Indika to acquire MBSS

IDX-listed energy firm PT Indika Energy Tbk announced that it has on November 2011 entered into an Option Agreement to acquire a majority 51 % stake of PT Mitra Bahtera Segara Sejati (MBSS), an integrated coal transport & logistics services company from Prasatya Family. 

Following the agreement, Indika Energy will conduct a customary due diligence on the shipping and barging company that provides logistics services to Indonesian coal companies as well as international customers. 

“This intended acquisition is in line with our strategic plan to further strengthening the group’s energy value chain to be a leading integrated energy player,” said Arsjad Rasjid, President Director, Indika Energy. “Besides diversifying the Group’s revenue stream, MBSS expertise will also provide complementary business offerings that meet the energy logistics needs of our existing and new customers.”

“This is a significant development for MBSS. We have chosen to partner with Indika Energy because we want to be associated with a credible and growing integrated energy company as well as to ride on the group’s strong growth opportunities,” said MBSS’ J.R. Bing Prasatya. “We are confident that going forward this two companies will derive great synergies from each other’s capability and resources to collectively drive a more robust business pipeline.”

MBSS is Indonesia’s second largest coal transporter and logistics providers with fleet of tugs and barges and transshipment facilities. MBSS is currently conducting business in one stop fully integrated solutions to the logistical needs of the Indonesia coal industries ranging from shore based barge loading facility to the offshore loading of ocean going to vessels. 

MBSS’s stop customers are Adaro Indonesia, Kaltim Prima Coal, Kideco Jaya Agung, Bukit Asam, Arutmin, Berau Coal and Indominco Mandiri. MBSS has transported more than 25 million tones of coal in 2009. Indika Energy is Indonesia ‘s leading integrated energy company through its diversified investments in the areas of energy resources, energy services and energy infrastructure through its strategic investments in the areas of coal production (PT Kideco Jaya Agung);engineering, procurement and construction services (Tripatra); engineering, mining and construction contractor & services (PT Petrosea Tbk) ;and a power generation project (PT Cirebon Electric Power).

Wika and Bara Selaras consortium starts 1st coal shipment to China

Coal trading firm PT Wika Intrade Energi (WIE), a unit of Indonesian listed engineering contractor PT Wijaya Karya Tbk, has started first shipment to China under 1-year contarct with STIG Jaingshu Light and Textile. The company’s operational director Agung Yunanto told Petromindo.Com that the shipment will be carried out using handymax vessel. “This shipment is just a trial to consider using a bigger vessel such as panamax  type in the future,” he said.

                 

The coal is sourced from various South Kalimantan and east Kalimantan coal miners, he said, without naming the miners. He said that WIE is collecting the coal in a consortium with PT. Baja Selaras Mandiri and PT. Sarana Cipta Intinusa. “Baja Selaras Mandiri is making direct contact with the coal miners,” he added.

                 

Under the one-year contract with the Chinese firm, the consortium, which calls itself “bwins”, should supply 2-2.5 million of coal per year. The contract could be extended for another 2 to 3 years to supply around 5 million tonnes of coal per annum, he said

Flame SA (Switzerland) to double 2011 coal import from Indonesia

Switzerland trading firm Flame SA, through its Indonesian coal trading unit PT RST International, is planning to boost coal import from Indonesia toabout 6 million tonnes in 2011 from this year’s target of 3.7 million tonnes, the company’s official told.

The official said that coal import from Indonesia as of October 2010 was more than 3 million. “we don’t have any problem with current unusual rainy season. There coal miners. (There were) only several re-scheduling of coal shipment,” the official said.

Of the 6 million tonnes target, the firm has secured about 3.7 million tonnes from East Kalimantan miners, including PT Bara Jaya Utama, which will provide 1.2 million tonnes under 1-year contract, and PT Adimitra Baratama Nusantara, the official said.

The company had signed a 4-year contract with Adimitra to supply a total of 3.8 million tonnes of coal, starting September 2009. 

“The remaining volume is expected to be supplied by other coal miners,” the official added without giving further details. 

source : Asian Coal Magazine

Trada Maritime to Boost Fleet

Indonesian Stock Exchange-listed shipping company PT Trada Maritime Tbk will buy four Panamax-type vessels next year to boost the company’s transportation service for coal shipment, Bisnis Indonesia reported. 

The company’s chief financial officer Adrian.E Sjamsul said that the company would spent about US$120 million for the four vessels. “ With the purchase of four vessels, we will have panamaxes next year,” he added.

This year, the company bought a Panamaxes vessel with a capacity of 70,000 dead weight ton (DWT) for US$30 million. The purchase is financed by loans from Bank Mandiri. In addition, the company has operated 10 sets of tugs and barges for the coal transportation. The vassel is expectect to arrive in Indonesian water December, he said.

Adrian said that the company was currently increasing the company’s fleet to be able to benefit from the increase in coal shipment both for domestic and export markets.

Kepco seeks coal mine in Indonesia

South Korea state-owned utility Korea Electric Power Corporation (Kepco) is seeking to acquire more coal mines in Indonesia, after successfully acquiring a 20 percent stake in listed coal mining group PT Bayan Resources, the company’s official said. 

