Boom Time Along ‘Rim of Fire’ : Indonesian Miners Revive Gold Rush Spirit of 49ers

Abdul Rasyid Kalyku turned a small chip of quartz in his fingers and held it to the light. “There,” he said, “that dark streak. That’s gold!”

A crooked smile cracked his face. He rolled the stone into his fist and held it tightly. Gold. The 35-year-old former merchant seaman had sunk a life’s savings, $3,600, into a mill to extract gold from the unforgiving clay soil of Gurupahi, and he had hit it big, more than $200 clear a day, an Indonesian fortune--while it lasts.

Around him, in a miners’ hamlet scraped into a jungled, volcanic ridge on the island of Sulawesi (Celebes), young men and small boys, barefoot and stripped to the waist, slid into deep shafts, clawing at the gray clay walls for gold-bearing quartz. They are illegals, working on land contracted to international mining combines, and they work with a fever against the day when the troops will come again to clear them out.

Panning, sluicing, tunneling, Indonesia’s local miners are infantry troops in a gold-rush army advancing across the volcanic islands of Southeast Asia and Australasia, the “Rim of Fire.”

“They go where we go,” said James Reeves, a tall Texan who manages the northern Sulawesi operations of Canada’s Placer Dome Mines Ltd. “And sometimes we follow them. A lot of these guys are first-rate prospectors.”

In the last three years, 51 foreign mining firms have moved into Indonesia in search of gold, buoyed by a steady high price for the metal and refined techniques for finding it. The government in Jakarta has signed concessions covering nearly 20% of the country’s land area.

Along the Rim of Fire, a volcanic arc that traces the convergence of the Earth’s crustal plates, mining operations are under way from New Zealand through the Oceanic islands, Papua New Guinea, Indonesia and the Philippines and beyond to China and Japan. Most are in the survey or exploration stage, but some have moved into production.

“Within five to seven years, Indonesia may have 20 or more operating mines and produce 30 to 36 tons of gold annually,” a recent study by the U.S. Embassy in Jakarta reported. South Africa and the Soviet Union remain the world’s top producers, but, by some estimates, Asian and Australasian mines will soon produce one-fifth of the world’s gold.

‘Page From 49ers’

“It’s like a page from the 49ers out there,” exclaimed Peter Wessells, a Placer Dome official in Jakarta. Veteran geologists speak with amazement and grudging admiration for the determined locals whose feverish activity has hampered their own efforts.

“Up in Kalimantan (the Indonesian provinces on the big island of Borneo), I saw these fellows diving for ore in a big pit full of mud,” recalled Malcolm Campbell, a Jakarta-based geologist. “No tools, just groping around with their bare hands, blind down there in viscous mud.”

A journalist who visited the Kalimantan digs, a three-day trip into the jungle by truck and dugout canoe, remarked on the mix of old-style prospecting and up-to-date information:

“They come into camp in the evening, beat from a day’s work, and flick on the ‘Beeb’ to get the London fix,” the daily world price set by the London gold market as reported on radio by the British Broadcasting Corp.

High Prices

Gold has been mined in Indonesia for centuries. Dutch colonialists operated mines on Sumatra, Sulawesi and other big islands, but Indonesia, then the Dutch East Indies, was never a major world producer. Then, as elsewhere in Asia, the high gold prices of the 1980s--the price per ounce reached $850 in 1980 and still stands above $420--spread the scent of profit. The Indonesian government has let 133 concessions since 1985.

Several other factors helped trigger the Indonesian gold rush:

-- Seeking to develop other resources as prices for oil, its No. 1 export, tumbled in the 1980s, the government repealed a windfall profits tax in 1985 and lifted a ban on gold exports.

-- Gold resources in South Africa, which once seemed bottomless, appeared to be less so as mines reached the high-cost regions of 12,000 feet in depth.

-- Refinements in the so-called “epithermal theory” led geologists to take another look at Asia. The theory holds that the grinding of crustal plates releases molten rock which moves toward the surface in volcanic systems. The process sometimes produces concentrations of gold and other precious metals.

Geothermal Processes

The relationship of gold to volcanism has long been known, as typified by mining operations in the American West. But new work on geothermal processes in recent decades has sharpened the understanding, according to geologists.

“Gold is where you find it,” miners say, and they’re looking now along the Rim of Fire.

