Indonesia is a country that plays an important role in the global mining industry. Located in the Pacific Ring of Fire, Indonesia consists of 17,000 islands with abundant natural resources, characterized by the content and production of mining goods such as coal, oil and natural gas; nickel ore; gold and silver ore; copper ore; bauxite ore; and many more. The mining sector is one of the sectors that contributes greatly to Indonesia’s GDP, exports, government revenues, jobs and development in the many remote areas where most of the mines are located. This remains the driving force behind the very high mining activity in the country. Various types of mining products are not only used as export commodities but also for domestic use.
Mining is the extraction of desirable and commercially valuable mineral resources from the earth’s crust, either automatically or manually, at the earth’s surface, beneath its surface, and beneath the water surface. Oil and natural gas, coal, iron sands, nickel ore, bauxite ore, gold and silver ore and copper ore are all produced by this activity. Mining is a type of activity in which various minerals are collected. Minerals are chemical elements, ores, and rocks found in natural reservoirs (excluding metals, coal, petroleum, natural gas and radioactive materials). In industry and construction, these minerals are usually used as a raw material or auxiliary material.
Mining activities are divided into four phases: prospecting, exploration, exploitation, and processing or refining. Prospecting is the investigation and search for mineral deposits or valuable minerals. Exploration is a follow-up activity for prospecting that includes work to determine the size, shape, position, average rating and amount of reserves, as well as a “feasibility study” of the minerals or valuable mineral deposits that have been discovered. Then, exploitation is a mining activity that involves taking and transporting mineral deposits or valuable minerals to locations for storage, processing, washing, and sometimes marketing. Finally, processing or refining is the process of cleaning or upgrading minerals by separating valuable and worthless minerals and then removing these worthless minerals by chemical processes.
The Indonesian government also plans to develop the economy by encouraging the mining sector. The Indonesian government has taken initiatives such as banning the export of raw mining resources while promoting upstream and downstream operations that include processing raw materials into value-added goods, thereby increasing the sales value of mining products from Indonesia. At the same time, this upstream-to-downstream activity plan is projected to increase job opportunities, increase profit margins for mining commodities, and reduce carbon emissions.
Despite the modest decline in mining output from 2013 to 2017, the overall mining industry in Indonesia can be considered improving based on the large difference in production volumes from 2010 (374.27 million tons) to 2019 (679.79 million metric tons). In 2020, which coincided with the start of the global pandemic, saw a decline in output. However, the number of mining products established in 2020 remains the second-highest in the previous 10 years (679.79 million metric tons). Carbon, oil and gas, nickel ore, gold ore, copper ore, and bauxite ore are among the main mining products in Indonesia in 2020. Most of the mining commodities produced in Indonesia are nickel (35.5 million tons), followed by gold and bauxite (29.96 and 26 million metric tons, respectively).
Indonesia is one of the world’s largest coal producers and exporters. According to the BP Statistical Review of World Energy, the country ranks ninth in terms of world coal reserves, with about 2.2% of total confirmed global carbon stocks. While 80% of Indonesia’s coal production is sold internationally, the remaining 20% is used domestically, with smaller pockets of coal warehouses located on the islands of Sumatra, Java, Kalimantan, Sulawesi and Papua.
The main areas of Indonesia’s coal warehouses are in South Sumatra, South Kalimantan, and East Kalimantan. With such large reserves of coal, the country can use it as fuel, raw materials for the industrial & manufacturing sectors and to generate electricity. In addition, the coal industry in Indonesia plays an important role in the country’s economy, contributing to job creation and export earnings. In addition, the government has implemented policies to encourage the development of clean coal technologies and increase environmental sustainability in its coal mining sector.
The distribution of natural gas in Indonesia mostly covers the region of Sumatera while oil reserves are mostly found in Java, Sumatera and Kalimantan Islands. These valuable resources can be used to generate electrical energy, raw materials for the plastic industry as well as fuel for various vehicles. According to the Ministry of Energy, Arifin Tasrif, the country still possesses 68 undeveloped oil and gas basins across the Indonesian archipelago, as well as known reserves of 42.93 trillion cubic feet and 2.36 billion barrels of oil. As a result, the ministry has developed measures to encourage exploration in order to appropriately discover oil and gas basins that are not dry holes.
Gold deposits are evenly distributed in almost every region of Indonesia. Indonesia is estimated to have 2,600 tons of gold, or 5% of the world’s total gold reserves of 50,300 tons, according to data from the 2020 United States Geological Survey (USGS) assessed by the Department of Energy and Mineral Resources (ESDM). This makes Indonesia home to the fifth-largest gold reserves in the world, after Australia, Russia, the United States, and South Africa. The largest gold producer in Indonesia is located in Central Papua Province, which is home to the Grasberg gold mine (one of the largest mines in the world), East Java, North Maluku, Central Kalimantan, West Nusa Tenggara and North Sumatra.
In 2022, based on the data compiled by GlobalData, Indonesia is the sixth-largest copper producer in the world. Copper deposits can be found throughout the Indonesian archipelago. In Papua, there are underground mines known as Grasberg Block Cave Mine, Deep Mill Level Zone Mine, and Big Gossan Underground Mine, which are all owned by Mining Industry Indonesia and will produce around 395.91, 227.02, and 68.35 thousand tons of copper by 2022, respectively. These vast copper deposits can be found not only in Papua but also in West Nusa Tenggara and Maluku. According to the United Nations COMTRADE, the country accounts for 4% of world production, with copper exports reaching $3.05 billion by 2021. This precious metal is infinitely recyclable and therefore contributes to global sustainable development goals. Copper can be used for many purposes, including electrical wire, plumbing, and building components. Its superior conductivity and durability make it an important component in the manufacture of electronic and telecommunications equipment. Copper is also frequently used in renewable energy technologies such as solar panels and wind turbines, contributing to the global trend towards sustainable energy sources.
The last two important minerals mined in Indonesia are bauxite and nickel ore. Indonesia also has significant bauxite reserves, which can be found in the Kalimantan (Borneo) and Riau Archipelagos. The main bauxite mining operations are located in West Kalimantan, East Kalimantan, and the Riau Archipelago. Bauxite ore is the main mineral used in the manufacture of aluminium, a versatile metal that is widely used in sectors such as automotive, construction, packaging and aerospace. The Ministry of Energy and Mineral Resources (ESDM) of the Republic of Indonesia predicts that Indonesia has 3.2 billion metric tons of bauxite, which accounts for 4% of world reserves, and that around 90% of Indonesia’s bauxite mines are exported.
Indonesia is known as the largest producer of nickel ore and has the largest nickel reserves in the world, with most of the nickel mining activities concentrated in the regions of Sulawesi, Halmahera (North Maluku Province), and Papua. Nickel is an important raw material for stainless steel production, where the stainless steel sector consumes more than 70% of world nickel production. This mineral is also an important component in batteries for electric vehicles (EVs), which account for 5% of global reserves. Given the enormous demand for nickel, it is remarkable that Indonesia controls 20% of the world’s nickel exports.
The mining industry in Indonesia is very attractive to multinational companies because it has the capacity to meet global demand for essential minerals. Indonesia’s mining sector is vital to the country’s economy, contributing to export earnings, job creation and government revenue. Mining operations in these areas have the potential to stimulate regional growth, infrastructure investment and technological advances. However, to limit environmental impacts and benefit local populations, proper and sustainable mining procedures must be implemented.
