THESE POSTS
WAS ORIGINALLY PUBLISHED MAY 05,07, 2011
Iron Ore in Indonesia: Much Ado About …?
Mining in
Indonesia is a vast subject to address, and within my blog I physically have no
ability to cover all the issues. However, there are some things that I want to
pinpoint:
- At the first
glance it is obvious that the major commodity in the country is coal;
copper, nickel, tin, bauxite and gold - the other commodities that are being
talked about;
- In 2010 24
IPOs raised US$3.4 billion on Indonesian Stock market - coal producer Harum
Energy raised $290 million; and there are seven coal producers or contractors
listed in Indonesia. Coal miner Adaro raised $1.3 billion in June 2008;
- Last year
Nathaniel Rothschild agreed to invest $3 billion in two Indonesian coal
companies through Vallar Plc, creating one of the biggest coal mining companies
in the world.
Thus, there is a
lot of buzz about coal – but can we speak of iron ore?
Indeed, those who follow the news may notice that there is very little talk
about iron ore in Indonesia, even in the world ranking of iron ore producers
the country is notably absent. Yet Bumi Resources Minerals, a unit of the coal
mining giant Bumi Resources stated that part of the proceeds of its 2010 IPO
(that was, BTW oversubscribed by 29.89 times) would be used to develop its iron
ore mine in Mauritania. So, it seems that iron ore business in
Indonesia is a sad story? Is it nothing? Or something to
talk about? Well, let us look into what we may find in the news over the last
three years.
In 2009
Australian company Coal Fe Resources Ltd. looked into 4 iron ore concessions in Central and West Sumatra,
Indonesia. However, there was no other developments, since there in no mention
of iron ore in current company’s Website.
Since 2009
another Australian company - Lincoln Minerals Limited in a
Joint Venture with Indonesian Samusa Corporation of Jakarta, develops Samusa’s Desa Mirah Kalimantan iron ore mine in the South central
area of the Indonesian island of Kalimantan (Borneo). Details of the operations
are available here as well as data on
the JV.
Coziron
Resources Limited has an 80%
interest in a joint venture with PT Galian Endapan Buana (“GEB”) to develop the Agam
Iron Sand Project in West Sumatra, Indonesia. The project,
comprises two licenses totaling 3,960ha, has concentrations of heavy mineral
sands, principally magnetite. The first reports on the program are listed in
2006, and this April it was announced that the company has commenced a review
to determine the best way to proceed with the Agam Iron Sands Project.
Australian Indo Mines
Limited is
developing 70%-owned Jogjakarta Iron Project in southern Java
where it has defined a 605 million tons resource. In mid-2011 a bankable
feasibility study examining the development of a 2 million tons a year iron
concentrate operation will be completed with production at this rate targeted
from mid-2012. It is anticipated that operations will begin in the first half
of 2011 targeting production of up to 250,000 tons of iron concentrate for
sale. Details of the project may be found here.
Since 2008 Earthstone Resources alongside with GJR develops and produces iron ore in Nalo Baru mine on Sumatra.
In 2010 it was
reported that Merukh Enterprises, has formed a joint venture with
the Indian company Salgaocar Mining Industries Pty Ltd to
develop two iron ore mines on Sumba island. The two mines are estimated to contain reserves of ±690m tons.
Merukh Enterprises is also in talks with several potential partners to develop
five other iron ore mines also located on Sumba. PT Merukh Iron & Steel, a
subsidiary of Merukh Enterprises, plans to build two iron ore plants in Sumba Timur
and Sumba Barat regencies in East Nusa Tenggara at a total cost of US$48
billion.
In January 2011
a group of Chinese investors examined iron ore mining opportunities in Musi
Rawas regency, South Sumatra, and discussed plans to invest in mining.
In March
2011 it was announced that there is a deposit of 300 million tons of iron ore
in Kulon Progo, Yogyakarta,
and that the government will support exploitation of the mineral by investors.
There are some discussions on setting up of a steel processing facility
with a capacity of 500,000 tons with subsequent increase to 2.0 million
tons per year.
A really
interesting announcement was made last March regarding Polo Resources Limited (a globally focused natural resources and mine development investment
company) . The company arranged a convertible loan agreement with Polo
IndoIron Holdings Limited to fund due diligence and related project
development costs in respect of iron ore opportunities in Indonesia.
In April 2011 it
was announced that Bumi Pertiwi Makmur Sejahtera,is stepping up its development of iron sand mine in an area of about
1,200 hectares in Sukabumi District, West Java, Indonesia. The estimated
capacity of the iron sand is approximately 100 million metric tons onshore and
500 million metric tons offshore.
