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HIGHLIGHTS ON INDONESIA





MINING AND ENERGY

The guideline of State policy underline that the development of mining should be directed towards the optimum but thrifty use of mining deposits for national development in the interest of the people’s welfare, by continuing to maintain the conservation of environmental function, and to supply not only the basic materials for domestic industries, but also for energy and public needs. It is also designed to boost exports, augment state revenues and regional income, and to expand business and job opportunities. The development of energy should be aimed at securing the ever-increasing demand for energy in social life as well as for economic activities and development, in particular to meet the growing demand of industries and services, proportionally to the phases of development growth.

The results and the progress of the mining sector during PJP l (First 25-Year Long-Term Development Period) constitute the strong foundation to enter PJP II (Second Long-Term Development Period). The rapid development of mining can be seen in the increase in production and export of almost all kinds of minerals. A large number of these minerals are among Indonesia’s export commodities, such as copper, bauxite and liquefied natural gas.

PETROLEUM

During PJP I , PERTAMINA (State-owned Oil Company) has signed 177 contracts with private companies, both foreign and national. At the same time, 1,504 wells were discovered comprising of 1,069 oil wells and 435 gas wells. Crude petroleum production including condensated oil during the same period had increased by 2.5% per year compared to that at the beginning of PJP I namely from 219.9 million barrels (at the beginning of PJP I) to 563.1 million barrels (at the end of PJP I), and the production of the country’s oil refineries went up from 72.3 million barrels to 294.8 million barrels.

NATURAL GAS

The production and use of natural gas has risen by 23 times namely from 16 billion cubic feet (at the beginning of PJP 1) to 2,715.9 billion cubic feet (at the end of PJP I). The use of natural gas has been increasing every year, because of its being needed by fertilizer, steel and cement factories and in hotels, restaurant and household, but also for the generation of electricity, and at the end of PJP I had reached 94.0% or a rise from 59.9 billion cubic feet at the beginning of PJP I to 2,509.3 billion cubic feet.

During Repelita V (since 1968/69 until 1992/93) production of LNG (Liquefied Natural Gas) had increased by 6.2 % per year namely from 963 MMBTU to 1,301,181.4MMBTU. LNG exports in the same period had risen by 5.8% per year namely from 962,200 MMBTU to 1,276,609.2 MMBTU.

Production of LPG (Liquefied Petroleum Gas) during Repelita V had increased from 1,717.4 thousand tons to 2,805.4 thousand tons, meaning an increase of 10.3% per annum and LPG exports which primarily went to Japan, South Korea and Taiwan rose by 12.0% per year in the same period, namely from 1,431 thousand tons to 2,525 thousand tons. During Repelita V LPG marketing in the country had risen by 14.2% per year, namely from 240.5 thousand tons to 468.4 thousand tons.

GEOTHERMAL ENERGY

Pursuant to the policy of diversification of energy sources efforts have been made since 1974 to transform geothermal potential into another form of energy. In 1993/94, the drilling of one exploration well and eight development wells had been undertaken, so accumulatively the number of drilling wells became 131 all of which to be used to generate electricity. Until the end of Repelita V geothermal energy that has been utilized through the operation of Electric Power Plants, driven by Geothermal Energy (PLTP) from Kamojang (West Java), Gunung Salak, Dieng (Central Java) and Lahendong was 199.5 megawatt.

COAL

Coal is a potential substitute for oil and natural gas, and for firewood particularly in the rural areas. Therefore, high priority is given to efforts involving exploration, rehabilitation and expansion, along with affording wider opportunities to private investment, both national and foreign. Boosting production and exports of coal during Repelita V resulted in an increase of 177 times, or from 159,9 thousand tons to 28,364.7 thousand tons thus making Indonesia the third largest producer in the Asia-Pacific region, or the 19th biggest producer in the world.

