Alluvial gold: why it looks easy and rarely is

Alluvial gold is gold that rivers have already freed from the rock. It sits in sand and gravel and is recovered by washing instead of crushing. A small crew with an excavator and a pump can produce some within weeks. That makes an alluvial project look cheap and quick, and that’s the trap.

The low entry cost is real. Everything after it is harder, from grades and recovery to the licence and reclamation duties, which apply in full.

Where alluvial gold comes from

Gold weathers out of quartz veins and other primary deposits and travels downstream with the sediment. It’s about 19 times as heavy as water, so it drops out wherever the current slows: on the inside of bends, in gravel bars, in cracks in the bedrock and at the base of old channels. Rivers shift over time and leave those gravels behind in terraces and floodplains, sometimes under metres of later clay and sand.

The deposit that results is usually shallow but uneven. Gold gathers in thin layers and pockets, and grades are low. They’re often quoted per cubic metre of gravel instead of per tonne, which the reporting codes allow. Sampling it well is hard. The KCMI code says that estimating alluvial gold reserves probably needs at least 5 years of experience with this deposit type, because of the way gold behaves in river sediment, the grain size of the host gravel and the low grades (see gold resources and reserves).

A primary (hard rock) deposit is a different business. It needs drilling, crushing, grinding and usually cyanide leaching, so it costs far more and takes years longer to build. In return, drilling can define it well and it can run for a long time. An alluvial deposit is cheaper and quicker to start, harder to estimate and usually shorter-lived. The digging moves along the valley, so the disturbed area grows quickly and the reclamation bill grows with it.

How it’s worked and what it costs

A typical operation is open-cut. Excavators strip the overburden, dig the gold-bearing gravel and feed it to a washing plant: usually a screen or trommel feeding sluices or jigs. Smaller crews use gravel pumps and water jets, or dredges working the riverbed. The concentrate is then cleaned up and smelted.

The volumes are the first surprise. Take a grade of 0.2 grams per cubic metre, used here only to show the arithmetic. Each kilogram of gold then means digging and washing 5,000 cubic metres of gravel, plus whatever overburden lies on top. All of it is moved with diesel. Fuel, machine hire and repairs are paid on every cubic metre, whether that week’s gravel is rich or barren.

Water is the second. Washing needs a lot of it, and the muddy water has to settle in ponds before it goes back to the river. A licence holder has to bring its mine waste, whether solid, liquid or gas, within environmental quality standards before it’s released (Article 96 of the Mining Law).

Recovery is the third. Coarse gold is easy to catch. Fine and flaky gold, and gold locked in clay that isn’t fully broken up, can wash straight through a simple sluice. A plant can report steady output while losing much of what it was fed, and only testing the tailings shows it.

Then come the costs missing from the first budget: compensation for the land and crops on the surface, security for a product that fits in a pocket, assays, the environmental approval, royalties and the reclamation that has to follow the digging.

The law still applies

Alluvial gold is a metal mineral. Mining it needs a licence, usually a mining business licence (IUP) or, for local residents and their cooperatives, a people’s mining licence (IPR) inside a designated people’s mining area (WPR). An IPR covers at most 5 hectares for a person or 10 hectares for a cooperative, and an outside investor can’t hold one. The licence routes are set out in mining licences.

Mining without a licence is a crime under Article 158 of the Mining Law, punishable by up to 5 years in prison and a fine of up to IDR 100 billion. Article 161 sets the same maximum for anyone who collects, processes, transports or sells gold that didn’t come from a licence holder. Funding an unlicensed crew or buying its gold brings that risk to you (see illegal gold mining).

Reclamation applies too. Government Regulation 78 of 2010 requires every exploration and production licence holder to reclaim the land it disturbs. In a people’s mining area the government sets a reclamation and post-mining plan before it issues IPRs, and IPR holders carry it out together with the government. Alluvial mining disturbs a lot of land per gram, and the Mining Law asks a licence holder to keep land opened and land reclaimed in balance (Article 99). How that’s costed and guaranteed is covered in reclamation and closure.

The mercury rules

Mercury is the old shortcut. It binds fine gold into an amalgam, which is then heated to drive the mercury off. Presidential Regulation 21 of 2019 notes that mercury is widely used in small-scale gold mining, and describes it as toxic, persistent and able to build up in living things.

Indonesia ratified the Minamata Convention on Mercury through Law 11 of 2017. The 2019 regulation then set a national target to eliminate mercury from small-scale gold mining by 2025, with mercury-free processing and stronger law enforcement among its strategies. That target date has passed. Don’t fund a plan that depends on amalgamation.

Where earlier diggers used mercury, the tailings and river sediment they left can become part of the clean-up on any licence area that takes them over.

Before you fund an alluvial project

• Ask for pits or drill holes on a regular grid, with bulk samples run through a test plant and an estimate signed by a competent person with alluvial experience.
• Check that the licence covers the ground being dug, including any river channel, and check its forest status and any overlapping licences.
• Test the tailings for lost gold before you trust the plant’s output figures.
• Ask how gold is weighed, sealed and recorded from the sluice to the sale.
• Find out whether anyone dug the area before with mercury, and agree in writing who carries that clean-up.
• Settle the reclamation plan, its guarantee and compensation for the people who use the land before the first excavator arrives.