During the early stage of the goldboom, newspapers and magazines published numerous articles

with unrealistic projections based on interviews with Australian executives, which seemed to owe
more to a desire to boost egos and share prices than to objectivity. Unfortunately, they also raised
expectations among groups in the government and public. The euphoria was, however, short-lived.
The combined effect of the October 1987 stockmarket crash and lower gold prices significantly
slowed exploration and development activity. Around the same time, the Government declared a
moratorium on the issue of further COWs, as it was dissatisfied with the lack of progress by many
COW holders. By mid199l, most of the smaller foreign companies and a few of the larger ones had
left or drastically reduced their activities. This decline in activity is demonstrated in Fig. 7, which
shows the annual total expenditure and annual total drilling meterage by foreign companies over
the period from 1985 to 1992. (Note that the increase in the 1992 expenditure and drilling meterage
is due largely to intensive drilling programs at Mt. Muro, Mesel and Batu Hijau. ) The gradual lifting
of the COW moratorium between 1988 and 1992 did not lead immediately to a significant increase
in exploration activity. By the end of 1992, only four new COWs had been signed or initialled,
including two for industrial minerals. These belong to the new Fifth Generation of COWs.
Improvements over the 4th generation COW include a higher debt to equity ratio for tax purposes,
tax deductibility for some benefits in kind and the right to keep accounts in US dollars. A number of
more onerous terms have also been included, such as significant increases in the land and building
taxes, security deposit and minimum expenditure levels, the exclusion of tin, nickel and industrial
minerals, no guarantee of purchase of product by the Government in the case of an export ban, and
the levy of import duties on spare parts. Other changes include a new royalty scheme based on fixed
US$ amounts per unit of contained metal, the abolishment of a separate export royalty and a return
to contract areas larger than 2500 km 2. For a comprehensive discussion of the Fifth COW the reader
is referred to a paper by Watkins ( ! 993).

5.1. Alluvial gold

Prior to the gold rush of the 1980s some exploration for alluvial gold had already taken place, mainly
in Sumatera. This included re-evaluation of the Woyla deposit in West Aceh, where the Dutch had
commenced a dredging operation just before the outbreak of the Pacific War, and which in recent
years was exploited by a local company (Appendix 2). In the 1980s, the focus of the exploration
activities shifted to Kalimantan, involving mostly Indonesian and small- to medium- sized foreign
companies. Most of the areas selected contained known alluvial gold occurrences (old Chinese
workings, Dutch prospects/mines, local mining activities). Targets included Recent-Quaternary gravel
terraces, active gravel channels, buried channels downstream of exposed alluvial occurrences and
paleodrainages. Typical exploration programs for alluvial gold in Indonesia have been described by
Toh (1979) and Andrews et al. (1991). These were based on the "classic" model, which envisages
accumulation of alluvial gold by mechanical and gravitational means. However, recent research by
Seeley and Senden (1994) suggests that gold in some of the Kalimantan deposits has a different
origin, involving transport of gold as a humic acid-stabilized colloid from terraces, followed by
aggregation of the colloidal gold within alluvial channels where acid groundwaters mix with surface
waters. These new findings may have important implications for exploration techniques applicable
to this type of deposit. Fig. 8 shows the location of alluvial prospects that have been or are being drill
tested (Appendix 2). Of these, three became dredging operations (Woyla, Ampalit and Monterado),
and several others have reached the feasibility study stage or are in an advanced stage of
exploration. Post-feasibility study drilling and mine production grades for all three projects fell short
of expectations due to various reasons (Appendix 2). The resource overvaluation combined with
other factors (i.e., large overheads, poorly designed equipment and/or difficult ground conditions)
adversely affected the economic viability of these projects, resulting in the premature closure of the
Monterado project and suspension of the Woyla operations after only a few years of operation.

5.2. Primary gold

Prior to the gold rush, little exploration for hard rock gold had been carried out. Several companies
examined the Dutch Lebong Tandai mine in Bengkulu and Endeavour Resources investigated Gunung
Pani, a Dutch prospect in their porphyry copper block in Sulawesi. In 1975, RTZ/CRA embarked on a
search for primary gold in Kalimantan, which led to the discovery of the Kelian deposit.

