Unlocking Sumatra by Ian Wollff

UNLOCKING SUMATRA COAL ;
OUTLOOK AND CHALLENGERS IN EXPLORATION OF NEW GREENFIELD COAL.
Manual mining multi seam mining- interburden removed with bull dozer
Bukit Asam – Suban Pit 1975
Photo – Ian Wollff

1. Sumatran coal is generally divided between east coast and west coast.
Manual mining pit supervision

1.1 East coast coal tends to be thick continuous coal seams of low rank, with low dip.
Manual mining coal with drill & blast

1.2 West coast coal tends to be thin strongly faulted
coal seams of moderate rank and often high dip.
Manual mining with mattok

1.3 In each case the rank and complexity of the seams tends to
increase towards the central mountain range. Coal seams are locally
upgraded when in proximity to intrusions.
Manual mining coal with pick & shovel into wicker baskets

1.4 Most of the Sumatran coal fields were mapped over 100
years ago by Shell in their oil exploration program, and are
reflected in today’s Government regional geological maps.
Manual mining fill carry baskets at coal face

1.5 Most of the Coal COW’s and IUP’s are located in proximity to
the Governments maps indications of such coal fields.
Manual mining carry coal to rail head

1.6 The greenfield exploration has largely been about
relocating and further defining the various coal seams.
Manual mining loading rail cars

2. Exploration programs tend to follow a well established pattern of
outcrop mapping, drilling with down hole geophysical logging, coal
assay and surveying.
Manual mining rail loading

2.1 The Indonesian development of light weight drills & geophysical logging
unites, plus assay laboratories contributes to low exploration costs.
Tanjung Enim Coal wash plant
Tanjung Enim – 1975

2.2 The overall growth of the Indonesian coal exploration industry
contributes to the development of geologists, surveyors and such skilled
work force to support the exploration industry.
Tanjung Enim Coal power station

3. The commercial targets for Sumatra Coal are mainly;
Tanjung Enim main street

3.1 Modest amounts of coal are being exported from each coast, however
haulage distance is a restricting factor for economic development for export.
General view coal mining
Mechanized mining- Air Layer Pit – 1975

3.2 Coal upgrading for export (to justify haulage) is yet to succeed commercially.
Overburden bucket wheel excavator & conveyor spreader #1

3.3 Development of coal rail (to lower haulage operating costs) is working for
PTBA, however a combination of high capital cost, difficult land
compensation and government regulations have hampered new private rail.
Overburden bucket wheel excavator & conveyor spreader #2

3.4 Mine mouth power stations have been developed & are being
considered on each side of Sumatra, however small local consumption of
electricity limits development opportunities.
Overburden bucket wheel excavators

3.5The new Government regulations on royalty for mine mouth power
station, and for selling electricity into the national grid and abroad may
help some exploration projects.
Dragline to prepare floor & for overburden spreading

3.6 Coal Seam Gas holds some potential, however unsuitable government
regulations and sparcity of oil pipe infrastructure has stalled this potential
development.
Mechanized mining #1
Air Layer Pit – 1975

3.7 Coal upgrading for export has been tested and tried, but there are no
viable operations, and funding for such new technology is difficult.
Mechanized mining #2

4. Social factors now provide a growing restriction over exploration.
Coal Conveyor – mechanized mining

4.1 Indonesia’s population doubles about every 33 years, leading to
two divergent community aspirations ;
Arial view coal mining

4.1.1Competition for land use for housing, infrastructure etc, imposes
higher land compensation costs and longer periods to acquire land. This
makes the marginal coal fields always “just out of reach” for many coal
project developments.
Arial view Air Layer pit & workshop

4.1.2 Demand for employment and electricity may encourage
some coal development projects.
Overburden bucket wheel excavator next to buried coal shovel

4.2 Indonesia’s growing social awareness of the environment, history
and recognition of human rights contributes to more regulations
placing restrictions on exploration and development.
Mechanized mining- top of electric shovel buried by mud slide
Air Layer – 1975

4.3 Competition for land use by other industry sectors – particularly forestry
wherein the faster pace of plantation development is placing growing
restrictions on exploration and commercial coal development.
Tanjung Enim Rail yards

5. Greenfields exploration needs risk taking investors – opportunists.
Mechanized Barge loading conveyor system
Kertapati Palembang– 1977

5.1 Greenfields exploration is typically undertaken by investors when there is
an opportunity to make great profits. Such opportunities mainly occur when
the price of coal is rising (demand greater than supply).
Mechanized Barge loading

5.2 Greenfield exploration is well known as a high risk - high cost venture, which
relies upon sound legal certainty and long development & operation periods.
Coal Barge

5.3 Indonesia’s recent Government regulations now imply poor legal certainty
for foreign investors (divestment) and Indonesian companies (land
compensation, forestry, local regulations), needing higher profits to offset the
higher project risks.
Trans Sumatra Highway
Prabamuli – 1977