TIN

Although the tin price at the world market has not yet improved because of a quite large stock of world tin, but PT. Tambang Timah (Tin Mining Company) succeeded in stepping up its export and competitiveness through increased working efficiency, additional facilities and structuring, so that Indonesia has been able to maintain its position as a foremost tin producer in the world together with Brazil, China and Malaysia.

The production of tin during Repelita V had increased from 3.9 thousand tons to 30.4 thousand tons and exports of tin in the same period had also rised namely from 16.9 thousand tons to 28.7 thousand tons.

NICKEL

Almost all of the production of nickel ore, ferronickel and nickel matte are exported. Sluggish development of downstream industries and the low demand for this mineral at home has caused the production of nickel to be very much dependent upon international prices and marketing. Nevertheless the production of nickel during Repelita V had increased from 261.9 thousand tons to 1,926.5 thousand tons, while exports of nickel in the same period had risen from 240.5 thousand tons to 1,819.7 thousand tons. Production of Ferro-nickel during Repelita V at the same time had increased from 4,883.7 tons to 5,300 tons, or an increase of 1.8% per annum due to optimum operation of a newly established factory and the expansion of the factory in Pomalaa, South Sulawesi. Meanwhile exports of Ferro-nickel during Repelita V had increased by 6.3% per year, namely from 4,258 tons to 5,800 tons. The production of nickel-matte in the same period had risen from 29,956 tons to 35,500 tons or an increase of 3.4% per annum, while exports of nickel-matte in the same period rose from 28,621 tons to 33,100 tons or an increase of 2.9% per year.

POMALAA NICKEL MINES AND FERRONICKEL SMELTING PLANT

Pomalaa is a small town situated at the Gulf of Bone, Southeast Sulawesi Province, four hours drive from Kendari, the capital of the province, or an hour flight from Ujung Pandang, the capital of South Sulawesi.

Administratively it is under the District Administration of Kolaka, some 30 kilometers away to north. Apart from nickel, it is noted for production of cashew nut and honey

BRIEF HISTORY

In 1909 a Dutch geologist named C. Abendanon discovered nickel ore deposits in Pomalaa. Based on his reports, in 1934 Oost Borneo Maatschaappij (OBM) and Bone Tolo Maatschappij started further explorations. The samples they brought proved to have an average grade to 3 to 3.50% Ni.

After estimating a mining operation would be both technological and economically feasible, the company started building infrastructure required. All facilities and infrastructure were in place, and the company began tapping the deposits. It took about three years, however, before the company could see its first shipment of 150,000 tons of nickel ore to Japan in 1938.

When the Japan occupied the country, in 1942, Sumitomo Metal Mining Company took control of the mine, and constructed a smelting plant to process nickel ore into nickel matte. However, no single shipment of nickel matte was made due to severe defeat to Allied Forces marking the end of the World War II in 1945. The plant itself was severely leveled to earth.

After the Indonesian nation declared her independence in August 17, 1945, there were some foreign companies interested in exploring such a huge reserve of nickel ore deposits in Pomalaa. These companies were among others were Freeport Sulphur CO. from the United States , Oost Borneo Maatschappij and MMC. But it was only since 1957 the mining could run again when a private company, NV Perto, shipped the ready stock nickel ore to Japan, and then in 1959 started mining nickel deposits in Maniang Island.

When the issuance of Government Regulation No.29 of 1960 and Mining Law no.37 of 1960, HV. Perto was nationalized and a company with status of Limited Company was established and managed jointly by the Central and Regional government. The company was named PT. Pertambangan Nickel Indonesia (PNI). Later on with the issuance of Government Regulation No. 22 of 1968 the Aneka Tambang State-owned Company came into being to replace the previous General Executive Board for Companies of State-General Mining. Since then Pomalaa Nickel Mining Unit (UPN) has been placed under the supervision and control of Aneka Tambang that changed its status into liability company (PT), bearing the name PT. Aneka Tambang, pursuant to Government Regulation No. 26 of 1974.