Area selection and exploration techniques Area selection at the start of the rush consisted of: ( 1 )
inspection of tenements offered for joint venture by local businessmen, selected mainly on the basis
of local miners' activity and/or Dutch workings; (2) identification, through literature research, of
Dutch mining districts (where targets included both extensions to lodes mined by the Dutch and
large bulk, low grade deposits that would have gone unnoticed by them); and (3) application for
areas in Tertiary and Quaternary volcanic belts, with or without reported gold showings. As the
scramble for areas intensified, geological input decreased proportionally. As shown in Fig. 6, the
majority of COWs were taken out in Kalimantan and the volcanic arcs of Sunda, Banda, and west and
north Sulawesi. In Java, where foreign companies are not allowed to hold COWs, several companies
carried out investigations under agreements with domestic tenement holders. Because of the tight
title situation in these regions combined with the discoveries of Grasberg, and zone VII at Porgera,
Waft and Mt. Kare in Papua New Guinea, the focus subsequently shifted to the central mountain
range of Irian Jaya, where Freeport, INCO and BRGM secured large tenement areas. Bulk leach
extractable gold (BLEG; Wood et al., 1990, pp. 440--441 ), stream sediment and heavy mineral
concentrate sampling combined with float observation and sampling were the main reconnaissance
exploration tools. Several case histories of regional geochemical programs in various parts of
Indonesia have been presented by Hellman and Situmorang (1986), Pringle (1989), Carlile et al.
(1990), Watters et al. ( 1991 ), Andrews et al. ( 1991 ), Sewell and Wheatley (1994a) and Turner
(1993). Sampling media, sample spacing, sample procedures, pathfinder element suites and
interpretation methods varied from company to company, due to individual preference and budget
constraints or, less commonly, based on results of orientation surveys. Average costs per sample site
ranged between US$ 50-100 for easily accessible areas and US$ 2,000-3,000 for the central range of
Irian Jaya. Remote sensing formed an integral part of some regional programs, a notable example of
which is CSR's survey of the Lesser Sunda islands (Sewell and Wheatley, 1994a). Because of high
costs, airborne geophysical surveys were flown in only five COWs after considerable ground
investigations had already been completed. As in the case of coal, exploration companies (and local
miners) benefited greatly from timber activities, which opened up many hitherto remote regions,
particularly in Kalimantan, and in several instances exposed areas of alteration and mineralized
veins. A major problem was the ubiquitous presence of gold in streams in many areas, particularly in
Kalimantan and parts of Sumatera. Spectacular anomalies in streams were often derived from
uneconomic sources, such as raised Tertiary and Quaternary alluvials, supergene enrichment over
low grade mineralization, and low grade but widespread mineralization in intrusive contact zones,
metamorphic veins etc. Trace element geochemistry was used by some companies in an attempt to
discriminate between anomalies derived from secondary sources or uneconomic types of primary
mineralization and those related to potentially economic mineralization. As discussed below, the
Indonesian gold deposits show a wide variety of mineralization styles and settings. Andrews et al.
(1991) point out that this gives rise to highly variable geochemical signatures and stress the
importance of following up any indications, no matter how subtle. The same point is made by Turner
(1993), citing Mesel as an example; this important deposit, located in carbonate terrain, gave no
detectable gold in - 80 mesh silt or panned concentrate samples, and only weakly anomalous values
in BLEG samples. Forty out of 75 drilled prospects were initially identified by regional geochemical
methods. Most of the others were prospects previously found by the Dutch or local miners. In most
cases -80 mesh and/or -200 mesh silt anomalies were accompanied by gold in panconcentrates.
Notable exceptions include the vein deposits of the Gunung Pongkor and Ciawitali districts in West
Java, which yielded geochemical gold anomalies only, reflecting the very fine-grained nature of the
gold mineralization (Felenc et al., 1991 ). There is only one reported case in which a prospect was
found by gold in the pan without an accompanying gold-in-silt geochemical anomaly. Remote
sensing played an important part in two discoveries, viz. Mirah and Kali Kuning. Case studies of
prospect investigations have been presented by Andrews et al. (1991), Swift and Alwan (1990), Van
Leeuwen et al. (1990) and Sewell and Wheatley (1994a). Drill targets were predominantly defined by
surface geochemistry and geology, in about 60% of the cases supported by geophysical methods,
including magnetics (30 prospects), IP (20) and VLEM (9). In one case (Bawone on Sangihe),
concealed mineralization was found by drill testing an IP/EM anomaly. Erosion and weathering
contributed to significant supergene enrichment at a number of prospects. This constituted an
important gold source for local miners, but often led to disappointing results for the exploration
companies when the underlying primary zone was tested by drilling.

