S.W.O.

T Analysis for Indonesia Coal Mining

(With special reference to Central Kalimantan)Sanjay Singh*

Introduction- Indonesia is one of the major mineral producer and export of numerous
commodities around the world such as Coal, Tin, Nickel, Bauxite, Gold etc..In last ten year average mining production growth are around 15 % for Coal, Gold and Copper and around 8 % for Nickel & Tin. Export demand to production demand of all these minerals and Coal are higher than the domestic demand. Indonesia have 15th rank of World Coal resources in Coal, 7th Rank in Gold & Copper, 5th rank in Tin and 8th rank in Nickel. Mining sector in Indonesia is the 2nd main business for economic growth and contribute around 235,000 billion Rupiah and contribute around 15.4 % on Indonesian GDP in 2009. Beside this Indonesian Mining sector have many loopholes in the legislative framework and uncertainty because of conflicts in forest Regulation, Regional autonomy and poor infrastructure development, lack of synchronisation among Government departments. . In this paper author try to summarise about the Central Kalimantan Mining status.

Central Kalimantan General Information:

Central Kalimantan is the 3rd largest Indonesian province by area with size of 15380000 Ha, The area has numerous rivers from the catchment area to the North in Schwaner Mountains and flowing to Java Sea, the major river are Barito River (900 km),Kapuas River (600 km),Kahayan River (600 km),Katingan River (600 km),Mentaya River (400 km),Seruyan River (350 km),Lamandau River (300 km),Arut River (250 km),Sebangau River (200 km),Kumai River (179 km),Jelai River (100 km). These rivers are a transport medium for Manpower, Material and Machinery all around the region. The province's climate is wet weather equatorial zone with an eight-month rainy season, and 4 months of dry season. Rainfall or precipitation is 2,776 - 3,393 mm per year with an average of 145 rainy days annually. The temperature varies from 30 to 35 C and humidity in the range of 95-98%. Central Kalimantan is divided into following districts as Murung Raya (Puruk Cahu),North Barito (Muara Teweh), South Barito (Buntok),East Barito (Tamiang Layang),Kapuas (Kuala Kapuas),Pulang Pisau,Gunung Mas (Kuala Kurun),Palangka Raya,Katingan (Kasongan),East Kotawaringin (Sampit),Seruyan (Kuala Pembuang),West Kotawaringin (Pangkalan Bun),Lamandau (Nanga Bulik),Sukamara (Sukamara).

Central Kalimantan- Geology: Geology of the Central Kalimantan province is not different
from unity of Kalimantan Geology. The area was formed from sediment or the rock because of sediment basin and mountain areas were formed by metamorphic magma process. The main Coal basins as defined in Central Kalimantan are Melawi Basin (Border West Kalimantan) Barito Basin (South Middle East Central Kalimantan) & Kultai Basin( Northern Part-East Kalimantan). Stratigraphy in Central Kalimantan was compiled from the rock that be aged old to young as follows Malihan Rock, Igneous Rock, Sediment rock, Volatile rock, Alluvial etc. Coal in Central Kalimantan was encountered all over the area having value calorie revolved between 5000 to 8300 Kcal/kg. The main Coal formations are Tanjung, Warukin,Ayau stone,Pamaluan,Pulau and Balang. In Murung Raya& North Barito District was encountered Coking Coal having GCV >7000 Kcal/kg and Crucible Swelling Index (CSI) revolved between 5-9. In the Kotawaringin Barat Regency, Seruyan, Kotawaringin Timur, Katingan and the Palangka Raya City also was encountered coal but calorie is generally low that is less than 5,000 kcal/kg. The geology of the area also indicate occurrence of Oil & Gas, Gold, Silver Copper, Bauxite, Galena, Limestone, Zircon, Siderite etc.

Central Kalimantan -Resources: The coal resources as confirmed by Government of Mining

& Energy department Central Kalimantan based on preliminary study are around 6.7 billion ton based on preliminary study & investigation. The region wise Coal distributions in Central Kalimantan are as Murung Raya (28%) Barito Utara(26%),Barito Timur(3%),Barito selatan(23%), Kapuas(12%),Kotawaringin Barat(6%), Kotawaringin Timur(0.26%), Katingan(0.26%), Gunung Mas(0.32%). The Zircon ((ZrSiO4) resources based on preliminary study are around 2.2 billion ton with its distribution as Area River Sekonyer(17%), River Seruyan(2%) , River Mentaya(17%), River Katingan(35%), River Rungan(o.3%), River Kahayan(24%) , River Muroi(3%), River Kapuas(0.5%). These resources data are not being proved for estimation of Economic Reserve because of shortage of exploration data and detailed survey is still required to be done for correct idea on economic reserve. The other mineral resources still unexplored for any resources estimations.
Kotawaringin Timur, Katingan, Gunung Mas 2% Murung Raya 28% Barito selatan 23%

