Indonesia Pivots to Underground Mining as Surface Reserves Dwindle

Indonesia Pivots to Underground Mining as Surface Reserves Dwindle

Increased Costs and Environmental Considerations Drive Shift

Indonesia is witnessing a growing trend towards underground mining as surface mineral reserves deplete. Irwandy Arif, from the Energy and Mineral Resources Ministry, highlights that underground mining, despite doubling operational costs and requiring up to four times the capital investment compared to open-pit mining, offers the potential for reduced environmental impacts. This shift is crucial as it involves higher expenses for specialized equipment and anticipates an increase in material waste that needs management.

Global Market Projections and Indonesia’s Strategic Position

The global underground mining market is forecasted to grow at a 3.62 percent compound annual growth rate (CAGR) from 2023 to 2033, reaching a value of US$34.97 billion by 2033, as reported by Research Nester. This growth is driven by rising demands for minerals like iron, copper, and coal, alongside the booming renewable energy sector and electric vehicle (EV) battery market, which demand cobalt, lithium, and rare earth elements.

Indonesia’s Coal and Mineral Mining Landscape

Indonesia, home to significant underground coal mining potential, has reported 16 companies in this sector, including notable names like PT Sumber Daya Energi (SDE) in South Kalimantan and PT Merge Mining Industri. PT SDE, a Qinfa Group subsidiary, has invested $300 million in the SDE 1 underground coal mine, with two more sites planned.

In the realm of mineral mining, copper miner Freeport Indonesia has moved towards underground operations following the termination of its Grashberg open mine in Papua in 2017. This strategic move, commenced in 2022, aims to address the dwindling surface reserves.

Sustainable Mining and Future Prospects

With Indonesia’s nickel reserves at risk of depletion within 15 years under the current extraction rate, the ministry is encouraging investments in exploration and recycling facilities development. Additionally, seabed mining is being considered for its untapped potential, though this proposal faces opposition from environmental groups concerned about marine ecosystem risks.

The Indonesian government’s focus on underground mining marks a significant shift in the country’s mining strategy, balancing economic interests with environmental sustainability. icon

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