Geologic setting and main characteristics Most of the primary gold prospects drilled to date (Fig. 8
and Appendix 3 ) are within Neogene magmatic arcs (Carlile and Mitchell, 1994). The largest
epithermal deposit found to date is Kelian (Ferguson, 1986; Van Leeuwen et al., 1990), which has a
geological resource of 97 Mt at 1.85 g/t Au. It is situated in an apparent NE trending Oligo-Miocene
magmaticbelt in central Kalimantan, which hosts a number of smaller occurrences, including Mt.
Muro ( Simmons and Browne, 1990), Masupa Ria ( Thompson et al., 1994), Mirah, and Muyup
(Wake, 1991 ). Kelian entered production in early 1992 with an annual output in excess of 14 tonnes
of gold, and Mt. Muro and Mirah are currently in the construction and feasibility stage respectively.
The central Kalimantan gold belt was not known to the Dutch, and credit for its discovery should be
given, at least in part, to local miners, as it was their hard rock (Mt. Muro, Masupa Ria) and alluvial
(Kelian, Muyup) activities which brought foreign explorers to the region. The above deposits belong
to the "low sulphidation type" (Hedenquist, 1987), characterized by assemblages of quartz, illite
(sericite), carbonate, pyrite and, with the notable exception of Masupa Ria, adularia, which are
overprinted by kaolinite dominated assemblages. At Masupa Ria, extensive zones of silicification
with associated clay and pyrite alteration ("silica caps") are present over areas up to l0 km 2. This
alteration predates mineralization and may have resulted from the condensation of volatiles
generated by magmas at depth in a high sulphidation environment (Thompson et al., 1994). Similar,
but less extensive alteration at Muyup is interpreted as a former near-surface zone of steamheated,
acid waters (Wake, 1991 ). With the exception of Kelian, these deposits are typical shallow-level
epithermal systems associated with quartz veins, vein breccias and stockworks hosted by andesitic
volcanics.
Fluid inclusion studies indicate that mineralizing solutions were dilute ( < 4 eq. wt % NaCI ) and
ranged between 200 and 290°C. Supergene gold commonly occurs as small nuggets and dendritic
grains to a depth of 25-30 m. The behaviour of gold in the weathering zone has been briefly
discussed by Simmons and Browne (1990) and Van Leeuwen et al. (1990). At Mirah, situated in fiat,
swampy terrain, gold has been strongly leached from the upper few metres. Kelian differs from the
other deposits in several important aspects: ( 1 ) the mineralization is associated with subvolcanic
intrusions and diatremes, (2) contemporaneous eruptive rocks are absent, presumably due to
erosion; (3) quartz veins and silicification are poorly developed; (4) the gold mineralization is closely
associated with iron and base-metal sulphides and carbonate deposition; (5) silver to gold ratios are
low; and (6) gold was deposited mostly from relatively hot (270-330°), moderately saline fluids.
These features suggest that the mineralization was )brmed in the transition zone between
epithermal and mesothermal environments (Van Leeuwen et al., 1990). They are typical of the
"porphyryrelated carbonate-base metal-gold systems" of Leach and Corbett (1993), thought to form
through mixing of hot, gaseous, relatively saline mineralized fluids from buried porphyry bodies at
depth, with cool, dilute condensate or ground waters from the near-surface environment. Other
examples include Porgera, Hidden Valley and Wau in Papua Nieuw Guinea ( Leach and Corbett,
1993). Another well-mineralized belt is the Mio-Pliocene North Sulawesi/Sangihe arc, where 20
occurrences ( Fig. 8 ) have been investigated (Carlile et al., 1990; Kavalieris et al., 1992 ), including ( 1
) Dutch mines of Sumalata, Bolong Mongondou (now known as Lanut, Tobongan and Mintu),
Ratatotok and Paleleh; (2) Dutch prospects at Gunung Pani and Doup, (3) new discoveries near old
mines in the Ratatotok district, including Mesel, and (4) new finds at Bolongitang, Motomboto and
Binabase/Bawone. No economic discoveries have yet been announced, although work is continuing
at several prospects, most notably at Mesel, where a full feasibility study commenced in early 1993.
Compared to central Kalimantan, the gold mineralization of the North Sulawesi arc displays a much
wider variety of styles and settings (Carlile et al., 1990; Kavalieris et al., 1992). These include: ( 1 )
low-sulphidation mineralization occurring in some combination of quartz_+ carbonate veins,
breccias, and stockworks, hosted predominantly by andesitic volcanics (Mintu, Lanut and Tobongan),
and in fractures and breccia zones hosted by a rhyodacite dome (Gunung Pani; Kavalieris et al.,
1990) ; (2) high-sulphidation mineralization at Motomboto, where it is probably related to porphyry
copper mineralization (Perello, 1994) and at Binabase (Swift and Alwan, 1990) ; (3) mineralization
associated with polymetallic veins at Paleleh and Sumalata; (4) sediment-hosted replacement gold-
base metal mineralization at Doup; (5) sediment-hosted disseminated gold mineralization at Mesel
(Turner et al., 1994); (6) gold mineralization in paleokarst breccias and related residual breccias in
the Ratatotok district (Turner et al., 1994) ; and (7) porphyry-style mineralization at Bulagidun ( Lubis
et al., 1994) and Cabang Kiri East ( Carlile et al., 1990). Available K/Ar dates and stratigraphic
evidence suggest a predominantly late Miocene to late Pliocene timing of the mineralization (Carlile
and Mitchell, 1994; Perello, 1994). Mesel, economically the most important deposit, is similar to
many Carlin-type deposits in a number of aspects, including decalcified and dolomitized carbonate,
and jasperiod host rocks, micron-sized gold in disseminated arsenopyrite, deficiency of base metals,
and enrich- T.M. van Leeuwen / Journal of Geochemical Exploration 50 (1994) 13-90 47 ment in
arsenic, antimony, thallium and mercury, but it is distinct in its island arc setting (Turner et al., 1994).