Kotawaringin Barat 6% Kapuas 12%

Barito Utara 26%

Barito Timur 3%

Coal Resources in Central Kalimanatn

Central Kalimantan Mining Concession Area:

COAL MINING CONCESSION DETAILS IN
CENTRAL KALIMANTAN-INDONESIA Ijin Exploration/Survey/Construction Central Kalimantan Area/Region Murung Raya Barito Utara Baruto Selatan Barito Timur Kapuas Pulang Pisau Gunung Mas Palangka Raya Katingan Kotawaringin Timur Seruyan Kotawaringi Barat Lamandau Sukamara Total PKP2B No. 8 3 1 0 1 0 0 0 0 0 0 0 0 0 13 Area( Ha) 269011 NA NA 0 NA 0 0 0 0 0 0 0 0 0 269011 No. 20 128 13 66 49 0 26 1 13 0 0 0 0 0 316 IUP Area( Ha) 274787 601345 48089 148774 259266 0 199284 3362 95324 0 0 0 0 0 1630231 Ijin Operational/Production PKP2B Area( No. Ha) 2 0 1 0 0 0 0 0 0 0 0 0 0 0 3 39724 0 NA 0 0 0 0 0 0 0 0 0 0 0 39724 IUP No. 2 26 14 37 6 0 1 0 0 0 0 0 0 0 86 Area( Ha) 29790 96740 49167 65615 28497 0 948 0 0 0 0 0 0 0 270757 No. 32 157 29 103 56 0 27 1 13 0 0 0 0 0 418 Area(Ha) 613312 698085 97256 214389 287763 0 200232 3362 95324 0 0 0 0 0 2209723 % Area 28% 32% 4% 10% 13% 0% 9% 0.20% 4% 0% 0% 0% 0% 0% 100% Total(IUP/PKP2B)

SN 1 2 3 4 5 6 7 8 9 10 11 12 13 14

GOLD MINING CONCESSION DETAILS IN CENTRAL KALIMANTAN-INDONESIA Ijin Operational/Production IUP Central Kalimantan Area( SN Area/Region No. Ha) Murung 1 Raya 4 60011 2 3 4 Barito Timur Kapuas Gunung Mas Total 19 20 10 53 121638 124318 164902 470869 0 0 1 0 0 47940 0 1 1 0 3880 3880 PKP2B/KK No. 1 Area( Ha) 47940 No. IUP Area( Ha) No. Area(Ha) 6 19 20 11 56 47940 121638 124318 168782 462678 % Area 10% 26% 27% 36% 100% Grant Concession Total(IUP/PKP2B)

IRON MINING CONCESSION DETAILS IN CENTRAL KALIMANTAN-INDONESIA Grant Concession Total(IUP/PKP2B) % Area 6% 6% 10% 0% 0% 0% 0% 0% 22%

SN 1 2 3 4 5 6 7 8

Central Kalimantan Area/Region Baruto Selatan Gunung Mas Katingan Kotawaringin Timur Seruyan Kotawaringi Barat Lamandau Sukamara Total

IUP No. 1 1 7 2 0 0 21 3 35 Area( Ha) 10000 10000 10990 1779 0 0 119322 9100 161191

Ijin Operational/Production PKP2B IUP No. Area( Ha) No. Area( Ha)

No. Area(Ha) 1 1 8 5 0 0 23 3 41 10000 10000 16458 1964.78 0 0 121514 9100 169037

0 0 0 0 0 0 0

0 0 0 0 0 0 0

1 3 0 0 2 0 6

5468 185.78 0 0 2192 0 7845.78

ZIRCON CONCESSION DETAILS IN CENTRAL KALIMANTAN-INDONESIA Ijin Operational/Production PKP2B IUP No Area No Area( . ( Ha) . Ha) 6 1 2 3 11 0 0 0 0 2 25 37400 25 4152.6 7378.6 12847. 2 982 62785. 4 Grant Concession Total(IUP/PKP2B) No . 2 25 2 15 14 39 5 10 2 % Area 1% 40% 1% 25% 11.60 % 21% 1.30% 100%

S N 1 2 3 4 5 6 7

Central Kalimantan Area/Region Barito Utara Kapuas Pulang Pisau Gunung Mas Palangka Raya Katingan Kotawaringi n Timur Total

