Borneo Lumbung Energy and Metal TBK seeks longer term contract with China Steel

Indonesia Stock Exchange-listed coking coal miner PT Borneo Lumbung Energi and Metal Tbk is currently in talks to establish a longer term coal supply contract with Taiwanese Company China Steel, the company’s senior executive has said. The company’s marketing director Ken Allan said that Borneo proposed an extension of the contract to at least a year from three months at present. “The final decision will be made during a meeting in December,” he said. 

At present, China Steel receives about 166,000 tonnes of coal worth US$200 a ton under a three-month contract. Allan said that the contract term might be extended to one year with total supply of between 500,000 and 600,000 tonnes. Allan said that the company expected to sign new contracts with a number of Japanese buyers in January or February, next year. He did not disclose names of the buyers but said that the delivery could be begun in April. 

Borneo exports all of its coal to several countries including China,Taiwan,Korea and India. About 80 percent of its output is sold under contracts,while the remaining 20 percent is sold in the spot market. At present, the company is targeting to produce 3.8 million tonnes next year, although the production capacity has been increased to about 5 million tonnes. 

Meanwhile, Borneo’s president director Samin Tan said that the company was negotiating to secure a contract estimated to be worth about US$120 million from PT Krakatau Posco, a joint venture between PT Krakatau Steel and Korean Steel company Posco. “Negotiations are currently underway. If the deal is made, the coal delivery will be carried out after their plant is completed,”he said. 

The joint venture is building a steel mill with a capacity of 6 million tonnes a year in Cilegon, Banten. The new plant will need at least 60,000 tonnes of hard cooking coal a year.