As in central Kalimantan and North Sulawesi, the majority of epithermal gold occurrences in the
Sunda arc are low sulphidation in character and occur in quartz and quartz-carbonate veins, vein-
breccias (e.g., Jobson et al., 1994) and stockworks hosted predominantly by volcanics of andesitic
composition. High sulphidation mineralization has been found at Miwah in northern Sumatera,
Pelangan in Lombok and Dodo in Sumbawa. The latter occurrence is related to a porphyry copper
system (Appendix 1 ). Most of the Sunda arc deposits characteristically display high silver to gold
ratios. Base metal and sulphide contents vary from minor (e.g., Bukit Tembang, Lebong Donok and
Gunung Pongkor) to abundant (e.g., Lebong Tandai, Cikondang, Cirotan and Soripesa). Of particular
interest is Lebong Donok, historically the richest gold mine in Indonesia, which has important
similarities to the Hishikari deposit in Japan (Izawa et al., 1990), including comparable vein textures,
a very low total sulphide content, a low silver to gold ratio, a high selenium content, relatively
abundant adularia, the presence of trusc0ttite, and carbonaceous shale as a major wall rock
(Kavalieris, 1988). A notable feature of the eastern part of the Sunda gold belt, starting from East
Sumbawa, is the common association of gold with barite in quartz veins, stockworks and breccia
bodies that are characterized by large surface areas relative to depth. A different style of
mineralization is found at Lerokis, Kali Kuning and Meron on Wetar Island (Sewell and Wheatley,
1994b), where gold-silver mineralization is hosted in stratiform barite-jarosite beds. It displays
several features typical of "classic" Kuroko deposits, including dome-like felsic volcanic centres with
siliceous and pyritic stockwork zones, massive sulphides, and ferruginous baritic caps overlain by
tufts, mudstones and ferruginous chert. There are also notable differences: the copper and zinc
contents of the massive sulphides are relatively low, whereas the baritic caps are enriched in gold,
silver, arsenic and mercury. The epithermal element suite suggests deposition under relatively
shallow-water conditions (Sillitoe, 1994), and the presence of enargite and alunite may indicate a
high-sulphidation environment of deposition (Carlile and Mitchell, 1994).

Stratigraphic relationships indicate a Neogene age for most gold deposits in the Sunda arc (e.g.,
Carlile and Mitchell, 1994). Reconnaissance K/Ar dates on adularia samples from several West Java
deposits yielded Late Miocene and Plio-Pleistocene ages (Marcoux and Milrsi, 1994), and a Pliocene
age was obtained for an illite sample collected at Kali Kuning (Sewell and Wheatley, 1994b).
Exploration of the deeply eroded Oligo-Miocene magmatic belt in West Kalimantan and the young
volcanic arcs of the Moluccas has so far yielded disappointing results. In the former region, gold
mineralization is predominantly associated with sulphidic quartz veins, and less commonly skarns,
e.g., at Buduk. The richest gold province in Indonesia is the central range of Irian Jaya, owing to the
Ertsberg-Grasberg mines (2,700 t of gold). Regional surveys currently underway in this region have
identified a number of gold prospects, including Waganon in the Ertsberg district, which is
characterized by gold-silver-lead-zinc replacement mineralization in carbonate rocks. Southeast
Kalimantan, south central Kalimantan and northern Sumatera are the only gold-beating regions in
Indonesia lacking conclusive evidence for association with Neogene magmatism. In southeast
Kalimantan, the Sungai Keruh and Timburu prospects display both epithermal and mesothermal
styles of mineralization. The mineralization is associated (spatially) with monzonitic intrusions
emplaced along major thrust zones separating ophiolites and andesitic volcanics of Mesozoic age,
and is characteristically low in silver. In south central Kalimantan, Cretaceous granitoids intruded
into sedimentary rocks are commonly accompanied by gold-bearing fissure veins and stockworks in
the contact zone, the best known example of which is Gunung Mas. Although individual veins are
commonly highgrade, and hence eagerly sought by local miners, they are mostly narrow and widely
spaced, thus limiting their potential for larger scale mining. In northern Sumatera, gold
mineralization is dominantly associated with copper-bearing magnetite veins and skarns, and is at
least in part of Mesozoic age (Beddoe-Stephens et al., 1987).
5.3. Gold resources

