The Aus tralian Coal Re vie w April 2000 9

International
The Indonesian Coal Industry
Fi gure 1 . Locati on map of I ndone s i an coal fi e l ds and s ome of the coal mi ne s .
I
n the 80s, the Indonesian coal industry
laid the basis for major expansion such
that coal production rose from under a
million tonnes in 1983 to 10.6 million
tonnes in 1990, 50.9 million tonnes by
1996 and 61.2 million tonnes in 1992. At
the same time, exports have increased
from 0.4 million tonnes to 44.8 million
tonnes. Expansion of coal production was
planned to permit greater exports of oil by
substituting coal in domestic power gener-
ation. Current export levels are higher
than originally expected, due in part to a
slow down in the construction of electric
power stations and a partial switch to nat-
ural gas. This has slowed the rate at which
domestic coal demand has built up.
The majority of coals currently export-
ed are low rank steam coals, but some of
the higher rank and very low ash coals
are used for blast furnace injection, and a
very small proportion may even be used
within coking blends, even though they
have poor coking properties. Some of
the coals have special competitive advan-
tages in terms of very low or extremely
low ash yields and some of the low ash
coals also have extremely low sulphur
contents. Some higher rank coking coals
have recently been discovered and these
may represent small future specialist pro-
ducers for the metallurgical industry.
Small amounts of semi-anthracite have
been mined at a number of locations, but
production is small and falling.
The reserves of coals are strongly biased
towards low rank coals (Low Rank A and
B See Table 3) but current production
is biased towards the low rank end of the
medium rank range (Medium Rank C and
D). Future production will inevitably
move towards lower rank coals. Although
some methods exist to upgrade low rank
coals, it seems inevitable that future pro-
duction will, on average, be lower in rank
compared with the present average.
Ge ne ral As pe cts of
Coal Production
The first commercial coal production in
Indonesia, according to Soehandojo
[1989], was in 1849 when production
commenced near Pengaron in south east
Kalimantan, with about 300,000 tonnes
being produced over a period of 36 years.
A series of small mines involved private
companies in the Tenggarong district
along the Mahakam River, the Kelai River
and Berau regions of north eastern
Kalimantan, and the northern part of
Pulau Laut in south eastern Kalimantan
[Sigit, 1963 and 1981; Johannas, 1983].
Miocene coals were mined from both
eastern and north eastern Kalimantan,
whereas Eocene coals were produced
from south east Kalimantan.
The main centres developed after that
were at Ombilin in west Sumatra (1892)
and at Bukit Asam in south Sumatra
(1919). Production reached over a million
tonnes per year (Mt/a) before decreasing
during and after the Second World War.
After the major rise in oil prices in 1973,
exploration commenced first in South
Sumatra and then in other areas, includ-
ing Kalimantan, and the development of
the coal industry was designated a high
priority aim in government planning.
Development of coal in the last two
decades has been under a series of state
plans (repelitas). It has taken place pre-
dominantly in the form of some large
mines operated by foreign contractors in
east and southern Kalimantan and the
expansion of some state-owned mines in
Sumatra. Smaller national companies have
also played a role in expansion of produc-
tion, especially for a diverse group of
export markets.
After the first oil crisis in 1973, inten-
sive coal exploration was carried out in
Sumatra and Kalimantan. By 1975, coal
had become an important component of
the Indonesian governments long term
energy strategy and policy. Main priorities
were defined as:
the need to compile an inventory of
resources after evaluation of currently
The Aus tralian Coal Re vie w April 2000 9
In this comprehensive article
the authors describe the
origins and progress of the
Indonesian coal industry and
the role it plays, and will play,
in the domestic energy scene
and world coal trade.
Alan Cook and Bukin Daulay
International
The Aus tralian Coal Re vie w April 2000 1 0
exploited resources and extensive
exploration of unexploited areas,
diversification of energy types, and
conservation of energy sources.
The cornerstone of these policy chan-
ges was an emphasis on diversification
for maximum coal utilisation in thermal
electricity plants and kiln firing in the
cement industry.
Development of the coal industry was
to permit diversification away from oil
and at the same time increase domestic
electric power generation. Greater use of
coal in the generation of electricity has
permitted the export of additional quan-
tities of oil and will delay the time when
domestic oil consumption exceeds pro-
duction (probably in the first decade of
the new century).
Modernisation and new mines allowed
increased production from the state
mines at Ombilin and then Bukit Asam.