Kepco is looking for coal mines with minimum reserve  of 100 million tonnes and a calorific value of above 6,000 kcal/kg (ADB), the official told Petromindo.Com recently.

“We prefer to invest in Kalimantan, which has an infrastructure,” the official said without giving further details.

In July 2010, Kepco bought a 20 percent stake in Bayan for US$515 million to secure its coal supplies. Bayan will supply 2 million tonnes of coal per annum to Kepco starting in 2012 and will increase the supply to 7 million tonnes per annum in 2015. 

In July 2009, kepco acquired a 1.5 percent stake in PT Adaro Energy Tbk, for $56.5 million.

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.

San Miguel sets sights on other Indonesia coal mines

The Philippines diversified firm San Miguel Corp. is looking to either enter into a joint venture or acquire other coal mines in Indonesia, the company’s chief executive said as quoted by Business World. “We’re looking at either acquisitions or joint venture for Indonesian coal mines,” Ramon S. Ang told reporters. Ang, however, did not provide other details.

San Miguel signed an agreement with Indonesian company Merukh Enterprises in July to invest $200 million in the development of coal reserves but the deal has yet to be completed. The coal areas are in Aceh, Kalimantan and Papua. 

The agreement will allow the Indonesian mining outfit to export coal to San Miguel’s plants in the Philippines.

San Miguel holds the independent power producer administrator (IPPA) contract for the 1,200-megawatt (MW) Sual coal fired power plant in Pangasinan.

It has already set foot on the mining industry, with three mine sites in Mindanao that provide coal for the company’s coal-fired power plants.

The company has expressed interest in consolidating the three mines to build a mine mouth power plant. San Miguel is currently the biggest trader of electricity. It won the IPPA contracts for Sual, the 345-MW San Roque hydropower plant also in Pangasinan, and the 1,200-MW Ilijan natural gas power plant and 620-MW Limay diesel power plant both in Batanganas, the report said.

China and India, Leaders of The World Coal Market

As with any scenario analysis, the projections are only as good as the assumptions. Such assumptions include taking a position on relative currency prices, supply from export competitor, electricity production dynamics in export markets, and regional economic growth. 

The Coal Market is an open market. It is only divided by an imaginary line separating the market in two; the Atlantic and the Pacific. The Atlantics has been left far behind that of the Pacific. China and India, the two countries that share 50% of the world’s growth, play a great role in shaping the current coal market. The already developed market indicates that the 2011 coal price would stay high and it is expected to reach the same price as that closing the 2010. The price is expected to stay at the level of US$ 100. The volume of the coal trade would definitely increase by three percent from 745 million tones in 2010, up to 780 million tonnes by next year. 

China, though relatively decreases the development of their thermal power plants and increases the use of hydropower plants, the coal imports of, china is projected to increase. Next year, the market expects a boost of the country’s coal demand reaching almost 200 million tonnes. China’s sky-rocketing demand would not only control the world’s coal price, but also make the market reactively look for alternative sources from places relatively considered too far before, such as South Africa and Colombia. Such a high import rate has also been encouraged by the relatively low international freight-rate, and infrastructure constraints, especially the coal transport corridors, that have been going on up to now. 

India’s coal import have been projected to increase up to 98 million tonnes by 2011. In the long run, India has been even projected to become one of the leaders of the world’s developed coal market, especially Indonesia’s coal export market. Coal is now used to generate 87,858 megawatts of electricity power, with the installed capacity of approximately164,509 megawatts. By 2016, India is projected to have the coal imports reaching 200 million tonnes, as the country would carry out plans to operate its coal-fired power plants, including the 18.8 Giga-watt plans to be completed by March 2011. It is said that India is the golden child at the moment, in the coal industry. 

The fast growth of coal demand of the two countries has been encouraged by their interest in generating the economic growth. With around 6.7 billion people of the world, India with its 1.15 billion, and China with its 1.35 billion people have to seriously think on how to encourage growth in the industrial sector through electricity power generation development. Moving forward, regarding their high demand, they have to make a thorough estimation on the available indigenous resource, cost of energy, and present technology of power generation.

Dealing with the Market

Up to the second week of December, almost all of the coal price indexes have stayed around the US$ 110 level, including those of the Newcastle (Newc), Barlow Jonker (BJI), and Richards Bay (RB). Newcastle Index was at US$ 115.81 level, BJI was at US$ 113.95, and RB Index was not far from that of Australia’s which stayed at US$ 109.93.

Next year, the coal price is expected to stay around those of 2010. A number of coal-fired power plants in China have made early preparation on coal inventory in their stockpiles since early September to accommodate the supply of the coming winter. This effort has been based on the past experience dealing with the unpredictable low temperature during winters. One of the stockpiles is in Qinhuangdao which has 15% more stockpiles reaching approximately 6.73 million tones. 

