Indonesia eyes more underground mining amid declining reserves

Growing requirements for various minerals such as iron, copper and coal have significantly pushed the demand for underground mining, according to Research Nester.

Divya Karyza

Divya Karyza

The Jakarta Post


Workers walk on Jan. 4, 2022, near a tugboat carrying coal barges at a port in Palembang, South Sumatra, Indonesia. PHOTO: ANTARA/THE JAKARTA POST

December 27, 2023

JAKARTA – The government expects an uptrend in underground mining to take hold in the country as surface mineral reserves continue to decline.

Irwandy Arif, the Energy and Mineral Resources Ministry’s special staffer for the acceleration of mineral and coal management, said excavating minerals below the surface will double the operational costs of surface mining, while its capital investment is projected to triple or quadruple the amount needed for open pit mining.

He added that these higher costs would cover additional expenses for equipment including ventilation and caving support. Moreover, underground mining is expected to result in higher amounts of material waste, which will need to be removed to obtain the ore.

“Although [underground mining] requires more investment, higher costs, more advanced technology and more expertise, it has the potential to reduce the risk of environmental impacts compared to surface mining,” he said in Jakarta on Friday.

The world underground mining market is expected to experience a 3.62 percent compound annual growth rate (CAGR) over the 2023-2033 forecast period, bringing the value of the sector to US$34.97 billion by 2033, according to a report published by consulting firm Research Nester.

Growing requirements for various minerals such as iron, copper and coal have significantly pushed the demand for underground mining, according to Research Nester.

The market insights company also pointed to the rapid shift to renewable energies such as solar and wind, as well as electric vehicle (EV) batteries, as major drivers in the mining of cobalt, lithium and other rare earth elements.

“The costs of underground mining are larger than surface mining, but some technology disruptions and costs can be trimmed down,” Irwandy said.

Indonesia still holds enormous potential for underground coal mining. The country reported 16 companies that operate underground coal mines, including PT Sumber Daya Energi (SDE) in South Kalimantan, PT Merge Mining Industri in South Kalimantan and PT Kusuma Raya Utama in Bengkulu.

To date, PT SDE, a subsidiary of Chinese mining company Qinfa Group, has disbursed $300 million to build the SDE 1 underground coal mine, out of the three planned sites in Kotabaru, South Kalimantan. The first site began operations on Dec. 18, while the second site is meant to begin operations in 2024.

In addition to coal, the country also saw increased underground mining of other minerals. For instance, copper miner Freeport Indonesia stated its plan to terminate its Grashberg open mine in Papua in 2017 amid concerns that surface reserves will soon run out.

The company then sought to shift toward underground mining, which it started in 2022.

The ministry had previously warned that the country could see its nickel deposits depleted within 15 years given the current pace of the mineral’s extraction.

To further extend the reserves, the ministry will continue to attract more investments for exploration projects and push developments of recycling facilities in the country.

In addition, the government has also eyed seabed mining, where it sees unexplored potential. However, activists and environmental groups have opposed the idea, citing risks posed to the marine environment.

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