predict, though it had a significant impact on the viability of the mine. The by-products of gold and platinum maintained the operation until Indonesia joined the Kimberly process, and subsequent export of the gem diamonds.
Gem Diamonds PLC acquired PT. Galuh Cempaka in April-May 2007, with a 30-year mining license commencing September 2004. Gem diamonds was then admitted to the London stock Exchange (AIM). According to the Gem Diamonds 2007 interim report, production at Cempaka was low at 8,441 carats prior to acquisition by Gem Diamonds. The resource was expanded from 1.3 million carats to 2.6 million carats, with an improved reserve increase from 1.8% to 8.6%. Production at the Cempaka mine was briefly suspended in April 2008 after local government officials raised concerns regarding waste water discharge. As at December 2008, PT. Galuh Cempaka had 568 employees and 47 contractors.
Gem Diamonds 2008 annual report indicates “that upon acquisition, the annualized 130,000 bcm production rate was increased to 672,000 bcm annualized excavation rate, with targeting 960,000 bcm. Some 10 400 carats from Cempaka were sold during 2007 prior to Gem Diamonds’ acquisition of BDI Mining at an average price of US$218 per carat. A revision of this sales process was under taken by Gem Diamonds and in 2008 an average price of US$331 per carat has been achieved, representing a 51% increase over previous prices. At these levels, Cempaka remains a small operation for Gem Diamonds. To maximise the return on investment, production levels need to increase. Feasibility studies in this regard are ongoing and results are expected in late 2008. The Gem diamonds 2009 annual report states that the Cempaka project was placed on care and maintenance in January – February, due to lower diamond prices in late 2008”.
Some reports indicate total production from 2004 to 2008 amounted to 122,206 ct with an average recovered grade of 0.11 ct/bcm. Ongoing interpretation suggested the Cempaka paleo-alluvial channel has different characteristics to the Danau Seran high grade paleochannel that may be one of the factors for lower recovered diamond grades.
In November 2011 it was reported that Gem Diamonds sold its 80% interest in the Cempaka mine to Tan & Chong’s Gem Pte Ltd, a private company based in Singapore. After a period of temporary mine closure, the Cempaka mine was taken over by Haji Norhin, a Banjarmasin business man in March 2017. A work plan and budget were submitted to the Mines Department in 2018, though subsequent limited public news suggests the mine has not yet restarted commercial production.
Export / Import Permit.
In accordance with the Decree of Minister of Trade of Republic of Indonesia Number: 01/M-DAG/PER/1/2007 dated January 22, 2007, the registered exporters of mining products included diamonds.
Indonesia joined the Kimberly Process in 2005, wherein the Galuh Cempaka mine was the only registered formal diamond mine in Indonesia.
On 10 January 2018, the Indonesian Ministry of Trade announced regulation 11/2018 simplifying the importing procedure for diamonds. On 15 February 2018, the Indonesian Ministry of Finance issued regulation 17/2018 reducing the import duty on diamonds, software and car parts.
Diamond Production
Schubnel (1980) estimated that annual diamond production from south-eastern Kalimantan ranged between 20,000 and 30,000 ct. In 1984, however, Diamond World Review gave production estimates for Borneo of 15,000 ct per year. Other estimates were much lower. Diamonds were sold at the local Matapura market, with more valuable stones often being sold in Jakarta. Traditional diamond cutting and polishing was carried out in Matapura. These figures were low enough that the government and the international community pay little attention at that time to the native workings of south eastern Kalimantan.
Stones sold by local miners are mostly in the 0.1 to 2.0 carat range. Diamonds over 5 ct are rare, but significant stones have occasionally been discovered as evidenced by a large collection of >10 ct stones kept in the National Museum in Jakarta. A number of larger diamonds have been found in SE. Kalimantan, including a 166.85 ct stone found in 1965.
The stones are predominantly colourless (white), pale brown or pale yellow, and have predominantly shiny surfaces. Other colours include pink, blue, canary yellow, and dark yellow. The colourless and coloured stones have low and high nitrogen contents respectively indicating two distinct mantle source materials. The stones often show relatively low amounts of percussion marks, abraded edges and rhombic cracks, features that one would normally expect to see in transported crystals.
