INDONESIA – COUNTRY SNAPSHOT  (April 2019 – not published)

Country Outline

Indonesia is a maritime country of 1.9 million sq km, wherein the sea between the 16,000 islands comes under Indonesian law. Indonesia has a GDP of 5.2 in 2018, with a population of some 264 million (2017), of which nearly half are on Java. Indonesia has a stable working democracy wherein the present political trend is towards nationalisation and support of State-Owned Enterprises, where this trend is reflected in many of the present mining laws and regulations.

A Brief History.

When the Portuguese first arrived in Indonesia in the late 1400’s, their spice trades also bought alluvial gold from Java and diamonds that came from Kalimantan. The latter Dutch colonial period saw the mechanical age mining of coal and gold that were often supported by local rail networks. Coal was important for colonial steam ships traders and men-of-war gun-ships. Oil was discovered in South Sumatra and saw the foundations to the modern-day Royal Dutch Shell. Other giant oil companies (Chevron, Exxon etc) were to operate in in North Sumatra, East Kalimantan, North Java and other places. The mechanical alluvial dredging mines off Banka and Billiton soon became a world class supplier of tin for the solder binding for tin cans (later for touch screens). The Dutch undertook significant regional geological studies, whereupon Van Bemmelen published his seminal works on the geology of Indonesia, including a section on mines and commodities. The Second World War and the Indonesian war of independence decimated the mining industry. The mining industry was restarted under President Soeharto, notably with Freeport Indonesia and with Alcoa exploring vast areas for bauxite, along with Shell Coal exploring South Sumatra for coal in the 1970’s. Several Government to Government regional exploration, geophysical & geochemical surveys were conducted in Indonesia. In the 1980’s and 90’s foreign investors were welcomed and so began the first of several rushes mainly for coal and gold. This rush was supported by the publishing of a new 1:250,000 series of Indonesian geology. Hundreds of Australian and Canadian juniors were accompanied by the major mining houses that brought in foreign geologists and miners along with their support systems in developing local survey and assay industries, along with contractors in airborne and remote sensing etc. The early mining houses bought in heavy mining equipment, and began local training programs for mechanics, drivers and operators etc. The universities followed the trend and started to expand their faculties to supply professionals to this new successful industry. The Asian Financial crisis, the BreX scam and other events saw the decline of interest by many of the juniors, and the new mining law 4/2009 saw the introduction of divestment that spelled the exit for many, but the bravest foreign companies. However, buy this stage the domestic mining industry had well and truly developed, first dominating the coal sector, but quickly spreading to the lateritic nickel and bauxite deposits, then more slowly getting involved in the gold industry. The mining sector spawned a barging and off-shore loading industry, along with cargo superintending and speculative commodity trading. Inco (now Vale) & Aneka Tambang built nickel smelters, Timah built tin smelters and Freeport built a copper smelter complex. The Kalimantan open cut coal mines flourished, and the cement industry grew to a point of over capacity for domestic and export markets. The Government introduced a restrictive raw ore export policy to support the further development of smelters, and this dramatically contracted the bauxite and nickel ore export industry. Several process plants were built, but it seems the largest and most successful is a Chinese funded nickel and pig iron plant in Sulawesi. The recent down turn in coal prices saw the mines introduce serious efficiency measures and so launched many mines into world class operation status. The Mines Department evolved along with the development of the exploration and mining industry.


Indonesia has some 37 billion ton of coal reserves and around 164 billion ton of coal resources (Oct 2018). In 2018 Indonesia produced 528 million ton of mostly thermal coal, of which some 115 million ton was consumed domestically. The main domestic consumers are the state electricity company (PLN) and the cement industry, and the main exports are to China and India.

According to the Mines Department (ESDM) web site, in 2018 Indonesia produced; – 2.5 million ton of copper concentrate (DMT), 230,923 ton of copper concentrate, 297,520 Kg of silver, 132,890 Kg of gold, 83,015 ton of tin metal, 75,708 ton of Nickel cobalt matte. In 2018, royalty earnt from mining was Rp 29.7 trillion (A$ 2.9 billion). Mining remains a significant contributor to the Indonesian economy, and in 2017 contributed about 4.7% to GDP.

Around the mining industry.

The international Extractive Industry Transparency Initiative (EITI) is operational in Indonesia, wherein the top 100 royalty payers are independently audited along with the government agencies receiving fees and taxes. There are a number of positive NGO’s, such as Publish What You Pay (PWYP) that observe and comment on the mining industry, along with the usual environmental and social focusses NGO’s.

There are about 5 major Universities producing graduates for the exploration and mining industry, but overall there about 80 tertiary universities and technical schools also feeding the oil and mining industries with more than 1,000 graduates per year. The downturn in the oil & mining industries will see far fewer job opportunities for graduates.

The AusIMM has MOU’s for mutual cooperation with several leading industry associations, the IAGI (geology) and PERHAPI & IMA (mining). The IPA (Petroleum) is well supported. There are also smaller associations for metallurgy and other fields. Indonesia is seeing the development of Geo-Parks and the rise in prominence for geoscientists in disaster mitigation (volcanology, earthquakes etc).


Indonesia has a mature mining industry. For example; – PT. Freeport Indonesia is transitioning from a 220,000 ton per day ore open pit to a 150,000 ton per day underground block caving operation. PT Adaro is regularly producing about 50 million ton of coal per year from its open cut mine, and PT. Timah is producing about half the world’s tin ingots from off shore dredging.

There are some 19 mines listed on the Jakarta Stock Exchange (IDX). Note that the IDX does not accept exploration companies. The major mines are doing well during the present commodity price improvement. Many of the big mines are conducting ongoing brownfield exploration, but greenfield exploration is virtually dead. Indonesia retains a top rating on the Frasier Index for prospectivity, but continues to need improvement on investor confidence. Very large tracts of Indonesia are covered by exploration tenements that are often languishing for lack of investment. The Mines Department is working towards lifting the moratorium on issuing new exploration areas.

The mining industry is highly competitive, and mine owners are always looking for an edge to improve and expand.