5.4 The pool of potential and capable Indonesian investors is very limited,
where alternative business opportunities (high rise building etc) may
offer more competitive business opportunities.
Shell Exploration -Helicopter visit for socialization
Lubik Linggau– 1975

5.5 The pool of potential and capable foreign investors is vast; however
other countries may present a more attractive investment opportunity.
Shell Exploration -Helicopter spotting of coal outcrops
South Banko– 1975

6. Recommendations.
Shell Exploration –picnic at coal outcrop
South Banko– 1975

6.1 The Governments need to become pro active in attracting investors into the
greenfield coal exploration industry. The Government has an active program to
support the tourist industry, so why not the failing Sumatran coal exploration
industry!
Shell Exploration –drill access
Banko – 1977

6.2 The Government should be encouraged to lift the moratorium on new coal
lease applications, such that companies can restart green field exploration.
Shell Exploration – drill & geological logging
Banko – 1977

6.3 The Government should be encouraged to formally publish its coal &
mineral spatial planning maps, to provide the exploration industry with
assurances that not all the prospective land will be allocated to other uses
(plantations etc).
Shell Exploration – drill
Banko – 1977

6.4 The Government may reconsider its National development strategy, with
Sumatra as a centre for mine mouth power stations supporting manufacturing
industries.
Shell Exploration – drill moving on road
Tanjung Enim– 1977

6.5 The Government should ensure the project data derived from the recent
surge in exploration is properly secured and stored (digitized) as a foundation
for the next cycle of exploration.
Shell Exploration – drill heli rig with platform above blow out preventer

7. Conclusions.
Shell Exploration – blow out preventer – heli drill rig

7.1 The opportunity to undertake greenfields coal exploration tends
to be cyclic, with most opportunities coming from :
Shell Exploration – drill heli moving#1

7.1.1 Upturns in the coal price (demand more than supply)
Shell Exploration – drill heli moving #2

7.1.2 Changes in Government support for the coal industry (tax
concessions, ease development barriers, support for mine mouth
power stations etc).
Shell Exploration – Winky rig
Banko – 1977

7.1.3 Change regulations to ease development for the CBM industry.
Shell Exploration – Winky rig & pump
Banko – 1977

7.1.4 Technology breakthroughs – new systems for upgrading or
transporting coal etc.
Shell Exploration – BPB logging unit- trailer mounted
Banko – 1977

7.1.5 Greenfields success often comes from creative geologist looking
in places, and in ways, others have not.
Shell Exploration – BPB logging unit- heli mounted
Banko – 1977

7.2 The previous cyclic for Sumatran Greenfield exploration was 40 years ago
with Shell in South Sumatra, 20 years ago with the development of the Coal
COW, and 5 years ago with the KP system.
Shell Exploration – BPB logging unit(heli ) - operation
Banko – 1977

(7.2 continued) Each cyclic phase had an essential Government
stimulant component through making attractive concession licensing
and business environment.
Shell Exploration – Geological core logging
Banko – 1977

(7.2 continued) The present down turn in the greenfields exploration
industry can not be blamed solely on coal price, but the Government should
acknowledge its lack of support for the industry.
Shell Exploration – Surveying
Banko– 1977

7.3 Limited short term potential for greenfields coal exploration
may lie with opportunities associated with;
Shell Exploration – Banko exploration camp
Banko – 1977

7.3.1 High value specialist coals, principally on the west coast.
Shell Exploration – Interested onlookers
Banko – 1977

7.3.2 Mine mouth power stations to supply local power demand.
Shell Exploration – Local slash & burn agriculture (Not Shell)
Banko – 1977

7.3.3 Mine mouth power stations in the far south of Sumatra to feed the
national grid connected to Java (short transmission losses).
Ship loader – Bamco / World Bank
Tanjung Karang – 1985

7.3.4 Mine mouth power stations in close proximity to Singapore to
feed future undersea power to Singapore & Malaya.
New Bucket wheel excavator – Bamco / World Bank
Bukit Asam – 1985

7.3.5 CBM development in close proximity to, and to feed into, the
existing oil pipe networks.
New Bucket wheel excavator (201)– Bamco / World Bank
Bukit Asam – 1985

7.4 Longer term potential for greenfields coal exploration is largely
dependent on a change in coal price, or some form of national support.
Mobile transfer for OB conveyor – Bamco / World Bank
Bukit Asam – 1985

A story associated with these historic photos by Ian Wollff can be found
in the Petromindo.com magazine “Coal & minerals Asia” Vol 34.
Mobile OB spreader – Bamco / World Bank
Bukit Asam – 1985

Ian Wollff is a Principal Geologist working with PT. CSA Global
international geological consultants , located in Jakarta.
Switching station for OB conveyor – Bamco / World Bank
Bukit Asam – 1985

Thank You
World Bank Exploration –plotting outcrop map

Unlocking Sumatra by Ian Wollff

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Unlocking Sumatra by Ian Wollff