Let’s develop an Indonesian “agro-mineral” phosphate mining industry. Vol 123
Introduction.
The Government has announced various initiatives to achieve food security and promote downstream agribusiness opportunities. This policy was earlier implemented through growth in plantation areas, and now is largely implemented through the desire to boost agriculture yields. The supply of fertilizer is a key ingredient in boosting crop yields for both private and state-owned enterprises. This article looks at the phosphate group of fertilizers, and the business drivers to stimulate large scale exploration and mining of sedimentary rock phosphate.
The author is not an expert in the phosphate industry. Data for this article was sourced from numerous public documents, and there has been limited opportunity to cross check on the wide-ranging nature of this article.
Business Opportunity & Risk.
Given Indonesia’s national trend to become self-sufficient, there is a considerable market opportunity to replace imports through developing a domestic phosphate mining industry.
There has been a prolonged growth in importation and use of phosphate fertilizers. The most recent 2019 statistics show nearly 4 million ton of phosphate fertilizers were imported at a value of more than US$ 600 million, along with some half a million ton of phosphate chemicals for a value of US$ 140 million.
Table 1. Importation of Phosphates.
Ref; Badan Pusat Statistik Indonesia; Foreign Trade Statistics Imports 2019 vol 1,
Indonesia imports the various phosphate products from several different countries to reduce risk to supply, and to seek competitive international prices. Phosphates are mostly consumed within the producing country, with about 15% of global supply being exported [30 million ton in 2015]. Much of the world’s phosphate exports come from a few Middle Eastern and North Africa countries, wherein risk to supply may come through local regional tensions. Fortunately, Indonesia has a long history of close ties with Morocco, one of the world’s largest phosphate exporting countries, and imports from several diverse countries. The global trend is towards vertical integration, with added value processing, potentially making Indonesian imports more expensive. Another global trend is to become more concerned about trace elements, wherein some NGO’s have begun to raise issues on cadmium trace element.
Phosphate Deposit Styles.
Phosphate deposits are typically produced from three main sources;
a) Guano bat droppings are typically found in small quantities in scattered remote limestone caves. Other sea bird guano deposits were successfully mined on a commercial scale, in the island countries of Naru and Christmas Island.
b) Apatite phosphate minerals (fluorapatite and others) are found in the formation of alkaline magma composed of nepheline, syenite and trachyte. These deposits are typically less attractive as they are often low grade and require considerable effort for mining and processing.
c) Sedimentary (marine) phosphate is formed in a variety of marine settings, typically on continental shelves where there is a mixing of seawaters. Cold water can dissolve more CO2 and apatite [Ca5(PO4,CO3)3F, Cl, OH] than can warm water. Therefore, PO4 averages 0.3 ppm in cold water but only 0.003 to 0.01 ppm in warm shallow water. As deep, apatite-saturated water is warmed CO2 is degassed and pH rises. Apatite is less soluble in alkaline water, so calcium phosphate precipitates from the supersaturated waters. If coal sea water upwelling is sustained and mixed with warm shelf water, the deposits may become very thick (several meters). Phosphorite deposits range from Precambrian to recent in age. The geological setting of shallow shelf warm waters mixing with cool upwelling deep waters would seem to be very prospective throughout much of Indonesia. This style of deposit tends to be laterally extensive and forms economic deposits of up to billions of tons in Morocco, Jorden etc.
Phosphate Deposits in Indonesia.
a) Cave Guano; – RW Van Bemmelen is the classical starting point for many economic geology reviews in Indonesia. His chapter on Phosphate in “The Geology of Indonesia, Vol II Economic Geology 1949” reflects that the Dutch era of exploration and production was focussed largely on 53 cave guano deposits in Java, with P2O5 grades of 18-28%. Manual mining in mountainous areas from 10 mines produced 485 ton (1927) – 34,085 ton (1940). There are scattered ESDM historical references to various small phosphate miners, though most seem to be mining guano. The ESDM Centre for Mineral Coal and Geothermal Resources – Geological Agencies “Indonesia Minerals Yearbook 2018” provides a table of guano phosphate deposits [Hypothetic, Inferred, Indicated, Measured] for several provinces. Only East Java has measured resources, at 31,970 ton.
b) Strata Guano; One good reference to Naru / Christmas Island style phosphate exploration is found in “ENDAPAN FOSFAT DI DAERAH MADURA & PHOSPHATE SILL IN THE MADURA AREA”, each by: A. Fatah YusufSub Dit. Eksplorasi Mineral Industri dan Batuan”.