Rough diamond summary
1990 – 2004 (https://en.actualitix.com/country/idn/indonesia-diamond-export.php )
2005 – 2018 (https://www.kimberleyprocess.com/en/indonesia-0 )
| YEAR | Export / Import | Volume (cts) | Value (UDS) | USD/ct |
| 1990 | Export | 31,139 | ||
| 1991 | Export | 179,916 | ||
| 1992 | Export | 2,502,764 | ||
| 1993 | Export | 507,948 | ||
| 1994 | Export | 15,994 | ||
| 1995 | Export | 46,248 | ||
| 1996 | Export | 576,612 | ||
| 1997 | Export | 33,675 | ||
| 1998 | Export | 577,665 | ||
| 1999 | Export | 822,229 | ||
| 2000 | Export | 890,398 | ||
| 2001 | Export | 105,652 | ||
| 2002 | Export | 1,399,950 | ||
| 2003 | Export | 2,876060 | ||
| 2004 | Export | 10,786 | ||
| 2005 | Production & Export | 17,557.15 | 4,928,569.40 | 280.72 |
| 2006 | Production & Export | 51,603.06 | 10,643,234.50 | 206.25 |
| 2007 | Production & Export | 17,821.15 | 4,691,248.50 | 263.38 |
| 2008 | Production & Export | 30,529.11 | 7,899,875.78 | 258.77 |
| 2009 | Production & Export | 10,637.41 | 819,080.57 | 77.00 |
| 2010 | Production & Export | 0 | 0 | 0 |
| 2011 | Import | 4,000.00 | 36,000 | 9.00 |
| 2012 | Import | 28,800 | 252,200 | 8.76 |
| 2013 | Import | 12,000 | 87,000 | 7.25 |
| 2014 | Import | 0 | 0 | 0 |
| 2015 | Import | 7,752.54 | 41,136.43 | 5.31 |
| 2016 | Import | 7,800 | 39,350 | 5.04 |
| 2017 | Import | 12,000 | 79,132.55 | 6.59 |
| 2018 | Import | 12,467.53 | 174,343.89 | 13.98 |
Note that selling gem diamonds is a complicated business, depending principally on colour, clarity and carats (weight), but also on shape, surface texture, flaws, inclusions and more. The method of selling as individual stones, or in parcels, at auction, or direct to buyers also reflects on terms of payment etc. The Galuh Cempaka rough diamonds were mostly of mid-range gem and some semi gem quality. There is a large range of colours, wherein one buyer was keen on the rare “antique yellow” colour.
It would seem the importation of diamonds from 2011 onwards were not of gem quality, but industrial stones for making diamond tipped cutting tools etc.
Source of the diamonds.
“The provenance of Borneo’s enigmatic alluvial diamonds; A case study from Cempaka, SE Kalimantan” (2015) by L.T. White, I. Grahamb, D. Tanner, R. Hall, R.A. Armstrong, G. Yaxley c, L. Barronb, L. Spencer, T.M. van Leeuwen. The study concludes the source of the Cempaka diamonds may be from NW Australia delivered through long alluvial systems before ancient continental break up in the Late Jurassic, or local Miocene diatremes in the northern Barito basin, or ophiolitic rocks in the nearby Meratus ranges.
“Tracing the depositional history of Kalimantan diamonds by zircon provenance and diamond morphology studies” (2015) by Nico Kueter, Joko Soesilo ,Yana Fedortchouk, Fabrizio Nestola, Lorenzo Belluco, Juliana Troch, MarkusWälle, Marcel Guillong, Albrecht Von Quadt, Thomas Driesner. Almost 1400 zircons associated with alluvial diamonds from SE & W Kalimantan were tested with laser ablation ICP-MS (LA-ICP-MS) as an alternative kimberlite indicator. The data supports the proposed model of the majority of Kalimantan diamonds were emplaced within the North Australian Craton by volcanic processes that were eroded, transported and deposited in sediments that were then subject to plate tectonic continental drifting.
“The provenance of Borneo’s enigmatic alluvial diamonds: A case study from Cempaka, SE Kalimantan” (2016) by Lloyd T. White, Ian T. Graham, D Tanner, Robert Hall, Richard A. Armstrong. This paper reports on a study of the provenance of heavy minerals from Kalimantan’s Cempaka alluvial diamond deposit. This involved collecting U–Pb isotopic data, fission track and trace element geochemistry of zircon as well as major element geochemical data of spinels and morphological descriptions of zircon and diamond. The results indicate that the Cempaka alluvial diamonds were likely derived from possibly three sources, one of transported diamonds from an Australian source, second of diatremes in North Barito, or a third of ophiolites from the Meratus.
The team.
A significant chapter in the development of Indonesia’s first, and only, commercial alluvial diamond mine came with PT Indo Mineratama [PTIM]. This junior company was formed in 1989 by three principals, Harry Suharsono, Lee Spencer and Charles Watson. These three people met through working for Bill Shaw’s PT Palmabim Mining, a company that was exploring a number of alluvial gold, chromite and mineral sands deposits throughout Indonesia. Lee, Charles and Harry were three principals that got on well together, and possessed a wide range of different skills that allowed them to establish their own company with which to consult and contract to the fast-developing minerals sector in Indonesia.
