Indonesia has grown to become the world’s largest exporter of steam coal. Its production has increased from 77 million tons in 2000 to 353 million tons in 2011. The Indonesian part of Borneo Island (Kalimantan) has become the main coal producing center in the country. Between 2000 and 2011, coal mining concessions in Kalimantan expanded from 1.5 million ha to about 13 million hectares. So far, the extent of forest loss because of coal mining has been limited and is much lower than that caused by oil palm. However, this is largely because small scale mining concessions, which form the majority of the mining concession area allocated, are yet to be activated. Because the legal framework encourages expansion and growth in coal production, the pressure on forest may increase if small mining concessions become fully operational. This may happen if the demand for coal in China and India, currently the main driving force behind the growth of coal mining in Indonesia, expands as predicted. Domestically, the privileged treatment of the coal mining sector as a strategic part of Indonesia’s long term development plan is a potential threat to forests as well. New policies limiting the intensity of coal mining, seeking to add value, and limit environmental damage are needed to guard against long term environmental and social damage.

1. Investment across sectors and at the
landscape level - the case of coal mining in
Kalimantan, Indonesia
Ahmad Dermawan, David Gaveau, Erik Meijaard, Krystof Obidzinski
THINKING beyond the canopy Bogor, 13 March 2013

2. Production is predicted to
increase
700
• Coal production has
Million tons
increased by triple in 600
2004-2011
500
• Predicted to double in
400
2018
300
200
100
0
2004 2005 2006 2007 2008 2009 2010 2011 2012f 2013f 2014f 2015f 2016f 2017f
Sources: MEMR and BMI
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3. Most of the coal is exported
400
Million tons
350 Approximately 60% of
Indonesia’s exports go to
300
China and India
250
200
150
100
50
0
2004 2005 2006 2007 2008 2009 2010 2011
Production Export
Source: Ministry of Energy and Mineral Resources
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4. But domestic use is driving
 Government national energy policy: increasing coal in the
national energy mix
 Increased demand from power sector, esp. for outer
islands
Energy mix 2006 Energy mix 2025
Geothermal,
Biofuel, 5%
Geothermal, 5%
Hydro, 3%
1%
Hydro, 5%
Oil, 20%
Gas, 29%
Oil, 52%
Gas, 32%
Coal, 33%
Coal, 15%
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5. Coal reserves in Indonesia
 Sumatera and Kalimantan have the highest reserves
2.1 MT
52.3 BT
52.5 BT
128.6 MT
233.1 MT
14.2 MT
Source: Ministry of Energy and Mineral Resources 2012
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6. Economic importance of
coal mining
 85% of national mining revenues comes from coal
 Approximately 35% of East Kalimantan’s GRDP comes
from coal
4% 2%
4% 6%
3% 8%
0%
23% 50%
Agriculture Mining and quarrying Manufacturing industries
Electricity, gas and water supply Construction Trade, hotels and restaurant
Transportation and communication Financial, leasing and business services Services
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7. Coal mining in
Kalimantan
• Multiplication of
large scale
operations since
2000
• Mostly in East and
South Kalimantan
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8. Coal expansion
14 4,000
Number of permits
Million ha
3,500
12
3,000
10
2,500
8
2,000
6
1,500
4
1,000
2
500
0 0
Cumulative area (ha) Permits (cumulative)
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9. Mining scars
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10. Small scale mining
Small scale coal District Mining rights Area (ha)
mining permits Malinau 7 11,114
Nunukan 22 70,112
issued by Regents
Tanatidung 2 5,000
are understudied Tarakan
Bulungan 33 136,153
Berau 68 224,060
Bontang
Samarinda 76 27,556
Balikpapan
Kutai Kartanegara 687 1,237,374
Kutai Timur 38 670,549
Kutai Barat 138 395,486
Penajam Paser Utara 36 86,307
Pasir 73 248,978
Source: LITBANG Kompas, JATAM,
Greenpeace Total 1,180 3,112,690
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11. Potential challenges
Significant potential for future deforestation:
 3.2 million ha of land allocate for large scale exploration and
exploitation in East & South Kalimantan
 40% of this is forested (1.3 million ha)
 Large portion of small scale permits in forested areas as well
(since 2010 no new small scale permits issued)
Mining get priority over other land uses:
 Permenhut No.P.18/Menhut-II/2011 on Guidelines for the use
of forest estate for mining
 Permenhut No.P.14/Menhut-II/2011 on timber utilization
permits (IPK) for mining companies
 Large new coal concessions (hundreds of 000s of ha) as 15-
20% can be clear-cut (timber) for mine development
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12. Concluding remarks
 Coal mining is a growing sector in Indonesia, but have
the potential to be a major driver of deforestation
 Demand for coal is rising, driven by growing demand for
energy in the Asia-Pacific as well as from domestic
consumers
 Indonesia is stepping up production and export; it’s
getting jobs but it’s loosing revenues and forests
 Major large scale expansion plans is underway, but small
scale expansion is often understudied.
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13. www.cifor.org
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