It was assumed that the Rembang – Madura area is a hinge / shelf basin that may host marine phosphate deposits. Therefore, in 1998/1999 the SDEMIB carried out phosphate exploration accompanied by core drilling in the Pamekasan, Sampang and Sumenep Regency areas.
The total distribution area of phosphate is around 31 Ha with total resources of around 827,500 m3. Phosphate deposits in the Sampang, Pamekasan and Sumenep regencies are scattered and of variable grade, making them unlikely to be mined on a large scale. In some samples, chemical, petrographic, XRD and SEM analysis shows that the precipitate is guano phosphate. The phosphorus element contained in bird droppings is around 2 – 4%, then reacts with carbonate rocks to form calcium phosphate minerals. Rainwater or surface water containing CO2 from air or organic decomposition reacts with calcium phosphate to form hydroxy apatite carbonate minerals.
c) Marine sedimentary phosphate; Public data on phosphate rock deposits in Indonesia is rather scattered and limited. There is little recent exploration or development activity. A 1986 ESDM report mentions of minor thin marine deposits in Pre-Tertiary rocks of Central Java and on Timor Island.
The ESDM “One Map” website shows the location of known phosphate deposits in Indonesia, including; Aceh 5 locations, Sulawesi Selatan 1, Nusa Tenggara Timur 6, Papua Barat 2, Kalimantan Selatan 4, Kalimantan Timur 2, Jawa Timur 12, Jawa Tengah 13, Jawa Barat 8. Short notes accompany many sites, wherein it is stated, or apparent that many of these sites are cave guano deposits. Sites located far inland are likely to be cave guano, though several coastal sites may be more prospective for marine rock phosphates.
Indonesian Phosphate Miners.
A 1998 report mentions; “Indonesia has considerable reserves of phosphate rock. P.T.Istana Kanematsu Indonesia started a phosphate mining and processing plant at Ciamis in 1997. The company is a joint venture between Kanematsu Corp. of Japan and P.T. Elang Istanamas. The project was completed at a cost of $60 million in the fourth quarter of 1996, with a capacity of 500,000 t/yr of phosphate products for the domestic market. It would appear IKI no longer holds a mining tenement, though undertakes trading in phosphates along with offering chemical treatment services. A second company, P.T. Kresna Duta Satria, was exploring a deposit of phosphate rock at Tuban in East Java. It would appear they also no longer hold a mining tenement.
The Petromindo.com Indonesian minerals year book 2019/2020 refers to the Geological Agency as Indonesia having a phosphate resources of 4.15 million ton (possibly including hypothetical and other classes of resource), with no reserves. The Mines Department’s web site, and recent year books, do not mention phosphate resources, exploration or mining.
It would seem that in 2020, only 2 IUP companies are currently licensed for the production stage of phosphate mining. PT. Karsa Sumber Rahaja (3 ha) and Koperasi Karya Mandiri Nunggal Sejahtera (5ha), with both companies located in the Bogor area. Limited news reports suggest Koperasi KMNS is actually mining limestone on a small scale. A third company, PT. Batin Indah Tulang Bawang in Lampung would appear to be no longer registered.
One smaller KUD, PT Bina Anugerah Inti Kimia (BAIK) in collaboration with Perum Perhutani, is located near Surabaya. The manual phosphate mining process workers use crowbars and hoes to dig the phosphate. The location of the mine which is in the forest and far from residential areas, that suggests it may be a cave guano deposit.
There is presently no significant exploration, or mining, for commercial quantities of phosphates in Indonesia.
Small Scale Mining & Beneficiation.
A 1993 report mentions that domestic phosphate deposits tend to be scattered small reserves, in difficult locations, and subject to incomplete exploration due to limited funds. It is difficult to compete with the imported phosphate both in quality and continuity of delivery. Some upgrading research of Indonesian phosphates has been undertaken, wherein the fine interlocking of iron and aluminium impurities is of concern. Most Indonesian phosphate mines are small scale mines, with simple open pit mining. Mined phosphate rock is manually sorted to separate its impurities, crushed by a hammer to less than 5 cm, and then is dried and ground to 80 – 100 mesh. Some studies have been conducted to improve the phosphate quality by washing, classification, calcination, magnetic separation and scrubbing. Results are not encouraging though the phosphate content canbe increased.
Problems of marketing for small local miners is a) the transportation of unprocessed product, b) knowledge of the phosphate product, c) maintaining quality and deliveries, d) competition with imported product, e) market knowledge.
