Copper

Copper mining in the late 1980s was dominated by the FreeportMcMoRan Copper and Gold Company, a United States firm, which, through its joint venture subsidiary Freeport Indonesia, had operated the Ertsberg Mountain mine in the Jayawijaya Mountains of Irian Jaya Province since the early 1970s. The mined ore was milled and then sent 115 kilometers by pipeline to Freeport's Amamapare port. The mine produced 32 million tons before becoming depleted. To expand its operations, in 1989 Freeport Indonesia was granted an exploration license by the Indonesian government that added 2.5 million hectares to its original 10,000-hectare concession. A major new discovery on Grasberg Mountain, three kilometers north of the Ertsberg Mountain site, was expected to come under production in 1990 and to produce around 270,000 tons annually by the end of 1992. It was projected to become the world's largest open-cast mine, and at one of the lowest costs in the world. Total proven and probable reserves of copper, centered in the Ertsberg and Grasberg areas of Irian Jaya, were 15 billion tons. In a related joint venture, Freeport Indonesia, Nippon Mining (Japan), Metallgesselschaft (Germany), and a private Indonesian investor had plans to start construction of a 150,000-ton annual production capacity, US$600 million copper smelter in Gresik, Jawa Timur Province. Given its 10 percent ownership of Freeport Indonesia, the Indonesia government had high profits at stake.

Gold

Most gold production officially reported in government statistics was a byproduct of Freeport Indonesia's copper mining. In 1989 total official gold production was about 6,000 kilograms, of which about 4,000 kilograms was extracted by Freeport Indonesia with a 15,000 kilogram production expected by the end of 1992. However, a large number of small-scale mining operations in Kalimantan may have produced as much as 18,000 kilograms of gold in 1989. Many of these small mines were operated illegally on foreign concessions. In 1989 there were approximately eighty foreign contractors with concessions for gold exploration, primarily in Kalimantan, but only a small number had producing mines.

Bauxite

Bauxite was being mined in the early 1990s by P.T. Aneka Tambang on Bintan Island and three neighboring islands, and most bauxite was exported to Japan. Total bauxite reserves of 396 million tons were found in the Bintan Island area and in Kalimantan Barat Province. Reserves of commercially exportable bauxite were much more limited, although on-site processing into alumina had the potential to be commercially feasible with below export grade reserves. Bauxite, the demand for which had increased during Repelita V after having slowed down during Repelita IV, is a primary input in the production of aluminum. It must first be refined into alumina. Plans were underway in 1991 for an alumina refinery, and the Department of Mining and Energy had been seeking an interested foreign partner to develop a US$600 million facility on Bintan Island since the late 1980s. Alumina input for P.T. Indonesia Asahan Aluminum was imported from Australia.

Source: U.S. Library of Congress