The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region
Issue link: https://asiaminer.epubxp.com/i/632337
14 | ASIA Miner | Volume 13 • Issue 1 | 2016 Indonesia INDONESIA'S second largest listed coal miner PT Adaro Ener- gy is set to conclude deals for two power plant projects worth around US$4.55 billion in total. The frst 2x100MW project will be in South Kalimantan and the second 2x1000MW project will be in Central Java. Adaro and its South Korean partner Korea East-West Power Co (EWP) have secured debt fnancing of $540 million for the coal-fred South Kalimantan project. The partners have formed a 65:35 joint venture called Tanjung Power Indonesia to build the 200MW plant at Tabalong. Adaro has secured $540 million in fnancing from fve banks. DBS Bank, Mitsubishi UFJ Financial, HSBC, Mizuho Bank and Sumitomo Mitsui Banking formed a syndicate to provide $400 million guaran- teed by Korean Trade Insurance Corporation. Korean Development Bank provided the remaining amount of $140 million. The plant is expected to be commissioned in four years and State utility frm PLN has agreed to purchase electricity for 25 years. Adaro Energy legal director Syah Indra Aman said that the com- pany would start construction for the project soon and it would take around 33 months to complete. Syah also says that Adaro is on track to reach fnancial closure for its mega power plant project, the 2x1000MW Bhimasena Power Indonesia (BPI) in Central Java, which will require $4 billion in in- vestment. BPI is a consortium comprising Adaro, J-Power Electric Power Development Co and Itochu Corp, which won the tender for the project in 2011. Syah said land clearance for BPI received a boost after President Joko Widodo directly involved himself in the project by leading an opening ceremony and giving a one-month deadline to settle the land dispute. The frst stage of commercial operations was initially scheduled for 2016. However, the initial target became unfeasible in mid-2014 after BPI declared force majeure regarding the project as it was un- able to acquire the remaining plot of land necessary for completion of the project. In September Adaro announced that it was likely to reduce pro- duction at its mine site in 2016 following the ongoing decline in coal prices. President director Garibaldi Thohir said that his company was looking at output in the range of 52 million to 54 million tonnes, up to 7% lower than the 2015 target of between 54 million and 56 million tonnes. He said the company would reduce the amount of coal offered on the spot market, with more focus on long-term contracts. AGREEMENT has been reached with a mining contractor to reduce waste remov- al base rates by 13% at the Delta Coal Project in East Kalimantan. Project own- ers PT Delta Ultima Coal (66%) and Altura Mining (33%) say that the successful ne- gotiations will provide a long-term sustain- able outcome for the mine. Altura said the 13% reduction in waste stripping costs was an acceptable result for all parties, and Delta Coal had fairly agreed to a mutual fairness clause where- by it would increase rates based on Indo- nesian Coal Index (ICI) prices. "The mine continues to focus on cost reductions and effciency gains in order to offset historically low coal prices and pro- vide a positive platform to maximise the extraction of the mine's considerable coal resources." Altura moved to producer status in 2013 with completion of the purchase of a 33% stake in PT Delta Ultima Coal. The mine is on a 1260 hectare Izin Usaha Pertamban- gan (IUP) or mining permit in the Mahakam River Delta, in close proximity to the near- by major centres of Balikpapan and Sa- marinda. The lengthy contractor negotiations re- sulted in signifcantly lower production during the September quarter. Produc- tion of saleable coal amounted to 56,995 tonnes, down from 280,192 tonnes in the corresponding period of 2014. Coal sold totalled 121,692 tonnes, down from 317,820 tonnes in the 2014 period. Negotiations were fnalised at the end of July 2015 which paved the way for re- commencement of operations in the new- ly developed Pit 37 Extension. Both were expected to result in increased produc- tion during the December quarter. Altura said that coal demand was good during the September quarter with all coal produced being sold and longer term con- tractual arrangements currently being frmed up after recent test shipments providing positive feedback from the end users. Altura has reviewed a technical assess- ment of the mine including a new Life of Mine (LOM) plan based on the new con- tractor rates. The work was undertak- en by external Australian-based mining consultants and has formed the basis for the independent technical reports as a pre-requisite for the intended Singapore listing of Delta Coal and the Tabalong Coal concessions. Upon conclusion of the coal asset list- ing process in Singapore it is planned that the funds raised will enable a fast-tracking to production at the Tabalong project in South Kalimantan. Altura is seeking the necessary Forestry Land Use approvals to allow mining to proceed. Adaro in power plant deals There are two defned resource areas at Delta - Gunung Lampu in the east of the tenement and Noni in the west. Both are serviced by a network of roads to the central processing plant. Delta waste removal rates reduced