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Small-Scale Mining in Indonesia

The following report tries to highlight some of the major challenges that mining companies, the Indonesian Mining Association and government, centrally and regionally, face whilst attempting to tap into Indonesia’s very valuable natural resource of minerals through small-scale mining.

Ancient Sanskrit documents translated by the Dutch, reportedly mention Sumatra rich in gold. Small-scale gold mining is deemed to have begun before the Dutch East Indies Company at the beginning of the 17th Century. The evidence is reported from alluvial workings, tunnels, diggings, shafts, aqueducts and sluices. Gold mining in Kalimantan was active during Hindu times, but more active between the 4th to the 18th century within the so-called Chinese Districts of West Kalimantan, although not necessarily on a continuous basis. Alluvial diamonds have been known in Kalimantan since the 7th century and occur over a wide geographical area within that island. Traditionally diamond mining has historically been done on a small scale by family units. Dutch attempts to recover diamonds on a large scale failed. Production figures are reported as incomplete and unreliable. The most active period is reported to have been in the 18th Century. Although the Dutch colonized Indonesia for 350 years prior to Indonesian Independence in 1945, and carried out limited mining operations in tin, gold and coal, the country did not become a real mining nation until after 1967. Today Indonesia is a leading mining country in Asia for its tin, nickel, copper-gold and coalmines. This has been done with the help of foreign companies and foreign investment. The paradox is that today, regulated mining is well an organized industry, while small scale, mining is not. This fact is an irony of small-scale mining in Indonesia to day. It represents a complete waste of human resources, natural resources, and loss of government revenue. Small-scale mining today is completely unregulated, is hurting the environment as well as polluting Indonesia’s rivers with mercury, and for the most part is “tax exempt.” This is because 90% of small-scale mining in Indonesia is regarded by the authorities as “illegal.” In this year 2001, Indonesia is now in transition to a democracy, and by all indications, the country is moving in the right direction. The Indonesian small-scale miners could be a tremendous resource to Indonesia if only they could be organized and managed by the government, or agents of the government. The problem is the government not only lacks funds, but also expertise. The government also has many other pressing matters to correct. What is definitely needed as more proactive in-put by the regulated mining companies operating in Indonesia, under a program of tax incentives.

Additional Info

C Aspinall
Publication Year
Associated Partners
WBCSD (World Business Council for Sustainable Development)
Publishing Institution Webpage
Data Source Classification
Program Report
Research Type
Research Methodology
Thematic Tags
Environmental, Mercury, Pollution
Clays, Coal, Diamond, Gold, Tin, Zeolite
East Asia & Pacific
Last Updated
October 1, 2019