IUP No . 2 19 1 13 11 28 3 77 Area( Ha) 4005.6 77907 1500 67462 26343 48725 2739.6 228682

Area(Ha) 4005.6 115307 1525 71614.6 33721.4 61572.4 3721.55 291468

Central Kalimantan Production: The production of coal in the Central Kalimantan Province
at this time still was very small if compared with the level of the production of coal that was produced by the neighbouring Province that is South & East Kalimantan. The main producer of coal in Central Kalimantan are the holder of PKP2B the generation 1 that was located in District Murung Raya i.e PT. Marunda Graha Mineral & the level of his production approximately only 1.6 million ton/the year, was followed with PT. Asmin Koalindo Tuhup and PT. Multi Tambangjaya Utama. The following producer was the holders of the Pertambangan Power that was located in the Barito Utara Regency with the main producer PT. Victor Dua Tiga Mega that afterwards was followed by CV. Sinar Barito Global, of PT. Duta Nurcahnya and other. For the territory of Barito Timur the producer especially at this time is PT. Maslapita, PT. Gunung Emas Abadi, PT. Bangun Indonesian Archipelago Jaya Makmur, PT. Kurnila. Whereas for the Kapuas territory the producer especially is PT. Telen Orbit Prima that just began the production during the 2010. COAL PROUDCTION(MT) IN CENTRAL KALIMANTAN UPTO OCTOBER 2010

The iron ore from Central Kalimantan sold/was exported still in the form of raw took the form of "Lump Ore". The main producer of his iron ore was PT. Kotabesi Iron Mining (1.5 million ton), PT. Feron Tambang Kalimantan (0,6 million ton) and PT. Mentaya Iron Ore Mining (0.35 million ton) that was located in the Kotawaringin Timur Regency, afterwards was followed by PT. Kapuas Prima Coal and PT. Visi Hutan Mandiri that his KP territory was located in the Lamandau Regency as well as PT. Graha Surya Tambang that his permission territory was in the Seruyan Regency.

IRON PROUDCTION (MT) IN CENTRAL KALIMANTAN UPTO 2010

The PRODUCTION of PASIR ZIRCON CONCENTRATE (ZrSiO4) the YEAR 2008-2010 (TON) During 2008 the production of Zircon Sand concentrate in Central Kalimantan the most was produced from the Katingan Regency, was followed by the Kotawaringin Timur Regency, Kotawaringin Barat, Seruyan, Kapuas, Gunung Mas and the Palangka Raya City. The production of sand concentrate zircon this had the trend to continue to descend. ZIRCON (ZrSiO4) PROUDCTION (MT) IN CENTRAL KALIMANTAN UPTO 2010

Gold in Central Kalimantan officially only was produced by PT. Indo Muro Kencana that was located in the Murung Raya Regency. PT. Indo Muro Kencana was one of the holder's companies of the III generation Work Contract that was signed by the Government and the Company during 1985. GOLD PROUDCTION (kg) IN CENTRAL KALIMANTAN UPTO 2010

The PRODUCTION of SILVER Kalimantan TENGAH SILVER was in Central Kalimantan produced by PT. Indo Muro Kencana as the mineral of primary gold of the mining model. PT. Indo Muro Kencana was one of the holder's companies of the III generation Work Contract that was signed by the Government and the Company during 1985. SILVER PROUDCTION (kg) IN CENTRAL KALIMANTAN UPTO 2010

The production and operation of all minerals and Coal are mainly affected because of sudden stoppage by strict action by Mining & Energy Department with Forest Department, Jakarta as most of the area came under Forest and have pending status of IPPH.

Central Kalimantan Forest Area:

Ministry of Forest follow the Map TGHK 1983 for the status of land and forest in Central Kalimantan and as per that map more than 99% of area was declared as the forest region. While based on RTRWP Central Kalimantan 2003 approximately 56% the Central Kalimantan territory was in the forest region but the same is not improved by Ministry of Forest., Jakarta. Revised RTRWP map as tried to be jointly approved by all Mayor of the Kabupaten, Governor and Ministry of Forest, Jakarta is still pending and expected that 82 % of the Central Kalimantan territory will be declared under forest region. Increase in the forest area by around 30 % will generate extra burden on the Owner of Mining Concession financially as well as delay in progress to take various further survey and permission to work in Forest Area. This condition caused many owner were forced to carry out the liberation of the land in a dual manner that is land compensation with the community or the plantation businessman also must borrow with the forest region with the ministry of forestry. This situation caused high cost economics for the development of the sector of the mining that in turn will lower recovery the mining, shortened the age of the mine and minable reserves.