Development of the Contract of Work
(CoW) mines in Kalimantan was largely
responsible for the major increases in
coal production over the period from
1990 to 1994, with increases in the pro-
duction from Bukit Asam being a sec-
ondary factor.
Current production (61.16 million
tonnes in 1998) supplies domestic power
generation systems and a number of
domestic industries, but 73.2%of the
coal produced in 1998 was exported.
This is higher than the proportion origi-
nally planned, but it is expected that the
percentage exported will fall in the com-
ing decade, even though the total ton-
nage produced will continue to increase.
The monetary crisis and subsequent
recession in late 1997 mean that the
extent of increases in domestic consump-
tion for power generation remain uncer-
tain. At the same time, natural gas has
become more attractive and available.
Price structures within Indonesia have
not yet become stable after the high rate
of devaluation of the currency in 1997.
Organis ation of the
I ndones ian Coal I ndus try
The Indonesian coal industry is organ-
ised through the Department of Mines
and consists of a set of elements. These
are outlined in Table 1 below.
As can be seen in this table, the parts
are not equal in terms of their contribu-
tion to production. Fuller details of the
organisation are given in IMA [1997].
The state coal mines operate at
Ombilin (central Sumatra) and Bukit
Asam (south Sumatra) and produced
9.635 million tonnes in 1998. Under-
ground and open pit mines operate at
Ombilin, and the Bukit Asam (also
termed Tanjung Enim) mines are open
pit. Expansion at Bukit Asam is planned
to take production there to 15 Mt/a.
Contractors operating under a series
of Contracts of Work (CoW) are by far
the largest producers, with 46.492 mil-
lion tonnes in 1998 from a total of 11
contractors. The three largest contrac-
tors are PT Kaltim Prima (over 14.5
Mt/a), PT Adaro (10.9 Mt/a) and PT
Arutmin (6.3 Mt/a). Under the First
Generation contracts, nine companies
are foreign and two are domestic. The
Second Generation contracts include 18
companies, all domestic, but none is cur-
rently in production. There are 103
applications under the Third Generation
contracts but work under these is at an
early stage. Details of contract condi-
tions are given in IMA [1997].
Nine mines were producing in 1997
from the 105 companies holding mining
authorisation permits (KP holders). Total
1998 production from the KP part of the
industry was 4.564 million tonnes.
In 1997 there were seven Cooperative
units. Production from this sector has sig-
nificance largely at a local level.
Production Proj e ctions
Projections have been made, and some
of these are given in IMA [1997].
However, it is proving very difficult to
project the trends established in the early
to mid 90s beyond the hiatus associated
with the monetary crisis of 1997. The
Directorate of Coal had forecast produc-
tion of 50 Mt/a by the year 2000 but this
had been exceeded by over 20%by 1998.
However, the 1998 total domestic con-
sumption (16 Mt/a) was only 80%of the
consumption predicted by Robertson in
1997 for domestic power generation. In
addition to cut backs in the construction
of facilities within Indonesia, natural gas
is becoming increasingly competitive in
terms of availability and price within
Indonesia.
I ndone s ian Coalfie lds
In relation to coal deposition, the most
important sedimentary basins in Ind-
onesia are Paleogene intramontane and
continental margin (or possibly retro-arc)
basins, Neogene back-deep (retro-arc)
basins and Neogene deltaic and continen-
tal margin basins. The coal measures
sequences were deposited in environ-
ments ranging from fluvial to deltaic.
Marine influence within the coal mea-
sures is generally restricted.
Most of the reserves are concentrated
within Sumatra and Kalimantan. A sum-
mary of reserves is given in Table 2. The
rank distribution given by Directorate of
Coal 1995 is given as a footnote to this
table. It should, however, be noted that
many assessments of rank are made on
the basis of Specific Energy (SE) and
these estimates tend to err on the high
side for many Indonesian coals due to
their unusual maceral composition.
Many of the coal measures sequences
in Indonesia are very thick, and a high
proportion of the seams being mined at
present are also relatively thick. How-
ever, data from sections such as those in
Kalimantan show that thick seams form a
small proportion of the total, and current
mined thicknesses are not likely to be
representative of the overall resource
base. Most of the coals are autochtho-
nous in origin, as indicated by the occur-
rence of seat earths, plant root traces and
low ash yields. The floors of the seams
are mostly shale and mudstone with gra-
dational contacts into the coal.