The problem in Indonesia is that even with an exclusive license to look, you won’t be alone. Illegal miners are as thick as the jungle, and most of them are “high-grading,” finding a seam of gold-bearing quartz and mining it to the end.

“The big mining companies are coming in here to move mountains,” explained a geologist. “They’ll drill some test cores to get an overall calculation of what’s there, then bring in the heavy equipment, set up an open pit operation and work for the average, so many grams per ton of rock.

“But if the illegals have been high-grading, it cuts the prospective average” and the mining company may pull out.

That hurts the government, which gets nothing from the illegal industry but takes a bite from the profits of a producing company in the form of taxes and royalties. From October, 1986, to November, 1987, according to the U.S. Embassy study, about 13 tons of gold were exported, at a value of about $175 million.

Pollution Hazard

But at least another two tons were believed to have left the country illegally. Furthermore, illicit operations use mercury to extract gold from the rock, creating a pollution hazard, and hamper large-scale operations simply by being underfoot.

Across the Indonesian islands, tens of thousands of local miners are working on land set aside for foreign combines. The Jakarta government permits “traditional mining” by the locals, panning or prospecting with simple tools. More sophisticated techniques are outlawed.

Earlier this year, government troops swept several areas to shut down the illegals, but since then, “thousands of illegal miners have seeped back,” like water in a shaft, a government spokesman said.

Here in the long northern arm of Sulawesi, Placer Dome’s Reeves and other foreign geologists are studying rock samples gathered before their concession areas were overrun with illegals and waiting for the government to move.

Joint Venture

Placer Dome’s operations--a joint venture with the government mining company and San Francisco-based Utah Exploration, a subsidiary of Australia’s big Broken Hill Properties mining combine--are centered near the provincial town of Kotamobagu, high in Sulawesi’s clove, coconut and coffee country.

Gurupahi, an hour’s haul up an old switchback logging road by four-wheel-drive truck, is a muddy example of gold fever and the problems with illegals.

Andreas, 31, who abandoned a job as a driver to try his luck, has a family inside his simple thatched hut. Just outside, he has a 40-foot-deep hole, about 3 feet in diameter. Three men are in the bottom of it.

The mouth of the shaft is framed in rough wood and a cross-beam supports a pulley and a 3/4-inch rope and bucket. Beside the shaft rises a gooey pile of gray clay hauled up from below. If fortune shines on Andreas, there will be quartz rock in the clay and gold in the quartz. And if misfortune strikes? No gold, or worse yet, his shaft will collapse.

“Cave-ins are fairly common,” Reeves said. “People get killed.”

Gooey Clay

Each gooey, gray pile adjoins another. At the word of visitors in the camp, clay-smeared heads pop like prairie dogs out of the shafts. The passageway between huts is perilous, sloping down to a creek. “Some of the miners build their hooches right on top of the shafts,” Reeves pointed out.

In one of the few flat areas of Gurupahi stands the trommel mill of Kalyku, the erstwhile sailor and a man in a good position.

The biggest of at least six trommels in Gurupahi, all illegal by government definition, Kalyku’s mill consists of 20 steel barrels into which mercury and pulverized quartz is loaded and tumbled by a motorized belt. At high noon, isolated Gurupahi rumbled like a factory town.

The mercury combines with gold and other precious metals in a spongy substance called amalgam, which is then heated to extract the metals. Some of the vaporized mercury can be recovered; some of the rest passes, eventually, into the creek, poisoning the water.

Metallic ‘Button’

Kalyku is left with a metallic “button,” about 65% gold and the rest usually silver, which he buys from the miner. Kalyku sells the button to a trader of the Bugis people of southern Sulawesi, who in turn moves the gold into the illicit world market. In Asia, traders say, much of the illegal gold ends up in India and Pakistan, where it is treasured as jewelry and a visible sign of wealth.

Gurupahi is a typical Rim of Fire gold camp, hard working and hard playing. Prostitutes work in the camp or nearby. Liquor is recreation, even here in a Muslim country. Hardware peddlers and mill-men make the big money. But while men, boys and some women carry parangs, the Indonesian machete, guns are a rarity, unlike the notoriously wild gold camp at Di Wal Wal, in the southern Philippines, where killings are commonplace.

“A year or so ago, one of the geologists here got wrapped up in a python,” remarked Reeves, a part-time novelist who bills himself as a “mercenary geologist” in the understated humor of his trade. “But that was when this place was solid jungle. If a python showed up now, he’d end up in the pot.”