PROCESS AND PRODUCTION

Wet ore mined at its about 7,500 hectare concession area from Gebe island are blended to obtain a required composition before being dried at a Rotary Dryer. From here nickel ore is mixed with lime stone and anthracite before being delivered to rotary kiln to remove wet moisture and part of loss of ignition contained in it. Hot calcite produced in Rotary Kiln is then charged into electric furnace for being smelted. The crude metal, after being tapped in a ladle, is mixed with Ca carbide and soda ash to eliminate the sulphur contained in crude metal. After desulphurization process, the hot metal then processed at the shaking converter into which the oxygen is blown to oxidize the impurities such as Si, C and P ( desiliconization and decarbonization process). The final products is in the form of ferronickel ingot and shot.

The production of nickel ore and ferronickel during the fifth Five-Year Development period (1989/90 - 1993/94) showed an increasing tendency. So did their exports. In 1989/90 production of nickel ore totaled 429,345 tons, of which 210,792 tons were exported. At the same time production of ferronickel reached 4,963 ton, of which 4,732 tons were exported. While in 1993/94 the production of nickel ore reached 525,271 tons, of which 259,740 tons were exported, and that of ferronickel, meanwhile amounted to 5,266 tons, of which 5,431 tons were exported.

Ferronickel ingot and shot is produced by the Pomalaa Ferronickel Smelting Plant having a total capacity of 5,000 tons per annum. The plant has been in operation since 1976. PT. Aneka Tambang is now constructing another plant, the Ferronickel Smelting Plant II, which will be in operation commercially in the middle of 1995. With the operation of the new plant it is expected that the production of ferronickel ingot and shot will see significant increase to make the country world’s major ferronickels producing country.

To underpin all mining operations, production and export activities there are available a maintenance shop for heavy equipment, construction and electrical shops, shipping facilities, and shipdocking facilities.

The Pomalaa Nickel Mine and Ferronickel Smelting Plant employs 1,917 workers of miners, operators, and administrative personnel. Many of them live in a housing complex equipped with public facilities such as schools, a sport hall, golf court, houses of worships etc.

PT. Aneka Tambang is also very concerned with the preservation of environment. Therefore, it has been very active in reclamation program by revegetating and replanting the previous mined areas and unproductive soil with suitable plants like cashew fruit, akasia and other local trees.

The program in fact, proved beneficial not only for the interest of environment but also for the local people’s well being.

COPPER

During RepelitaV, the production of copper concentrate showed an annual increase of 26% namely from 302.7 thousand tons to 959.3 thousand tons, and exports in the same period rose from 290.5 thousand tons to 944.3 thousand tons. Copper from the Gunung Bijih in Irian Jaya has been processed into concentrate since 1922 by PT. Freeport Indonesia Company. Production of copper concentrate has made headway after Freeport Indonesia started getting copper through open-cast mining which is easier to handle and reducing production costs.

GOLD AND SILVER

Production of gold, including that contained in copper concentrate produced by PT. Freeport Indonesia Company during PJP I had increased namely from 129.6 kg to 43,908.8 kg. At the end of Repelita V, exports of gold had reached 41,224.4 kg, or an increase of 13.1% per year. Said increase in exports which made Indonesia to become the 7th largest exporter of gold in the world, was in consequence of the high price of gold at the world market and the growing gold content in copper concentrate but also because of Government’s policy that gold may be freely exported. Development of gold reached 466.4 kg at the end of Repelita V, or an increase of 8.2 per annum. Meanwhile the production of silver obtained through the silver content in copper concentrate and several work Contracts during PJP I showed an increased, namely from 9,855 kg to 88,902.6 kg.

BAUXITE

All of the bauxite in Indonesia produced by PT. Aneka Tambang at Bintan Island is designed to be exported. During PJP I the production and export of bauxite showed an annual increase of 54.2% and 78.2% respectively, namely from 879.3 tons to 1,338 tons and 847.7 tons to 1.371 tons respectively, all of which to be attributed to re-exports to the USA apart from to those traditional countries as Japan and several European countries.