The coals that are presently being
mined were probably formed from
ombrogenous peat mires that were raised
above the nearby river channels. Water
ingress to such peat mires is from rainfall.
It is probable that some coals were
formed from topogenous mires, similar
to the mangrove and Nypa swamps cur-
rently seen around the coasts of Sumatra
and Kalimantan, but these tend to be
high in pyrite and organic sulphur and
have a high mineral content.
The Eocene coals from Kalimantan
tend to have a much higher content of
minerals compared with the younger
coals. This seems to be a result of
deposition under fluvial conditions dif-
ferent from those that operated for
later deposits.
The Oligocene coals, such as those
found at Ombilin, contain some dirt bands
but the coal between the dirt bands shows
relatively low ash yields. Coals of this age
Tabl e 1 . Str ucture of the I ndone s i an coal i ndus try.
Organisation Type 1998 Production %(Rounded)
State coal mines 15.8
Mines operated under Contracts of Work 76.0
Mining authorisation operations (KP) 7.5
Cooperative units (KUD) 0.44
International
The Aus tralian Coal Re vie w April 2000 1 1
are widely distributed under the Jawa Sea
but are too deep to offer any mining poten-
tial. However, they may ultimately form a
coal bed methane resource of considerable
importance, and vitrinite reflectance values
within some of the deeper sub-basins range
up to and over 1.5%.
The Miocene coals generally show
much lower frequencies of dirt bands. Ash
yields in south Sumatra are generally high-
er than those in coals of this age from
Kalimantan, possibly due to more active
vulcanism in Sumatra. The Kalimantan
Miocene includes many seams with ash
yields of less than five percent and that
mined by PT Adaro is remarkable for a
typical ash yield of about one percent.
Indonesian coals differ markedly in
type from most Australian or USA bitumi-
nous coals, but are similar to the Tertiary
coals from Germany and the Gippsland
Basin. Inertinite is almost absent from
most Indonesian coals, and vitrinite con-
tent typically is in the range of 80 to 96%.
Although liptinite contents are not, on
average, unusually high [Daulay 1985;
Daulay and Cook 1988], some coals do
show unusually high contents of liptinite.
The most abundant liptinite macerals are
resinite and suberinite. These can be
major components both of the Eocene
coals and of the Miocene coals. They are
important in relation to coal use in that
they result in specific energy (SE) values
that are unusually high for the rank of the
coals. Thus, on the basis of SE, some very
low rank coals would fall within the bitu-
minous rank range using the classifica-
tion criteria from the ASTM system. If
accepted, the draft ISO system shown in
Table 3 will avoid this problem of mis-
identification. The liptinite can also
result in unusually low HGI values.
Indonesian coal bearing basins are very
young geologically. The existence of high-
er rank coals near the present land surface
is dependent upon uplift or the presence
of igneous intrusions. Igneous intrusions
have only localised effects and may result
in extreme problems relating to quality
control. Some form of regional uplift, usu-
ally in the form of structural inversion,
yields much more predictable coal quality.
Uplift has occurred in relatively few loca-
tions. At Ombilin, within the present main
mountain range of west Sumatra, uplift
has occurred. This is the reason for the
higher quality of the coals at Ombilin. In
south eastern Kalimantan the uplift of the
Meratus Range, probably late in the Ter-
tiary, has exposed a ring of higher rank
Eocene coal that forms the basis of opera-
tions such as Arutmin. A folded and fault-
ed belt trends north-north-east, from the
northern end of the Meratus through
Samarinda, ending at a structure called the
Pinang Dome. This Samarinda Fold Belt
contains Miocene coals that range in rank
from sub-bituminous to bituminous.
These Miocene coals form the basis of a
large part of the export industry.
Away from the Samarinda Fold Belt,
coals of similar age tend to be much lower
in rank. However, it appears that other
more restricted areas of high rank exist to
the west of this fold belt, and these may be
the site of the development of a small but
important industry mining coking coals.
Trans port
Indonesian coal deposits range markedly
in their distance from the sea and in the
ease of transport to the sea. Deposits
such as that mined by Kaltim Prima in
East Kalimantan or Arutmin at Senakim
are within 30 km of the sea. However,
construction of coal-loaders on gently
shelving coastlines can present some
engineering difficulties. Despite this,
four terminals are now operating in
Sumatra and 13 in Kalimantan. Cap-
acities range from relatively small barges,
up to 7,500 tonnes, through to the
Kaltim Prima terminal that can take
ships up to 180,000 dead weight (dwt).