Beside the individual factor of the importer country, factors concerning oil and gas have been inseparable dealing with the coal price. Organization of the Petroleum Exporting Countries (OPEC) has even predicted the oil demand will be lower than that of this year. In its 158^th conference in Quito, Ecuador (in December 11,2010), OPEC has called on member, as well as non-member countries to work together in stabilizing the oil-price. Many analyst have estimated based on the growth of supply , the increasing coal price has been due to the weekend US4 exchange rate. Beside that the gas price would become one element that would influence the fluctuation of the coal price for the next several years. Coal will have to face the market competition against gas-generated power plants through 2011 with the estimated decrease of international gas price.  

Harsh competition among energy commodities is approaching before us. The coal prices have been relatively stabilized throughout 2010. The high price opportunities would be open only in spot markets. In the end, the coal industry should not inwardly focus, but need to open eyes to the facts that coal is competing with gas and find ways reduce the cost of coal production.

Abterra Ltd bags 1-year coal supply deal with South Kalimantan coal miner

Singapore listed firm Abterra Ltd, through its Indonesian coal trading unit PT Abterra Resources Indonesia, has bagged 1-year contract to buy 100,000 per month of coal from South Kalimantan coal miner. 

The company’s manager told Petromindo.Com the coal supply the shipment is expected to start early December with an initial coal shipment of 40,000-50,000 tones per month. The coal is sourced from PT Borneo Lintas Sarawak (BLS).

The coal prices will be adjusted every three month based on indexes, he said. The coal from BLS has calorific value of 6,300-6,100 kcal/kg (ADB). According to him, the company is now scouting for more coal to supply its parent company’s business in China, “We look more coal supply at least around 300,000 tonnes of coal per month, with calorific value of 5,800-5,600 kcal/kg,” the manager said.

According to Abterra’s website, Abterra trades coking coal, coke and iron ore in Australia, India, Indonesia and China. Tapping on the the competitive advantage of a strong parent company, General Nice Resouces (Hong Kong) Ltd., Abterra is able to leverage on its concrete branding and expertise to establish a strong foothold in China.

India’s SPML Infra starts West Kutai Kaltim coal production

PT Vardhman Mining Services, a coal unit of Indian firm SPML Infra Limited (formerly Subhash Projects and Marketing Limited), has started coal production at its coal mine in West Kutai regency, East Kalimantan. The company’s senior official told. That its subsdiary PT Bina Insan Sukses Mandiri (BISM), which runs the coal mine, is currently producing around 50,000 tonnes per month. The mine started producing coal since last June. 

“Right now we’re building infrastructure to increase our production capacity for next year to 100,000 per month,” the official said. In the next 2-3 years, the company plans to boost its coal output by 4-5 million tones of coal per annum. 

The company is selling its coal to end-users as well as traders. The company has already buyers for its coal output over the next six months. “ After six month, we are open for new buyers,” the official added. The mine is located just 5 kilometers away from Mahakam river and its river port can accommodate 300-feet barges.

According to the company’s website the mine covers an area of 5,000 hectares with reserve amounting to 100 million tonnes and gross calorific value of 5,200-5,600 kcal/kg.

Challenger Acquires East Kalimantan Coal Project

Calgary-based minnow Challenger Deep Resources Corp., through its wholly owned  subsidiary PT Bestindo Energy (Bestindo), signed a conditional sales and purchase agreement (CSPA) with PT Alam Tabang Raya Pratama (ATRP) to purchase 100% of the issued and outstanding securities of ATRP for CAD $1.85 million.  The purchase will be paid in crash within about 18 months. ATRP is private Indonesian company that holds the coal exploration rights to a property located in Mahakam river  basin, East Kalimantan. 

The 2,900-hectare Tabang Project is located in Tabang district, Kutai Kartanegara regency. The project area is accessible by vehicle with well established logging roads and is situated in close proximility to the Belayan river, a major tributary of the Mahakam, which turn is the coal transport route to Muara Jawa, the anchorage point for mother vessels and export to market. This river has the capacity to handle 230ft (3,500 tons) barges from projected port facilities. 

Coal operations in the area currently use Belayan River as a transportation highway for commercial coal production. Tabang Project area covers both Batuayau and Ujoh Bilang geological formations, which typically produce coals with the calorific value of 5,600 – 6,000 Kcal/kg (ADB), and coal seam thicknesses varying from 0,5 – 6 meters. 

A preliminary field assessment conducted by Challenger has determined the presence of at least five outcrops of coal, which indicates shallow dipping coal seams.

The current exploration rights for the project are in the form of a SKIP, a license to conduct reconnaissance surveys for the purpose of applying for an IUP, or the exploration permit.  There are no work commitments associated with the SKIP, as it allows preliminary exploration, but not including resource drilling.  ATRP has applied for the IUP that, if issued, would permit drilling operations.  If further exploration results warrant it, a permit for actual mining operations would be required and applied for. The surface access to the project area is subject to negotiation with local landowners and typically provides for compensation for damages caused by exploration activities. 

A comprehensive work program of surface mapping, trenching, sampling and analysis is being prepared to evaluate the potential of the Tabang Project. If and when the IUP (Exploration Permit) has been issued for the project, the exploration drilling operations may be initiated. This stage will depend upon the results of the initial work program, it said.