Indonesian energy ministry (ESDM) seeks more investments in underground coal mining as part of its broader goal to increase the country's production in coming years.
Increased private and public sector investment in underground mining would help in tapping high-quality coal resources available in deeper seams, as the number of deposits with higher calorific value (CV) coal have been declining with years of open-cast mining, ESDM said.
The country has set a coal output target of 710mn t for 2024, and this could be revised higher since this year's target of 694.5mn t has already been exceeded. Indonesia produced 741.47mn t in the year to 21 December, according to latest ESDM data. Output data is regularly revised higher because of delays in some producers reporting their output. This means actual output is probably even higher so far this year.
Challenges ahead
The open-cast or open-pit mining was limited by the strip ratio of a mine. A higher strip ratio would mean more overburden materials moved to mine a certain quantity of coal.
But it becomes financially unviable at some point to continue mining owing to high cash costs. Moreover, tighter regulations and environmental norms along with reduced mobility of mechanical equipment over the years restricts open cast mining operations.
But at the same time, underground mining operations require significantly higher up-front investments into mine development, with ESDM estimating initial costs to be between 3-4 times higher than open-pit mining. Furthermore, operational costs in underground mining aree also high as it requires a skilled workforce along with infrastructural costs for ventilation, tunnel support and other ancillary needs.
But development of new mining technologies might help in cutting down operational costs associated with underground mining, ESDM said.
Underground mines would allow companies to directly access coal seams, minimising waste that is usually generated during mining. Underground mining is considered less environmentally damaging compared with opencast mining because of lower overburden volume removal and less surface disturbance.
The comments from the ministry come as coal producer Sumber Daya Energi (SDE) has started commercial operations at the country's first underground mine in Kotabaru, South Kalimantan. Besides this mine, Indonesia's commercial coal mining sector consists almost entirely of open pit mines.