Rivers are used by a number of mines.
Many near Samarinda use the Mahakam
River, and PT Adaro transports coal
down the Barito River with transfer to
larger vessels being effected offshore.
Self-propelled barge transport across
the Jawa Sea is common practice, and
deliveries are made by barge to some
export destinations within south east
Asia, even though the freeboard on the
barges is small. However, the larger com-
panies use large ships as their main mode
of transportation.
Most Sumatran coal deposits suffer
compared with Kalimantan in relation to
transport costs. Ombilin is separated
from its port by the Barisan Range. Bukit
Asam has a long rail route to the main
port on Selat Sunda. Transport costs are
recognised as being a major factor in the
future development of coal within Ind-
onesia. In general, the weighted distance
to ports will tend to increase as reserves
near the coast are mined out.
Lower rank coals from both Kalimantan
and Sumatra are less suitable for transport
due to the high moisture content and a
higher tendency to spontaneously com-
bust. Spontaneous combustion could be
inhibited by inert gas blanketing and suit-
able compaction techniques. Moisture
reduction would be required to prevent
higher transport costs per unit of energy
Mine Reserves Specific Energy Volatile Matter (%) Moisture (%) Ash (%) Sulphur Hardgrove Comment
(million tonnes) ('000 cal/ kg) Grindability Index
PT Adaro 780 5950 40.0 24 1.0 0.10 46 Low rank coal, but
remarkably low ash and
sulphur, sold as Envirocoal
PT Allied Indo 8.5 6,900 37.3 4.0 10 0.5 40 Mine at Ombilin
PT Arutmin 268 63006600 39.541.5 9.510.0 158.0 0.70.8 5045 Mines on Eocene coals, Rv
0.55 to 0.65%, many coals
rich in resinite
PT Berau 400 51005800 37.840.1 24.618.0 4.34.20.9 0.5 5045 Low rank coals from the
Tarakan Basin
PT Kaltim Prima 377 68005500 37.540.4 9.020.0 4.07.0 0.40.9 5045 Rank decreases away from
the crest of the Pinang
Dome, low ash coals used
for PCI
PT Kideco
J aya Agung 455 58004400 40.0 18.035.0 34 0.2 53
PT Multi Harapan 67.4 6400 40.0 16.0 5.0 0.80 45 Typical Miocene coals from
the Samarinda Fold Belt
Table 2 . De tails of re s e r ve s and quality of coal for s ome of the large r mine s ope r ate d by contr actor s .
Source of data: IMA 1977.
Low-Rank Coal Medium-Rank Coal High-Rank Coal
Lignite Sub-bit Bituminous Anthracite
Ortho Meta Para Ortho Meta Per Para Ortho Meta
* 0.4 0.5 0.6 1.0 1.4 2.0 3.0 4.0 5.5
Bed Moisture Mean Random Vitrinite Reflectance As %(Af)
* Boundary still to be decided, probably bed moisture of 40%
In the ECE rank classification specific energy is used as the classification basis for low rank coals and mean random vitrinite reflectance
for medium and high rank coals. The ECE has not yet agreed on a classification that includes coal type.
The upper row of terms will be the definitive ISO rank stages, the lower two rows are provided for cross reference, but correspondence
with older systems will not be exact.
In addition to the broad rank ranges, coals are specified in terms of vitrinite content and ash yield. The meaning of the codes is shown
in the right hand column for three example coals.
Rank Petrographic Composition Ash Yield
1.3 45 9 Medium-rank low vitrinite coal with an ash yield of 9%
0.52 85 11 Medium-rank D, high vitrinite and ash of 11%
0.45 92 1 Low-rank A, high vitrinite and very low ash
International
due to their low specific energy and the
amount of water that has to be transport-
ed. Even after moisture reduction, higher
oxygen contents result in lower specific
energy values. It is probable that the main
use for the lower rank coals will be at
mine mouth power stations. However,
some export sales have been made of
lower rank coals from Bukit Asam.
Curre nt Us e s of
I ndone s ian Coals
Dome s tic powe r
A major rationale for the government
policy to foster growth in the coal indus-
try was to develop large coal-fired power
stations. These were to support increas-
es in electricity consumption and substi-
tute for diesel-powered generators. In
turn, this would permit the export of
petroleum to be extended. In practice,
diversification away from reliance on oil
was a timely move in that major decreas-
es in the price of oil occurred in 1986
and more recently in 1993 and 1998.