The grade-tonnage distribution for selected epithermal gold, copper-gold skarn and goldrich
porphyry copper deposits is shown graphically on a log-log scale in Fig. 9. The majority of the
epithermal gold deposits fall in the range of 1 to 40 t of contained gold. Notable exceptions are
Mesel (53 t), Gunung Pongkor ( 100 t) and Kelian ( 180 t). As a comparison, the gold contents of the
copper skarn and porphyry deposits fall mostly in the 10-100 t range; Batu Hijau contains about 250
t of gold, whereas Grasberg with 2,500 t of contained gold is a class apart: it contains twice as much
gold than all the other deposits combined (epithermal: 660 t; skarn: 160 t; porphyry: 390 t). The
combined resource of the alluvialdeposits is about 45 t, with the majority of the individual deposits
containing between 2 and 3 tonnes of gold. (Note that all the above figures include past production).

5.4. Discussion

The high expectations that prevailed at the start of the gold rush have yet to be fulfilled. Only five
out of 103 COWs signed between 1985 and 1987 reached the mining stage; two alluvial projects
(Ampalit, Monterado) and three hardrock projects (Lebong Tandai, Lerokis/Kali Kuning and Kelian). A
sixth project (Mt. Muro) is under construction and three others (Bukit Tembang, Mesel/Ratatotok,
Mirah) have reached the feasibility stage. With the exception of Monterado and Lebong Tandai,
these are new discoveries. It could be argued that this somewhat limited success (i.e. seven
discoveries in 103 COWs) may be due to the following interactive factors: - Indonesia did not take
full advantage of the worldwide boom in gold exploration at the beginning of the 1980s, as the first
gold COWs were signed only in 1985. -Exploration activity peaked within three years (by 1988) due
to deteriorating global economics. - Most prospects investigated to date are not economically viable
at a gold price below US$ 400 per ounce. - The majority of COWs were held by Australian junior
companies, lacking adequate financial and technical resources to pursue projects to fruition. If the
exploration success of stage 4 is measured in terms of discovery costs of in-situ gold resources, a
more favourable picture emerges. Exploration and feasibility expenditure by foreign companies
during 1985-1992 was US$ 355 million in 1992 dollars (Fig. 7), and the total in-situ resource
(including past production) in the seven COW discoveries is about 330 tonnes of gold. This amounts
to $ 35 per ounce in discovery costs. As a comparison, in North America the average discovery cost
for in-situ gold during the period 1985- 1990 was US$ 44/oz (Metals Economic Group, 1991 ).

6. Other activities

6.1. Uranium

The first search for uranium took place in the early 1950s when Dutch expeditions from Delft
University investigated the Birdshead area in Irian Jaya. The Indonesian National Atomic Energy
Agency (BATAN) conducted small-scale surveys in the early i 960s. Largescale exploration started
only in 1969, mainly through agreements with foreign government agencies. Area selection (Fig. 10)
was based on the presence of one or more of the following geological features: ( 1 ) acid magmatic
rocks, especially S-type granitoids; (2) associated metamorphic rocks; and (3) non-marine
sedimentary rocks derived from weathering of the above two rock types (Agoes, 1988). Stream
sediment sampling was used widely during the reconnaissance phase. Airborne radiometric methods
were unsuitable, due to thick soil cover, dense vegetation and rugged topography. For similar
reasons, ground radiometrics had to be limited to areas with outcrops and float (Barthel, 1988).
Geochemical techniques (stream sediment, soil, rock) were used for more detailed investigations
(Masdja and Sastrawiharjo, 1988). The only significant uranium discovery was at Kalan in West
Kalimantan (Fig. 10), which was explored between 1974 and 1988 by detailed radiometric and
geological surveys, trenching,, drilling and the excavation of an exploration tunnel. Mineralization
occurs in a number of undulating fault breccias, which form parallel boudinage-type structures
within a favourable bed, 80-150 m thick, in metasediments. Individual breccias vary from 0.3 to 1.5
m in thickness and contain 300 to 3000 ppm U. They are cut by breccias containing gypsum, calcite
and chlorite (Sarbini and Wirakusumah, 1988). The total resource is approximately 11,000 tonnes of
U3Os.

6.2. Diamonds

" Alluvial diamonds have been known in Kalimantan since the seventh century and occur over a wide
geographic area, having been recorded in every province. Traditionally, mining has been on a small
scale by family units or by Chinese immigrants. Dutch attempts between 1922 and 1933 to recover
diamonds on a larger scale failed. Production figures are incomplete and unreliable, but the most
active period seems to have been the 18th century. The Dutch made a number of attempts to locate
the primary source of the alluvial diamonds. Only one possible source, the Pamali Breccia in the
Meratus Mountains of South Kalimantan, was identified, which was interpreted as an intrusive
breccia. Recently, Bergman et al. (1987) and Burgarth and Mohr ( 1991 ) re-examined the occurrence
and concluded that it has a sedimentary origin.

