Indonesian gold output on the rise

Gold is becoming an important export commodity for Indonesia.

In 1992, the country’s exports of gold-ingot bar amounted to US$151.5 million, up from US$118.3 million in 1990.

Add to this the value of gold-bearing copper concentrate, US$230 million, and the export of gold products, and the total value of the country’s gold exports reached US$470.3 million.

Gold exports go primarily to Asia and Australia, with Singapore — last year’s 10.7 tons were valued at US$118.7 million — by far the biggest buyer, followed by Hong Kong, Japan and Australia. Not yet exploited as possible gold purchasers are Taiwan, South Korea, the Middle East and the U.S. Besides unwrought gold, Indonesia has also been exporting gold jewelry and other gold products with the emergence of domestic gold jewelry manufacturers. Exports of gold products have increased substantially, to US$88.8 million last year (gold jewelry accounted for US$79.4 million of that total) from US$30.3 million in 1991.

More than 60% (US$49.5 million) of Indonesia’s gold jewelry exports last year went to Singapore. Hong Kong was the second-biggest export market (US$26.1 million), followed by Germany, the U.S., the Netherlands, Denmark, Taiwan and Switzerland.

Worldwide interest in Indonesian gold mining has grown since 1985, when geologists first found evidence linking the formation of gold deposits to the existence of volcanic activity. The Indonesian archipelago, which straddles a major volcanic belt stretching from Japan to Indonesia’s island of Sumatra, has subsequently become a central focus of gold exploration. Most of Indonesia’s gold deposits occur in Kalimantan, Sumatra and Sulawesi, with the rest found in Java, Nusa Tenggara, Maluku and Irian Jaya. Potential gold production in Indonesia is estimated to be about 100 tons per year which, if realized, would place the country among the world’s largest producers of gold. Gold output grew to 37.9 tons by the end of 1992 from 17 tons in 1991 and 10.7 tons in 1990.

Besides Freeport Indonesia, the major gold producer, PT Kelian Equatorial Mining (KEM) has made a substantial contribution to the increase in Indonesia’s gold mining production. The company was established in 1985, started exploration in 1987, and produced about 14 tons last year, accounting for 37% of the national production.

According to Indonesia’s directorate-general of mining, estimated gold reserves in the country are around 1,609 tons, and the measured deposits about 1,584 tons. The biggest reserve, 1,261 tons, belongs to Freeport Indonesia; at its current output level, the company’s gold production will last for at least 50 years.

Freeport’s Grasberg copper mine in Irian Jaya has the largest known gold reserve of any single operating mine in the world.