A review of the history of coal exploration, discovery and production in Indonesia: The interplay of legal framework, coal geology and exploration strategy

Indonesia's long history of coal exploration and commercial production began > 160 years ago, when the colonial era Bureau of Mines began the first coal exploration. However, the origin of the modem coal industry from the 1980s followed the introduction of two new investment and mining laws in 1967, which provided the framework for experienced foreign mining companies to enter. The coal industry has subsequently developed mainly in Sumatra and Kalimantan, where the large Cenozoic sedimentary basins include coal deposits with thick seams amenable to low cost mining. The First Generation Coal Contracts of Work (1st Gen CCoWs) were signed from 1981, covering some of the most prospective coal exploration target areas in Indonesia. Systematic coal exploration within these areas was highly successful, with the discovery of several world-class coal deposits. Case studies are presented in this paper, illustrating the geology, exploration strategies and techniques, and current production of three world class coal discoveries which, in 2015, amounted to nearly 28% of Indonesian coal output and over 10% of global steam coal and lignite exports. Commercial coal production under the 1st Gen CCoWs began in 1989, marking the start of a steady increase in coal production, that in 2005 led to Indonesia becoming the world's largest coal exporter. Coal production from the 1st Gen CCoWs still account for over 50% of Indonesia's total coal mined. During the early coal search, most private companies targeted relatively higher rank (typically higher calorific value) steam coal for export. Therefore, the typical focus of initial exploration included those areas that were geologically prospective for this type of coal and which also had potential for low transport costs. These conditions were met in some areas within Kalimantan near the east and southeast coasts or near rivers navigable by barges. This early focus later widened to include lower rank sub bituminous coal and lignite, suitable for Indonesia's domestic markets and as a blend coal in India, China, and countries of SE Asia. More recently, successful exploration was undertaken in remote areas of the Kalimantan interior for coking coal finally achieving success some 35 to 40 years after the first reported coking coal exploration in Kalimantan in the 1960s.