Following discovery of the Trisakti diamond (166 carats) near Martapura in South Kalimantan in
1965, the Government set up an agency to supervise and develop diamond mining in the district. It
was subsequently taken over by ANTAM, which was unable to develop a profitable operation
between 1968 and 1976. Brief investigations of other diamond occurrences were undertaken by
several foreign ~ompanies, including Seltrust and MIM, in the late 1960s and early 1970s. During
1983-84, Anaconda, in joint venture with ANTAM, carried out a major helicopter-supported survey
for primary diamonds in areas of West and Central Kalimantan totalling 80,000 km 2 (Fig. 10). In
most areas, minus 1.6 mm material, weighing 25-30 kg, was collected at an overall density of one
sample per 50-75 km 2. This was considered sufficient to detect a primary diamond province, as it
was assumed that kimberlites and lamProites occurred in groups rather than as single bodies. In less
prospective parts of West Kalimantan, bulk samples of approximately 500 kg were taken from the
best available trap sites to test large areas (approx. 500 km 2 per sample) for microdiamonds.

The results were highly disappointing. No indicator minerals or ultramafic rocks of kimberlitic or
lamproitic affinity were identified. Anaconda interpreted the Kalimantan diamonds to be derived
from secondary sources because of (1) observed occurrences of diamonds in Cretaceous, Tertiary
and Quaternary conglomerates; (2) alluvial diamonds found by them in West Kalimantan occurred in
areas underlain by Lower Tertiary basal conglomerates; (3) the robust nature of Kalimantan's alluvial
diamonds; (4) surface abrasion features commonly displayed by the diamonds; and (5) the presence
of green and brown spots overprinting abrasion features on many diamond surfaces, which were
believed to be radioactive damage produced by the decay of monazite and zircon concentrated with
diamonds in alluvial deposits. Anaconda' s geologists speculated that some of the Kalimantan
diamonds came from ultramafic rocks of ophiolitic origin, or that their source area was outside
Kalimantan. Taylor et al. (1990) suggest that on the basis of N aggregation characteristics the
Kalimantan diamonds were derived from local primary sources related to remnant Gondwanaland
subcontinental lithosphere during the mid-Mesozoic or Tertiary. Following Anaconda's unsuccessful
search for a primary deposit, Acorn (subsequently renamed Indonesia Diamond Corporation), in joint
venture with ANTAM, explored for alluvial diamonds in the Martapura district. Their target was
buried channels downstream of local workings, beyond the reach of local miners. In 1991, the
company initiated development of an alluvial diamond mining operation at Danau Sera based on
reserves of 3 Mm 3 @ 0.15 ct/m 3 (overburden: 9 Mm3), a high proportion of which was expected to
be gem quality. Financial problems ended the operations in the following year. The Malaysian
Mining Corporation is currently exploring in the same district, again with buried channels as the
principal target. A magnetic and EM resistivity survey was flown to map these channels, and a
sampling program commenced in 1992.

6.3. Lead and zinc

Numerous lead-zinc occurrences were found by the Dutch in Sumatera, Kalimantan, Java and
Sulawesi, some of which were mined briefly on a small scale. During the last 25 years no systematic
exploration for lead and zinc has been undertaken, but several known occurrences and new finds
were investigated in some detail (Fig. 10; Table 4).

Between 1972 and 1975, ALCOA carried out detailed investigations ( including drilling) of the Riam
Kusik prospect, a lead-zinc occurrence located in their West Kalimantan bauxite concession, which
had been known since 1871. Renewed interest in this prospect has been shown by Tanjung
Resources, which between 1990 and 1992 undertook mapping and sampling of the old ALCOA
trenches, diamond drilling, and the sinking of a shaft. Mineralization is largely covered by alluvial
deposits and occurs intermittently as steeply dipping, narrow veins in a 1 km long, EW trending,
partly-faulted contact zone between limestone and altered quartz~liorite dykes. It varies
considerably from banded, fine-grained massive sulphides to coarse-grained sulphides. Brecciation
and rebrecciation are common features. The mineralization is preceded by quartz-calcite veins and
cut by later chalcedonic quartz veins. During BHP's exploration for tin in the Nam Salu horizon at
Kelapa Kampit, Belitung Island (see above), lead-zinc mineralization was intersected in cross-cuts
and drill holes within and near the horizon over a strike length of 4 km. BHP was not interested in
the lead-zinc potential but used the mineralization close to the footwall of the Nam Salu horizon as a
' 'marker bed' '. Following their take over of the Kelapa Kampit COW in 1984, Preussag explored for
lead-zinc between 1984 and 1986. This included auger sampling, an EM survey, drilling and
underground exploration. Drilling of EM anomalies and base metal anomalies in soil intersected only
minor mineralization. Available evidence suggests that lead-zinc mineralization found to date is
predominantly controlled by bedding-plane parallel shears within and adjacent to the Nam Salu
horizon, and occurs in lenses and irregular, narrow veins as ( 1 ) massive, fine-grained sphalerite,
galena and pyrite, locally with a streaky lamination and commonly containing fragments of vein
quartz and argillized mudstone; (2) brecciated quartz veins and argillized mudstones with selvages of
sulphides; and (3) disseminated sphalerite and galena in quartzitic sandstones. As with the Nam Salu
tin mineralization, syngenetic and epigenetic origins have both been proposed. Kuroko-style
mineralization at Sangkaropi, Central Sulawesi, was investigated in detail t including drilling and
aditing) by ANTAM in the 1970s (Yoshida et al., 1982). Only a small resource was outlined. In 1991,
Aberfoyle initiated an exploration program for volcanogenic massive sulphide deposits in the same
district, but to date no significant new discoveries have been made. Other lead-zinc occurrences
which have been drill tested (Djaswadi, 1993) are shown in Table 4. None of these occurrences
appear to have significant economic potential.