These also resulted in some decreases in
coal prices that have benefited local gen-
eration but made the export market less
attractive.
The first major PF coal-fired power sta-
tion in Indonesia was established at
Suralaya in west Jawa. This was designed
to use coal from Bukit Asam. Additional
generation using Bukit Asam coal now
occurs at Tanjung Enim. Original plans
called for an expansion of coal-fired sta-
tions from 2,000 MW 20.6% of
installed power) in 199394 to 11,400
MW (44.1%) in 200304 and 21,000 MW
(56.9%) in 200809. The extent of
growth of coal-fired power generation
within Indonesia over the next ten years
remains uncertain, but it can be expect-
ed that the growth rate of power genera-
tion will greatly exceed that expected
within OECD countries.
In the longer run, use of Indonesian
coals for domestic power generation
faces difficulties as lower rank coals are
mined. The coalfields are not major cen-
tres of population, so mine mouth power
stations are not as attractive a solution as
in, for example, Germany or Australia.
Ce me nt indus tr y
Cement production is a major user of coal
as a fuel but the economic crisis has cut
cement consumption. Exports of cement
clinker may become a major determinant
of the use of coal in cement production.
Othe r dome s tic us e
Indonesia is rapidly developing an indus-
trial base, and this includes some heavy
industry. A program to introduce coal bri-
quettes for small industrial and domestic
use was initiated but it remains to be
seen if this has any greater degree of suc-
cess compared with many similar pro-
grams in other countries. It seems more
probable that gas (either LPG or reticulat-
ed gas) will take up this market.
Ex port for PF Fire d
Powe r Stations
The majority of coal exported goes to PF-
fired power stations in Asia and other
markets. Indonesia has strong advantages
in transport distances to Asian markets
compared to Australia and is no longer
disadvantaged by lower port capacities is
terms of ship size, at least for the major
exporters.
Indonesian coals are among the lower
rank coals being traded. They differ in
coal type from all except the small ton-
nages of New Zealand coal exported. In
terms of average properties, the Ind-
onesian coals have low ash yield and low
or very low sulphur but are relatively dif-
ficult to grind. It may not be necessary to
grind Indonesian coals as fine as those
from some other countries in order to
achieve the same burnout in a given
design of furnace. However, the experi-
mental nature of the use of most of the
coals has meant that special grinding cir-
cuits have not been installed to explore
or take advantage of this possibility. The
specific energy is lower than that of most
competitors, in spite of the low ash.
Although it would be possible to
achieve power generation with low lev-
els of atmospheric pollution, by using
only the low ash and low sulphur coals,
it is common practice for overseas pur-
chasers to use these grades of coal with
other coals that have higher ash yields or
sulphur content (or both). The coals
tend to be used to meet specific emis-
sions targets, but although sole use of
some of the Indonesian coals would
allow the targets to be exceeded, this is
not common practice. The use of
Indonesian coals permits the purchase of
other lower quality and lower price
coals, but the low ash and low sulphur
Indonesian coals do not generally appear
to have attracted a price premium.
The Aus tralian Coal Re vie w April 2000 1 2
Tabl e 3 . Dr aft I SO cl as s i fi cati on of s e am coal s by r ank (uppe r two rows ). Lowe r rows s how cor re l ati ons wi th e ar l i e r te rms .
C B A D C B A C B A
International
Spe cial mar ke ts
Specialist markets exist for low ash lump
coal burned on special types of grates.
This can be met with part of the product
from a number of Indonesian mines. This
will never be a large market, but should
continue. With the exhaustion of the
older coalfields in Europe and the USA,
demand for such coals may increase.
Coals such as Envirocoal can be pro-
duced to extremely low ash and sulphur
specifications. Although they may
achieve some use for combustion to give
very low emissions, the more common
use is as a diluent when operators are
unable to meet clean air requirements
with existing suppliers of coals. The
extremely low ash and sulphur values
then enable targets to be met with lower
rates of addition compared with more
normal low ash and sulfur coals.
Grant [1994] reports that although
coals such as Envirocoal provide signifi-
cant benefits to end users, they do not,
as yet, command a premium over prices
paid for other coals with similar specific
energy content but higher ash yields and
sulfur contents.
