Underground mining in forest areas not so simple

Alfian, The Jakarta Post 27 Apr 09;

The government's plan to issue a presidential decree allowing mining companies to mine underground in protected forest concession areas has resulted in mixed reactions from industry stakeholders.

Alwin Syah Loebis, president director of state-run mining company PT Aneka Tambang (Antam), praised the decree, saying it would benefit the company immediately.

"This (regulation) is very good. We expect it would enable our project operation in Dairi (North Sumatra ) to start immediately," Alwin indicated to The Jakarta Post during the weekend.

Antam and Australian exploration and mining company Herald Resources have a joint venture called PT Dairi Prima Mineral to develop a large lead zinc deposit in Dairi Regency, North Sumatra.

Part of this project is located in a protected forest. The project has been delayed since 1998 as the Forestry Ministry has yet to issue a permit for the project to operate.

Alwin expected the decree would clear the legal status of the project.

He was fully confident that Antam had sufficient technology and access to capital to carry out underground mining, (despite the higher costs involved and technical complexities), due to their experience in underground mining in other parts of Indonesia.

"We have an abundant experience with underground mining in Pongkor ( a gold mine in Bogor, West Java ) and in other areas," he said.

Having relied heavily on the nickel mining business, Antam is now trying to diversify into mining other commodities, especially gold, iron, and zinc.

Energy and Mineral Resources Minister Purnomo Yusgiantoro said last week that the government was deliberating the proposed presidential decree allowing underground mining activities in protected forest areas. He said this would benefit the sector as it would boost exploration activities as well as proven mineral reserves.

He gave the example of protected forests areas in Kalimantan where there were estimated to be very large reserves of coal. However underground mining requires quite different technologies and know-how, higher investment and stringent safety and environmental standards.

Bob Kamandanu, chairman of the Indonesian Coal Producers Association (APBI) said the decree would indeed boost coal reserves, but it also appeared that it might be quite difficult for the country's coal firms to suddenly adapt to the very different requirements of underground mining, compared to traditional open-cast mining commonly used in Indonesia.

"Underground mining requires high cost and advanced technology. This is even more difficult in Indonesia as our underground rock is often lose and not firm. Thus, I think Indonesia's coal companies will need some years to be able to fully tap the benefits of underground mining," Bob said.

There were higher possibilities of fires, explosions, floods and other accidents, with dangers in underground mining due to its complexity. The industry also would need to depend much more than open-cast mining on highly skilled miners. Furthermore, Bob added, at the moment domestic coal demand could still be adequately supplied from surface mining.

APBI estimated that Indonesia would produce 250 million tons of coal this year, up from about 240 million tons last year. The directorate general for coal, minerals and geothermal earlier estimated that domestic demand for coal would reach 66 million tons this year, up from 57 million tons in 2008.