6.4. Into the next 25 years

After phase 4, which was a typical boom-bust stage of exploration, the mining industry has entered
a period of consolidation. At the beginning of 1993, 12 foreign companies had active exploration
programmes compared to more than 30 during the gold boom. These include Aberfoyle, Ashton,
Battle Mountain, BHP, BRGM, CRA, Freeport, INCO, Newcrest, Newmont and Pelsart. Junior
companies are unlikely to be back in force within the foreseeable future due to several reasons. For
one, their overall disappointing performance has prompted the Government to tighten the screening
process of new COW applications by increasing the foreign contractors' financial obligations during
exploration. By contrast, involvement of large Indonesian business groups in gold and coal has been
increasing significantly during recent years, and this may lead to a broadening of the domestic
mining industry. The pace at which exploration and mine development will proceed during the next
25 years will, to a large extent, depend on Indonesia's perceived prospectivity, its competitiveness in
terms of political stability and commercial environment, and more global factor

such as commodity prices, world-wide exploration budgets and capital availability. Some aspects of
the country's prospectivity and commercial environment are briefly discussed below. Discussion of
the other factors is beyond the scope of this paper. Reasons to feel optimistic about Indonesia's
future discovery potential include the following: ( 1 ) Compared to countries such as Australia, the
USA and Canada, Indonesia remains relatively underexplored. There are still virgin areas, and many
other areas have been covered only once by regional surveys, which were of varying intensity and
quality. (2) Almost all regional surveys to date were aimed at a single commodity or target type. In
other parts in the world there are many examples of new discoveries made in areas with a long
history of exploration, but where geologists had been looking for something else. (3) Most of the
discoveries made to date had good surface expressions and resulted from using traditional
exploration techniques. Greater and better application of geophysics, conceptual geology, remote
sensing and other modern techniques using a multidisciplinary, integrated approach should lead to
the discovery of deposits with poorer or no surface expressions, and of new ore body types. (4) In
the majority of cases area selection was based on research of Dutch literature, presence of known
mineral occurrences (including local workings) and/or broad geologic criteria. Over the past 25 years
a vast amount of new data have been collected by exploration companies, government agencies and
research institutes. Review and follow up of these data, and of historic data in the light of new
concepts, are likely to increase the chances for discovery success. (5) The continuing economic
development of Indonesia will gradually open more and more remote areas, thus changing the
economics of both exploration and mining. As mentioned above, one of the factors that will
determine to what extent the discovery potential will be realized is Indonesia's future commercial
and operational environment. Some areas of concern include the following: ( 1 ) Openfile data
system: Over the past 25 years Indonesia has done an admirable job in geologically mapping the
country. However, most of the mapping done to date is first pass reconnaissance in nature. As in the
future there will remain less and less well-exposed deposits to be discovered, there will be an
increasing need for more detailed geologic information. The same applies to airborne geophysical
data, which currently are virtually non-existent. Unfortunately, since 1985 government funds for
these types of work have been limited, and this situation it unlikely to change in the near future. At
present, aerial photography, SLAR, etc., are not always readily available because of security and
other reasons. Similarly, relinquishment reports by COW companies are not easily found in open file.
In addition, some of these reports are sub-standard, and certain important information, such as drill
core, is usually lost when a company terminates its COW. (2) Continuity in exploration: Several times
in the past, momentum in exploration was lost because of moratoria on new land acquisition and
lengthy periods of negotiations for a new generation of COWs. This stop and start approach
considerably slows down the process of sustained exploration, and hence the discovery rate. (3)
Land access: Because of Indonesia's rapid economic development, competition for land use has been
increasing significantly. Furthermore, existing and proposed forest and nature reserves cover large
tracts of land in regions of good mineral potential (e.g., the Tombulilato porphyry-copper district was
included in a national park in 1991, and the central part of the Irian Jaya copper-gold belt falls within
a designated national park). To gain exploration and/or mining title to areas with overlapping land
rights or forest reserves can be time consuming and costly, whereas in the case of pre-existing
national parks this is virtually impossible. (4) Modus operandi: Although the COW system is on the
whole superior to most other mining investment regimes, it has some drawbacks too. It requires the
establishment of a new locally incorporated company, which is a separate legal and tax entity, for