The low ash and low sulfur content of
some Indonesian coals makes them
attractive for use in metallurgical process-
es. The main method of benefiting from
the low amounts of impurities in the
coals is to use them for direct injection
into blast furnaces. In terms of carbon
balance the best results from this prac-
tice are obtained using coals of semi-
anthracitic rank. However, the Ind-
onesian coals prove attractive because of
the low make of slag, their high reactivity
and the reduction in the amount of sulfur
pick-up in the metal that would come
with their use.
Kerosene and charcoal are extensively
used for cooking in Indonesia. Govern-
ment policy has been to develop a
domestic coal briquette industry to sub-
stitute for some or all of these other
fuels. Problems exist in providing suit-
able burners for briquettes that allow
easy combustion and do not emit carbon
monoxide. The cost of the briquetting
process and ash disposal are additional
major problems. Much has been written
about briquetting relating to other coal
industries and it would be surprising if
the Indonesian program was successful.
It is more probable that use of LPG and
reticulated gas will prove more effective
solutions to the problems of kerosene
and charcoal use.
It has been suggested that, in the
longer run, use of coal for the produc-
tion of synthetic natural gas and for the
production of liquid fuels may be eco-
nomic. Both of these processes have
been used. However, recent experience
suggests that coals are unlikely to be a
viable feedstock for such processes in
the near future.
The Balance Be twe e n
Dome s tic Us e and
Ex ports
Effe cts of dome s tic de mand
Indonesia became a major exporter in
1991. Current high rates of export result
as much from a slow down in domestic
demand as from rises in production.
Since 1996, coal prices have de-
creased, and this trend became more
marked in 199899. In early 1999, coal
spot prices recovered marginally, but
some very low price contracts (less than
US$20 FOB) are still being written, espe-
cially with Taiwan.
Once the present financial problems
are solved, Indonesia will show an
increase in demand for steaming coal and
for similar reasons as have occurred
more widely within the world. The cur-
rent low base of electricity use suggests
that the rates of increase in use within
Indonesia will outstrip world averages.
The availability of coal for export will
depend on the extent to which coal pro-
duction expansion is able to outstrip
domestic demand.
The Indonesian coal industry is much
more oriented toward export than the
world average. In this sense it is similar
to Australia. However, it is not likely that
Australia will show the rates of increase
in domestic demand that are likely with-
in Indonesia. An additional difference is
the larger reserves base on which the
Australian export industry is based. The
financial problems since 1997 have inter-
rupted the rise in domestic consump-
tion. It has also permitted natural gas to
become more competitive in some set-
tings, and at present it is difficult to pre-
dict the balance of domestic use and
exports for the Indonesian coal industry.
Suitability of coals for e x port
Indonesian coals are unusual in terms of
coal type and are generally lower in rank
compared with the world average for
coal exports. The specific energy of
Indonesian coals typically lies in the
lower part of the range offered by com-
peting coal provinces, but the Ind-
onesian product typically has lower ash
and lower sulfur content.
Over the past ten years, growth in
demand for coals has been directed at the
lower end of the rank range. It is possible
to use coals of any rank for PF firing and a
wide range of rank in most other types of
furnace. After the sharp decline in coking
coal prices in 198687, a number of pro-
ducers of coking coals switched part of
their sales to steaming coals. The prices
cuts in 1998 and 1999 have hit steaming
coals very heavily. However, Indonesian
coals have proved their ability to com-
pete on the basis of price. Assuming qual-
ity control can be maintained, market suc-
cess should continue.
Compared with Indonesian coals, most
other coals being offered as steaming
coals have a higher rank and usually a
higher specific energy, a lower moisture
content and less tendency to sponta-
neous combustion. They are therefore
easier to keep in stockpiles. Additionally,
the amount of carbon dioxide released
per unit of energy is lower. Where laws
require lowering of carbon dioxide emis-
sions, this may place some competitive
coals at an advantage. Conversely, very
few coal provinces can match the low
sulfur contents of many Indonesian coals
and the low ash yields of some of the
products on offer.
Long Te rm As pe cts of
the I ndone s ian Coal
I ndus try
Re s e r ve s to production r atios
Within the ASEAN group of countries,
Indonesia has by far the highest coal
reserves and resources. It is therefore
extremely well placed to service the
future coal import requirements of its
near neighbours. Vietnam has substantial
coal deposits, but so far these are largely
undeveloped.