Indonesian Fertilizer Producer Association [APPI]
From the beginning of the Indonesian National Development Program the government has placed great emphasis on the development of the agricultural sector. In 1959 it set up PT Pupuk Sriwidjaja (PUSRI) in Palembang, South Sumatra, marking the start of the Indonesian fertilizer industry. PUSRI was one of three special projects launched by the government at that time, the other two being a steel iron project and a rayon project. To meet growing requirements, more fertilizer plants were built in the 1970’s.
The APPI (Indonesian Fertilizer Producers Association) was established on May 26th, 1970. The association is mostly focussed on Urea (nitrate), some Ammonia Sulphate (AS) plants, plus a Phosphate plant.
Indonesia Phosphate Plants.
The phosphate fertilizer products include; Mono-ammonium Phosphate (MAP), Di-Ammonium Phosphate (DAP), Triple Superphosphate TSP) and other Phosphatic Fertilizers, including TSP (Triple superphosphate, 46% P2O5). More recently Indonesia replaced TSP with SP-36 (superphosphate, 36 percent P2O5) and produced the compound fertilizer “Ponska” (15 percent N, 15 percent P2O5 and 15 percent K2O – NPK). Of Indonesia’s 6 major fertilizer plants, only one plant produces AS (Ammonium Sulphate), TSP, SP-36, and Ponska.
A 2010 report indicates Indonesian ventures also processed phosphate into raw materials for the chemical industry (e.g. sulphur, copper-iodine and other salts), and raw materials for the ceramic and construction industries (such as clays, kaolin, quartz sand, marble, feldspar, sandstone, trass). Most of this produce was destined for domestic markets. However, their contribution to mining-related value adding remains relatively small.
Indonesian investment abroad – Algeria.
In 2016, Indorama Corporation signed deals with Algeria state-owned phosphate companies Asmidal and Manal to develop a new phosphate mine in the eastern Algerian province of Tebessa. Indorama, Asmidal and Manal will build a $4.5 billion phosphate processing plant in Algeria, to produce phosphoric acid and di-ammonium phosphate (DAP), plus another plant to process natural gas into various ammonia-based products. Projects were to be completed in 2019. Algeria is thought to have deposits of around 2bn tonnes of phosphates. In 2017 various news reports suggested this, and other Algerian phosphate development programs, were not likely to go ahead due to bureaucratic delays and financing constraints.
Application of Rock Phosphate
Most Google references on phosphates in Indonesia will lead to various agriculture research papers that examine the phosphate take up of various crops on different soils. These studies use phosphate from selected Indonesian sites, but also from the major international supplier countries (Morocco, Algeria etc). Plants need nitrogen-based fertilizers for plant growth, and phosphate-based fertilizers for seed production & root growth, along with potassium and other various elements. The term “agro-mineral” is often used to refer to rocks and minerals which naturally contain elements for the promotion of plant growth.
- Fertilizer Industry: Phosphate fertilizers typically come as slow release (rock phosphate) for crops such as palm oil with fertilizer take up over several growing seasons, and fast release (super phosphate) for quick soluble release for crops such as rice or corn. The use of rock phosphate is very effective for acid soils compared to non-acid soils
- Animal Feed Supplement: to ensure optimal growth, fertility and bone development. Industrial feed phosphate production is technically pure (ortho) phosphoric acid (H3PO4) which is obtained from the apatite in a wet chemical process. Wet process phosphoric acid is prepared by adding sulfuric acid (H2SO4) to apatite or tricalcium phosphate rock.
- Industrial Chemical: Phosphorus from rock phosphate is also used in food preservatives, anti-corrosion agents, cosmetics, fungicides, ceramics, water treatment and metallurgy.
The Ministry of Agriculture of Indonesia (MOA) regulates and monitors standards that affect farmer productivity. Phosphate as natural fertilizer must meet the requirements of SNI No. 02 – 3776, 1995 as raw material. Phosphoric acid also has government set requirements.
Phosphate Fertilizer Supply and Demand.
There are a number of decrees regulating fertilizer distribution and prices. The distribution of fertilizers (AS, SP-36 and Ponska) throughout the country is the sole responsibility of PT Petrokimia Gresik. Most of the urea, SP-36 and AS is used on food crops. In 2013, the Ministry of Trade laid out a subsidy scheme that caps some fertilizer sales prices to small scale farmers (under 2 ha), and in return the producers receive input subsidies. The management of the distribution for this subsidized industry can be difficult. The government limits the quantities of fertilizer that may be exported by the producers in order to safeguard domestic supply. Farmers can buy fertilizer from the KUD in cash or credit, or can buy fertilizer directly in cash from private fertilizer dealers or depots.