each COW area. In the case where a foreign investor holds more than one COW, this duplicates
many functions, increases overhead costs and tax exposure, and reduces overall flexibility in
exploration. Liquidation of these companies, in the event of unsuccessful exploration, is time
consuming. Furthermore, abortive expenditure in one COW area cannot be transferred to another.
(5) Costs: Exploration in Indonesia is relatively expensive. Costs for drilling, airborne geophysical and
remote sensing surveys, helicopters etc., are significantly higher than in, for example, Australia.
Employment of expatriate staff, a cumbersome bureaucracy and the geographic nature of the
country also add to the costs. Available statistics suggest a significant increase in exploration costs in
real terms over the past 25 years, e.g., a comparison between regional surveys carried out in central
Irian Jaya in the early 1970s and late 1980s shows a doubling of costs (US$1,500 against
$2,50(03,000 per sample in 1990 dollars). Increasing difficulty of finding new deposits under deeper
soil and rock will further increase costs. (6) Outside competition: It could be argued that the lack of
proper investment regimes in most other countries in the Asia/Pacific region has, by default, assisted
Indonesia to reach its present competitive position (Ritchie, 1992). However, this situation is rapidly
changing. In order to stimulate mineral exploration and development in their countries, a significant
number of governments have recently overhauled their mining and foreign investment laws, or are
in the process of doing so. Although many of these countries still have to show that they have the
capabilities of implementing their new investment codes, a trend towards a wider geographic spread
of exploration funds has already started. This development, together with the fact that since 1991
world-wide exploration budgets have been drastically cut and are unlikely to increase significantly in
the foreseeable future, means that competition for investment funds will become increasingly fierce,
and hence Indonesia may have to review the fiscal regime in mining (which currently offers few
special incentives) to remain competitive. Technical aspects of exploration in the coming years, such
as area selection, exploration methods and target types, are predicted to undergo the following
trends. Exploration will focus on known mineral districts and existing mining areas, and on mineral
occurrences and geochemical anomalies identified during previous exploration phases; there will be
less emphasis on large grass roots surveys. Geochemical sampling methods, which generally proved
to be effective in Indonesia's tropical and predominantly mountainous environment, will continue to
be used as one of the principal exploration tools. The main changes will be in the greater use of
computer-assisted interpretation techniques and a wider range of elements analyzed. Geophysical
methods will be increasingly used, but in the case of airborne surveys only if costs can be reduced.
The usefulness of remote sensing as a tool for direct target definition will be largely restricted to the
drier, less vegetated parts of the country. The recent trend to drill test prospects at an relatively
early stage by using portable drilling equipment is likely to continue.

Gold will continue to be a main target, at least in the short term. Because of the poor past
performance of Indonesia' s alluvial operations and the diminished role of junior companies, hard
rock deposits will be the main focus of interest for foreign explorers. The recent discoveries of
Grasberg and Batu Hijau is generating renewed interest in porphyry copper deposits, in particular
the gold-rich type. As most of the "sore thumb" deposits are likely to have been found during the
regional surveys of phases 2 and 4, geologists will have to look for more subtle indications. Assuming
that the target for future domestic coal consumption set by the Government is realistic and/or world
coal markets continue to grow, the coming years will witness another boom in coal exploration,
mainly in the established fields. Opportunity commodities may include lead-zinc, mineral sands and
diamonds. Industrial minerals (Hasbullah, 1990) will be primarily of interest to domestic companies
and cooperatives. New concepts, chance discoveries and/or changes in world commodity markets
may lead to exploration for other commodities or ore types. With regard to future mine
developments, several gold and copper-gold prospects identified during the 1980s are likely to be
brought into production, in particular if the outlook for gold improves. Before the end of the century
the annual production of copper and gold is expected to increase to 400,000-600,000 t and 50-70 t
respectively. Coal production will also increase significantly, both from existing operations and new
mines, and may reach 50-60 Mt by the year 2000. An improvement in metal prices combined with
the development of new metallurgical processes and/or the availability of cheap energy may result
in increased exploitation of Indonesia's vast bauxite and nickel laterite resources, with the annual
nickel output exceeding 75,000 t, and continued growth of the national economy will stimulate
demand for industrial minerals. In contrast, tin production is likely to decline despite continuing
restructuring of the industry, which commenced in 1984 and made Indonesia one of the lowest cost
producers in 1988.