The Aus tralian Coal Re vie w April 2000 1 3
Fi gure 2 . Mi oce ne coal approx i mate l y
5 m i n thi ckne s s be i ng mi ne d by ope n
pi t. Coal i s ve ry l ow as h and has a
vi tr i ni te re fl e ctance of 0 .6 2 %.
The current resources to production
ratio for Indonesia is about 550 years but
the reserves to production ratio is closer
to 85 years. It is reasonable to assume that
some growth in reserves will occur, so
that the resources base should be suffi-
cient to support further major increases in
production over those already planned.
Experience suggests that the size of an
industry is driven by the perceived
resource as well as by market opportuni-
ties. Large amounts of new production
will be required for domestic use, and the
quality of coals discovered will control the
extent to which they can be exported.
Balance be twe e n oil, natur al
gas and coal
Coal production, in terms of energy, is
still much lower than both oil and natural
gas. In value terms, the discrepancy is
greater. However, coal resources appear
to be greater than those for the other
two fossil fuels.
The Indonesian government has previ-
ously expressed an intention to develop
nuclear energy. Costing of nuclear plant is
very difficult because costs in most coun-
tries have been mixed with other activi-
ties. Safety and siting issues are probably
now more likely to be discussed openly,
and this development can be seen as less
probable compared with five years ago.
Cons tr ai nts f r om r e s our ce s
and r e s e r ve s bas e and
coal qual i ty
All coal industries are constrained by the
nature of the resources base that is being
exploited. In the case of the Indonesian
coal industry, the nature of the resources
base has not yet been fully explored.
However, some general characteristics of
that base are clear and are unlikely to
change. Additionally, some indications
can be given concerning the changes
that could occur and those that are not
likely events.
Coal exploration in Indonesia has been
both extensive and intensive since the
early 1970s when the coals in the Bukit
Asam area were extensively drilled. Since
that time exploration has been undertak-
en both by government agencies and by
a number of Indonesian and overseas pri-
vate companies. Basic geological informa-
tion has been available from the geologi-
cal surveys that have been conducted
during the geological mapping of
Indonesia. Drilling for oil has provided a
valuable regional control over the geolo-
gy, and most of the coal bearing basins
have also been prospective for oil and
gas. The result is that drilling for petrole-
um has provided excellent control over
the general stratigraphy of most areas
that are prospective for coal.
The major resources will be confined
to the south Sumatra and central
Sumatra Basins and, in Kalimantan, the
Kutei, Asem Asem, Barito and Tarakan
Basins. Within most of these basins high
rank coals have been found to exist at
depth during the course of petroleum
exploration, but there are very few areas
where coal measures in outcrop have a
high level of rank. Over the rank range
that occurs in Indonesian coalfields, the
higher the rank, the greater the heating
value of the coal and, other factors being
equal, the greater the economic value of
the coal. Coal type varies very little so it
is appropriate first to examine the possi-
bilities of finding higher rank coals, or at
least maintaining the present levels
being mined.
In Kalimantan, most of the areas where
the Eocene coals outcrop have a moder-
ate regional level of rank. Thus, the cur-
rent mines of PT Arutmin operate on
coals of bituminous rank. The Miocene
coals are low in rank over many areas but
within the fold belt that runs through
Samarinda, in the structural highs, coals
of bituminous rank are found. However,
rank variation can be very rapid and with-
in a distance of less than one kilometre,
the rank can fall into the low rank range.
The Pinang Dome (Kaltim Prima mine
area) appears to be an uplifted area, simi-
lar in many ways to the structural highs in
the fold belt near Samarinda, but with a
slightly different setting. Within most
other basins, apart from near the margins,
no areas of uplift are known. An excep-
tion appears to occur along the northern
margin of the Barito Basin and this may
be prospective for at least limited
reserves of coking coals.
In Sumatra, the Ombilin Basin has
been subject to uplift and cover loss. Its
area is restricted but there remains a pos-
sibility that other areas of structural
inversion occur in this setting. Within
the south Sumatra Basin, structural inver-
sion is known to be a feature of the areas
flanking the Barisan Range, but coal bear-
ing provinces have yet to be identified in
these areas. The high rank coal at Bukit
Asam is associated with a number of
intrusions. It is possible that other areas
of higher rank coal may exist in the south
Sumatra Basin in association with
igneous bodies.
High rank coals occur locally in Beng-
kulu Trough and in parts of Sulawesi but
it seems unlikely that large tonnages can
be found in these areas. Further, most of
the heat altered coal in these coalfields
is very close to the igneous intrusions
and this presents quality control prob-
lems for large mines attempting to serve
the export market.