Lee Spencer the Exploration Geologist, undertook essential work on the alluvial diamond deposit at Danau Seran and Cempaka in South Kalimantan. Along with other areas in SE Kalimantan. Lee was instrumental to a public listing on the Canadian stock exchange that raised the funds to explore and develop the Cempaka diamond mine. Charles Watson, Geologist with 13 years’ experience in diamond exploration with De Beers in several African countries and was instrumental in putting the technical processing team together. Harry was engaged as Mine Manager. Harry went to university with various mined department officers in the national and provincial level that enabled the Mines Department to be supportive of this, and other, new ventures into commercial diamond mining. Harry was instrumental in getting Indonesia to join the Kimberley Process in order to obtain an export licence to sell the production. Freddy Situmorang undertook the role of financial manager.
From this start, Indo Mineratama engaged a number of young geologists, including Pak Kuncorn Hadi and a team of about 6 geologists to run exploration 6 inch banka drilling between 1995-97. First pass lines were spaces at 500m, with infill at 100m X 25m, with a depth capacity of up to 20m. Typically, the top 2-10m was swamp mud. The basal gravels were panned for local indicator minerals of corundum, rutile and gold, and this was combined with gravel size, character and colour to define the various paleochannels. Drilling continued for about 4 years into production. Two main paleochannels were defined, the Danau Seran that became the first mining area, and the larger Cempaka channel. Kuncoro had graduated in geology from UPN “Veteran” in 1985 and grew to become a director of a South Kalimantan alluvial diamond company. Kuncoro continued a full career with a wide range of geological and mining roles, in many parts of Indonesia, and with several mining commodities.
Learning from the past.
The 1990’s was a time when Junior explorers could evolve out of friendship, a suitable mix of skills, and good will with the Mines Department and the community. Money could be raised from an excited and risk-on public, and tenements could be readily secured to support the national aspiration to develop the regions and enhance the national pride. International geological experts could readily apply their skills in Indonesia. There were several diamond exploration programs. The change in ownership of Galuh Cempaka allowed fresh ideas, new techniques and new money to increase the chances of success.
Science has slowly added to our basic knowledge of the South Kalimantan diamond fields. On day 2 of the 12th MGEI annual convention 2020, Hendro Susanto, from the Indonesian Gemstone association mentioned that Kalimantan diamonds are relatively young at 1.2 – 1.6 Ga, being similar to Argyle diamonds in Australia, rather than 2.9 Ga age of Kimberly diamonds or 3.5 Ga for Diavik/ Ekati diamonds. Such information may encourage a reappraisal of the diamond source. There are many new technologies to aid in the development of targets with weak outcrop signatures, or below the cover of recent volcanic /sediments or below swamps.
The human resources have changed in the last 20 years. Early exploration geologists benefitted greatly under the mentor system. Today the internet system can bring a wide array of new information into your pocket, but the vast data and personal experiences of pre-internet are often overlooked. The opportunity to draw upon the experience of people like Lee Spenser, Charles Watson, and pak Kuncoru is limited.
The Indonesian Mines Department has significantly changed the ground rules for the greenfields exploration industry. Synthetic diamonds are a relatively new marketing factor. On the positive side, the Mines Department is still issuing non-metallic tenements, and the centralization of issuing permits may be easier to take out an exploration prospect.
Harry.
Most recently Harry was an independent commissioner of PT. Bayan Resources Tbk, where we are fortunate in that Harrys extensive professional history is preserved in Bayan’s on-line records. Harry graduated with a Bachelor of Mining Engineering from the Sriwijaya University and a Master of Business of Administration from the Labora college in Jakarta. Harry started his professional career as a mining engineer at Koba Tin, before developing and operating PT. Palmabin Mining as Indonesia’s first chromite mine. Harry then was a founder of Indomin Resources, a North American public company that took out 7 contracts of work. Harry later took on the responsibility of President Director of PT. Galuh Cempaka, Indonesia’s first successful alluvial diamond mine. This was later sold to other parties wherein Harry took on presidential roles with the contract mining companies of PT. Indo Karsa Mas and PT. Indo Butirima. Later Harry was appointed as independent director of PT. Bayan Resources Tbk.
Harry was a true entrepreneur in bringing parts of the Indonesia mining industry to life. Harry was a member of several mining industry associations, including being on the PERHAPI advisory board.
I visited the traditional alluvial diamond site near Matapura, South Kalimantan several times, where I saw first-hand the dangerous local mining practices (more than 50 people had died) and the lively families doing the panning. PT. Galuh Cempaka implemented safe, and modern large-scale mining to extract the diamonds – many of which were too deep for local miners to reach. I recall visiting Harry on site and seeing a huge ancient tree trunk extracted from the open pit swamp, and guessed this contributed to the change the mining practice from floating dredge to open pit. I was fortunate to look over the modern processing plant that was run by experts from South Africa. I recall Harry describing his duties to develop certification procedures with the Mines Department that lead to the development of formal exports of diamonds from Indonesia. Over the life of this modern mine, Indonesia joined the prestigious global club of being a registered diamond exporter.
I consider myself fortunate in being able to call Harry Suharsono one of my friends. Harry passed away on the 21st November 2020, losing out to cancer.