Landscape
Mineral
industry in Indonesia is rapidly developing, however, this expansion is really
slow. It took almost 10 years to introduce a new Mining Law with relevant
regulations. A very slow pace is noted in this statement of a recently formed Forum for Exploration and Mining Development
Indonesia (Forum Explorasi Pertambangan Indonesia - FEMDI / FEPI):
“While exploration investment in Indonesia has only averaged US$20 million
a year over the past decade, in just one year, 2008, US$470 million was spend
in Brazil and US$3.3 billion in Canada. Studies show that spending of at least
US$500 million annually is needed just to sustain Indonesia’s current
production levels.” This is
exactly true in the case of iron ore. In many news reports and professional
publications it is stated that the country’s iron ore potential is still
unexplored.
Here I will attempt
to take a glimpse of iron ore mining landscape in Indonesia. This is not a
scientific or precise report – rather it gives a general understanding. The
numbers that are presented here are taken mostly from the published data of
Ministry of Mines; mostly they are not up to current date, but they are
reasonably new and represent the general picture. We should also remember of a
big potential for new deposits.
Indonesia has a number of
types of iron ore (these two references describe the types well: Iron ore and its beneficiation; GLOSSARY OF TERMS/ DEFINITIONS
COMMONLY USED IN IRON & STEEL INDUSTRY). However, there are three types that have commercial
value:
- laterite iron ore – 75%
- primary iron ore – 17%
- iron sand – 8%
Source: Directorate of
Mineral Resources Inventory, 2004, 2007
Laterite Ore
Laterite ores are the
products of rock decay that have content of the oxides of iron. In Indonesia,
mostly it occurs as the limonite in the form of nickel mines over layer (overburden). There are also
other types present: saprolite, pyrite and peridotite. The large deposits of laterite ores are in South
Kalimantan, North Maluku, Papua and South-East Sulawesi. Usually it has a low
Fe content and it is not widely utilized for steel industry. According to
available information, PT. INCO and PT. Antam Tbk are processing limonite ore;
and there are some plans to use it as coal liquefaction catalyst. Limonite is
actively processed from the nickel Soroako deposit in South Sulawesi by PT INCO.
Major deposits are:
·
Kota Baru
(Batulicin), South Kalimantan – Fe: 39%
- 55%, ore – 485.2 million tons, metal – 229 million tons;
·
Luwu (Nuha),
South Sulawesi – Fe: 49% , ore - 371.5
million tons, metal – 182 million tons;
·
Raja Ampat, West
Irian Jaya – Fe: 30% - 44%; ore – 287.2 million tons, metal
– 94.8 million tons.
Primary Ore
Primary
iron ore is usually found in the form of slabs of rock that contain magnetite
and hematite. As a rule it has Fe 50%-70%. In Indonesia
it is found in the areas of South and West Kalimantan, Belitung, Nanggroe Aceh
Darussalam and Papua. The country’s resource in primary ore is 76+ million
tons, but it is not yet utilized. The biggest deposits are:
·
Ketapang,
Kendawangan, West Kalimantan – 280
million tons of iron oxide ore with 159.6 million tons of metal; Fe 40%-70%;
·
Pasaman, West
Sumatra, with 25.6 million tons of ore;
·
Kutai, East
Kalimantan – 18 million tons of ore, 9,9 million tons of
metal;
·
North Minahasa,
North Sulawesi – 17.5 million tons of
hematite ore, 5.25 million tons of metal
·
Sukarame, South
Lampung – 5.6 million tons of ore, 3.2 million tons of
metal
According to the Ministry of Mines, the total value for the country’s
primary iron ore deposits is 363,564,042
tons with projected exploitation for 52 years.
Iron Sand
Iron sand in
Indonesia contains high titanium oxide, which makes it not exactly fit for iron
making process. This titanium may be separated during smelting as titanium slag
– to produce steel. Fe content maybe up to 58%, however, titanium (TiO2) is
around 10%-12%. This processed iron sand – titanomagnetite may be the source of
ferrotitanium – thus making development of iron sand deposits economically viable.
The technology of transformation of iron ore to steel is nicely described in this New Zealand story. In Indonesia iron sand developments started way back in 1910 along the
South coast of Java Island. However, it was only in 1971 when the first
commercial production started by PN Aneka Tambang. At the end of the
XX century iron sand was extensively used for cement industries, which later
lowered due to new substitutes used in cement production.
The biggest deposits are:
·
Ende
(Nangapanda), East Nusa Tenggara – Fe – 15%
ore: 57.1 million tons, metal – 8.57 million tons
·
Kulonprogo,
Bantul, Yogyakarta – Fe:
50%-59%; ore 38.2 million tons, metal – 20.9 million tons
·
Bolaang
Mongondow, North Sulawesi – Fe:
57.99%; TiO2: 9.85%; ore 31.4 million tons, metal 18.21 million tons
As an example, you may
look into Agam Iron Sand Primary Report by Coziron
Resources Limited that estimates the inferred resource of 9,720,000 Metric Tons.
This Website represents another iron ore project in East Java Paseban and
Wotgalih Iron Sand Mining – with detailed description of mineral.
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