Mining Introduction | Leading Mines

Indonesian output soared more than 30% in 2001 to reach over 180 tonnes (5.9 million oz) according to GFMS. This has positioned the country ahead of both China and Russia as last year's fourth biggest producer. Most of the increase was the result of a surge in output at Grasberg, the world's largest single gold producing mine, operated by Freeport McMoran which yielded 108 tonnes (3.5 million oz), an increase of 48% year-on-year.

Freeport McMoran's copper-gold Grasberg
(Credit: courtesy Freeport McMoran Copper & Gold Inc)

The Indonesia archipelago of hundreds of islands hosts large epithermal and porphyry gold-copper deposits, which are only now being fully explored.

Gold has been mined in Indonesia for over a thousand years and under Dutch colonial rule from the late 19th century several small mines opened.

The real potential was revealed from 1972 when Freeport McMoRan first opened up a copper-gold project at Ertsberg in the mountains of Irian Jaya (just over the border from Papua New Guinea). Ertsberg contributed a few tonnes of gold by-product each year, but it was the nearby mountain of Grasberg that contained the real treasure of gold, silver and copper.

The development of Grasberg during the 1990s made Indonesia a major gold producer. As late as 1990 the country's output was only 18 tonnes (0.58 million oz). Grasberg's output then soared from 41 tonnes (1.3 million oz) in 1995 to 93 tonnes (2.99 million oz) in 1999, a world record for any mine, anywhere in a single year. Production dropped back in 2000 as a result of lower gold grades and operational difficulties but surged in 2001 to report a new high due to exceptionally high gold grades.

By comparison with Grasberg, other new mines seem modest, yet are substantial. Newmont started Minahasa on Sulawese island in 1996, which includes Indonesia's first heap leach operation, and opened the Batu Hijau copper-gold mine in 2000.

Rio Tinto's Kelian gold mine has been going well since 1992 in the mountains of Kalimantan, where Aurora Gold's Mt Muro mine is also located (the cessation of production and consequential closure of the latter has been set for June 2002). Newcrest's Gosowong opened in July 1999 and reported output of almost 9 tonnes (0.29 million oz) in the full year 2001. There are several other small mines, such as Aneka Tambang's Pongkor in West Java and considerable unofficial alluvial output, mainly on Kalimantan.

The setback, of course, was the Bre-X scandal in 1997 when it was revealed that the small Canadian company, which declared finding reserves of 6,220 tonnes (200 million oz) of gold at Busang on the island of Kalimantan was a fraud. The revelation hit small exploration companies in Indonesia and elsewhere very hard. What cannot be challenged is that Indonesia has gold potential on a grand scale, as Grasberg and now Batu Hijau show.