IRON SAND

Iron sand produced by PT. Aneka Tambang is designed to meet the need of domestic cement factories. During Repelita V, production of iron sand had increased from 164.9 thousand tons to 356.4 thousand tons or an increase from 16.6% per year. Exports of iron sand to Japan has been discontinued since 1979/80 because of reducing considerably its export from Indonesia.

GRANITE STONE

The greater part of the granite stone produced from Karimun island, Bangka Island, Belitung Island, and West Kalimantan are exported. The production of granite stone during Repelita V rose by 41.9% per annum, namely from 1,259.3 thousand tons at the beginning of Repelita V (1968) to 7,265.2 thousand tons at the end of Repelita V. Meanwhile the export of granite stone in the same period went up from 776 thousand ton to 2,621.2 thousand tons, or an annual increase of 27.5%.

OTHER MINING PRODUCTS

Other mining products include manganese, yodium, sulphur, phosphate, asbestos, kaolin, quartz sand, marble, felspart , calcite, yorosite, bentonite, and gypsum which are and spread in various regions, thus contributing to creating employment opportunities, expansion of enterprise opportunities and development of regional mining potential generally carried out by national private enterprises on a small-scale by cooperatives and small- holders.

ENERGY

In keeping with development progress and economic growth utilization of primary energy during PJPI had increased namely from 40.72 million SBM (Oil Barrel Equivalent) at the beginning of PJP I to 449.10 million SMB at the end of PJP I or an average increase of 10.1% per year

In the first PJP I the role of petroleum in development was very conspicuous both as a source of energy and basic material for industry as well as a most important source of foreign exchange receipts.

During PJP I in keeping with increased enterprising activities, the production of petroleum went up though still being influenced by world marketing and the quota imposed upon Indonesia by OPEC. Until the end of PJP I the potential of oil resources was about 48.40 billion barrels and potential reserves of 4.96 billion barrels.

During Repelita V, the use of petroleum went up from 179.05 million barrels at the beginning of Repelita V (1968) to 262.25 million barrels at the end of Repelita V (1993/94) or an annual increase of 8%.

The consumption of natural gas during PJP I rose from 4.74 million SBM to 94.84 million SBM, or an average increase of 20 times per annum. Greater availability of natural gas has resulted in a greater use of this source of energy such as for newly built gas-driver power plants, the generation of electric power and in transportation, while previous by it was used to meet the need of forewood in industry and household. The greater use of natural gas made the gas transmission network be also increasing namely from 330.5 km at the beginning of Repelita V to 652.5 km at the end of Repelita V while marketing and distribution of gas rose by an average of 13.9% and 19.1% respectively.

The use of geothermal energy during Repelita V went up from 2.07 million SBM to 3.61 million SBM; its highest increase was in the last year of Repelita V (1993/94) namely by about 80%.

MINING PRODUCTION

No.ProductsUnit1968End of Repelita IV (1988/89)End of Repelita V (1993/94)
1.Petroleum (Crude)2million barrel219.9496.9 -
2.Natural Gasbillion cubic feet116.01,887.02,715.9
3.Coalthousand tons159.95,175.728,364.7
4.Tinthousand tons39.929.030.4
5.Nickel Orethousand tons261.91,830.31,962.5
6.Bauxitethousand tons879.3514.11,338.7
7.Iron Sandthousand tons - 164.9356.4
8.Goldkilograms129.65,069.343,908.8
9.Silverkilograms9,885.064,562.488,905.6
10.Concentrated Copperthousand tons - 302.7959,3

ELECTRIC POWER

Development of electric power is meant to support the development of other sectors in an integrated and cooperative way.

During PJP I the supply of electric power showed an average increase of 12.4% per year, namely from 616.6 MW at the end of PJP I. During Repelita V, the construction of a number of electric power plants had been completed with a total capacity of 4,603 MV.

Pursuant to the program of having electricity enter the villages, at the end of Repelita V, 30,394 villages or 49% of the total number of villages in Indonesia with a total of 9,071,679 consumers have been receiving electricity.

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Last Update on 19.05.2002