It is probable that the majority of the
coals that will be added to reserves in
Indonesia in the future will be of lower
rank than most of the coals currently
being mined, although a proportion of
new reserves should be of coals signifi-
cantly higher in rank than the present
average. In particular, it is probable that
some coals within the coking coal range
could be found. If these have low levels of
ash and sulfur (similar to those of the
Miocene coals from Kutei Basin), they
would be extremely valuable as metallur-
gical coals for blending with higher inerti-
nite and higher ash coals from other coun-
tries. Prices obtained for such coals could
be substantially higher than those being
received at present for steaming coals.
Even though some high rank coals may
be found, the average rank of discoveries
will probably decrease. This will tend to
make export more difficult. As local
demand increases, this may not present
major problems. If, however, the rank of
the coal that was mined fell much below
that currently being mined at Bukit Asam,
some difficulties might develop in relation
The Aus tralian Coal Re vie w April 2000 1 4
Figure 3 . Thick s e am in unde rground
mine in the Ombilin coalfie ld in Sumatra.
At this location, the coal is be ing mine d
by continuous mine rs us ing board and
pillar me thods , but parts of this mine
are mine d us ing a longwall me thod. A
s ands tone was hout cuts down more than
a me tre into the s e am in this cut-
through. The coal is Oligoce ne and has a
vitrinite re fle ctance of 0 .6 8 %.
International
International
The Aus tralian Coal Re vie w April 2000 1 5
to transportation from mine sites to areas
of major consumption. If special proper-
ties are present, as in the case of the coal
from the PT Adaro mine, these could be
overcome, but for coals with other charac-
teristics similar to the coals from Bukit
Asam the problems would be greater.
In the longer term it may be necessary
to develop a greater reliance on the gen-
eration of electricity near the mine site.
In the much longer term, an examina-
tion may be necessary of the coals that
should be reserved for liquefaction. In
the present state of development of tech-
nology and prices, it appears to be pre-
mature to do this now.
Conclus ions
The Indonesian coal industry has devel-
oped very rapidly over the last six years
to become a significant exporter, espe-
cially within the ASEAN context. The
resources base appears to be large
enough to support further increases in
production above those already planned.
It is probable that resources and reserves
can be increased above the current levels.
It is likely that some reserves of high
value coals can be found, but it is also
probable that the majority of additions to
reserves will be lower in rank (and there-
fore quality) compared with the average
of coals currently being mined. Reserves
of qualities suitable for export will sup-
port that industry for a considerable peri-
od of time. However, in the longer term,
the emphasis of production will increas-
ingly swing to the domestic market.
Re fe re nce s
Daulay B, 1985. Petrology of some Indonesian and
Australian Tertiary coals. MSc thesis (unpubl.)
University of Wollongong 265p.
Daulay B, 1994. The coals of eastern and southern
Kalimantan - a geological and economic appraisal.
(In preparation)
Priyono A, 1989. Overview of the Indonesian Coal
Development. Geologi Indonesia, Journal of the
Indonesian Association of Geologists (Eds Sudradjat
A, Tjia H D, Sukendar A and Katili A N), J A Katili
Commemorative Volume (60 years). pp 253-278.
Soehandojo, 1989. Coal Exploration and Exploitation
Review in Indonesia. Geologi Indonesia, Journal of the
Indonesian Association of Geologists (Eds Sudradjat A,
Tjia H D, Sukendar A and Katili A N), J A Katili
Commemorative Volume (60 years). pp 253-278.
Alan Cook is the Director of Keiraville
Konsultants, Kieraville, NSW.
Tel: 02 4229 9843 Fax: 02 4229 9624
Email: acc@ozemail.com.au
Bukin Dawley is the Senior Researcher
at the Mineral Technology Research and
Development Centre (MTRDC), Ministry
of Mines and Energy, Indonesia.
Fi gure 4 . Ope n pi t i n Eoce ne coal i n s outh Kal i mantan, 8 5 km north of
Banj ar mas i n. The s e am i s approx i mate l y 4 m tr ue thi ckne s s and di ps NW at 3 0
o
.
As h yi e l d of the coal i s cl os e to 1 0 % and vi tr i ni te re fl e ctance i s 0 .6 0 %. Ne ar the
outcrop, a dar k s quare mar ks the l ocati on of an e ar l i e r i l l e gal unde rground mi ne .