Central Kalimantan Infrastructure: River is the main transport medium for all activity
including Coal transport from Mine Site to off shore by Barges. Mainly Coal are loaded in trucks from Mine Site to Jetty and further loaded into Barges having average capacity 3500 MT by Conveyor Jetty at River Point. The high capacity of Barges cannot be used because of fluctuating water level all along the main river Barito and that lead to development of Intermediate Stockpile at around Buntok downstream to facilitate loading of 8000 MT Barges. This intermediate Stockpile and loading points is mandatory to facilitate for the Mother Vessel Loading at offshore while even adding rehandling cost. All Coal from Central Kalimantan are finally loaded from the Coal terminal of South Kalimantan at different points as North PulauLaut (150,000MT) IBT (70.000 MT) ,Sembilan ( 8000 MT) Air Tawar (8000MT) Banjarmasin( 10,000MT),Buntok ( 8,000MT) S a t u i ( 5.000MT), Kelanis ( 10.000 MT). In dry days, Coal movement cannot be regularised from mine to Intermediate stockpile point because of low water level in river and that does not support for the Investor looking for regular fuel supply for Power plant and so they also plan for fuel supply from other sources. To overcome this problem 1.5 Billion USD Coal Railway Transport project (185km- Purukchau to Bangkuang) through District Murung Raya, Barito Utara, and Barito Selatan to the east of the Barito River was approved but still pending as was planned to start from 2009 by GOI. Road transport from Mine site to River Point need high investment on construction and maintenance of road and drainage system as now most of the project are far away from the river point. The difficult climatic condition as 8-12 month rain and shortage of good road material in surrounding area of Mining Concession recommend good road condition while preferd transport network for this type of condition is Belt Conveyor or Rail network for big projects.

A SWOT Analysis of Central Kalimantan, Indonesia Mining Industry

Strengths:
Large quantity of high grade mineral , Thermal & Coking Coal Export profits from Coking Coal, High grade Coal, Gold, Silver, Zircon etc. IUP made available to both domestic and foreigner investor. IUPs awarded by way of tender process for mineral and coal mining.

Weakness:
No synchronisation between Regional and Central Government on legal aspect of Forest Area as revised RTRWP Kalteng Map still pending. No guideline and coordination on the rate of land legal authority (Kacamata) for Land acquisition for Exploration and Mining. Poor Infrastructure & logistic facility. Shortage of Skilled manpower (Operator, Driver, Mechanic, Engineers, Geologist). Law is silent on Mineral and Coal conservation and recovery % for effective economic Mining Operation. Tough labour law

Opportunities:

Potential areas for exploration ventures include Coking Coal, Thermal Coal, gold, Silver, Lead, Iron Zircon & other rare metals. Strengthening of logistics infrastructure such as railways projects, road development, ports, river dredging project to accelerate the Coal & mineral movement round the year. Focusing on Mining at greater depth for better mineral and Coal conservation as current mining practices are generally limited to depth of 70 m in Coal mine. Processing of Low grade Coal and mineral for its up gradation in quality parameter and further export. Exploring the possibility of Underground Mining/ CBM technology process after Opencast Mining for best recovery of minerals.

Threats:

Uncertainly on final RTRWP Map with Forest and Mining Area and further reduction in Mineral resources and Economic Reserves. Land acquisition from land owner, Plantation Company & Forest department may block the project at any time. After 5 year it is difficult to find suitable local party for divestment obligation up to 20 % by foreign owner. Local party after getting 20 % stake put directly or indirectly start pressing for more stake from different sources. Domestic market obligation by all IUP holders, while its pricing and % still remain uncertain. Indonesia Government may ban on export of low grade Coal without up gradation... Strict environmental law, purification, land acquit ion process will impact on economic

Conclusion:
The establishment of a green field Mining project is capital intensive and companies intending to invest in Indonesia have to carry out further research and obtain updated information on investment and operational requirements with regulatory guidelines. Government authority have to accelerate the process of transparency in regulations for Investor , Mining and Forest Area ,Land acquit ion, Labour laws and do infrastructure development for confidence of Investor to start Mining Operation in Central Kalimantan and support the region by for better mineral conservation as well as maintaining eco balance of the area with fund as available from Mining Industry.

Acknowledgement:
The views given in this paper is solely of the author and not the view of Company in which I work. Author is thankful to Mr. Mohit Maheshwari Director of PT. Solid Black Gold for his kind approval to publish this paper.