The supply of appropriate types and amounts of fertilizers at the right times, right places, and at affordable prices are very important for the success of agricultural development.
Table 2. NPK fertilizer demand and supply.
| Indonesia NPK demand (million tone) | ||||||||
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 |
| 3.9 | 4.2 | 4.4 | 4.7 | 5.0 | 5.4 | 5.7 | 6.1* | 6.5* |
| Indonesia NPK production (million tonnes) | ||||||||
| 0.7 | 1.2 | 1.8 | 1.8 | 2.1 | 2.8 | 2.5 | 1.9** | n/a |
Source: Indonesia Fertilizer Producers Association (APPI) *Forecast. **Jan-Sept figure.
Rock Phosphate fertilizer is largely for the palm oil plantations, rubber plantations and vegetable plantations. Main supplyers of Rock Phosphate in Sumatera are; PT Multi Mas Chemindo, PT Sentana Adidaya Pratama (WILMAR Group), PT Bumi Tani Subur (Tani Jaya) and PT Rolimex Kimia Nusamas (Sinar Mas Group). They buy raw material from Egypt, Christmas Island and China and process it in their plants, packing in 50 kg pp bag for sale to plantations and local markets.
Pupuk Sriwidjaja Palembang planned to begin construction on a new NPK plant in 2014. The company web site gives 2020 production data for Urea at 2 million ton, and ammonia at 1.28 million ton, but only mentions distribution of NKP Pusri, that follows the Standard: SNI No. 2803: 2012.
Phosphoric Acid
In 2013 a study was based on the Nissan Process, where phosphoric acid is made from sulfuric acid and phosphoric rock. It is proposed to import the phosphate rock from China.
A 2018 study by the Widya Mandala Catholic University looked at planning a 120,000 ton/year factory to produce phosphoric acid from rock phosphate. The wet reaction option was preferred because it produces a large conversion reaction, low price, and low electricity requirements when compared to thermal and dry processes. The study proposed to source phosphate rock from Sampang, Madura and sulfuric acid from PT. Petrokimia Gresik.
A 2020 report indicates the domestic consumption of phosphoric acid in Indonesia is 862,272 tons / year that is met by domestic production of 800,000 tons / year. Phosphoric producers are; PT. Petrokimia Gresik with a capacity of 400,000 tons / year (JV with Jordan Phosphate Mines), PT. Pupuk Kaltim amounting to 200,000 tons / year (JV with Jordan Phosphate Mines), PT. Sriwijaya fertilizer in the amount of 200,000 tons / year, wherein all rely upon imported phosphate rock. Note that historical records indicate factories generally produce about 70% of capacity. All rely upon imported rock phosphate.
The Beuro of Statistics records 7 types of phosphoric acid imports for 2018 as 62,545 ton for US$ 54.1 million, and imports for 2019 as 64,750 ton for US$ 53.6 million. See Table 1.
Law 3/2020
The new mining law 3 of 2020 asserts in Article 5 that the Central Government, in consultation with the House of Representatives, shall enact a national policy for prioritizing Minerals and Coal for domestic interests. The ESDM (Mines Department) considers Phosphate (Fosfat) as a non-metal mineral. Article 54 states that “WIUP Non-metal minerals are given to business entities, cooperatives, or individual companies by way of application to the Minister”. This implies no bidding process may be required, as per the metal mining tenements. “Mineral Exploration are given the most extensive WIUP of 25,000 (twenty-five thousand) hectares”, with subsequent mining area of 5,000 Ha.
It may be further noted that the 6-month moratorium for issuing new tenements, as indicated by Law 3/2020- Article 173C, has passed, wherein the Mines Department may have less impediments to issue new exploration tenements for the exploration of phosphate. Tenements may be issued by the Central or Provincial governments.
Conclusion.
There is no commercial production of phosphate rock in Indonesia, and imports of phosphate products are approaching $1 billion/year. The potential for geological targets based on mixing sea waters to form large deposits of rock phosphate is complimented with a number of historic “showings” of sedimentary rock phosphates. There have been no modern exploration programs directed at discovering large sedimentary rock phosphate deposits in Indonesia. There are ample in-country capabilities to undertake open cut mining and processing of rock phosphates. It would appear there could be strong political justification to develop such an industry, to off-set imports, to promote new fields of mining, and further develop the downstream phosphate industry. It would seem the Mines Department door may open to apply for phosphate exploration areas throughout Indonesia.