PT Indo Tambangraya Megah, Indonesia’s fifth biggest coal producer in terms of volume, plans to acquire several mines to boost its reserves, the company’s official said recently.
The company is in talks to acquire about 5 mines with reserves range from 20-30 MnT, Yulius Gozali, the company’s director said. The unit of Thai Banpu Group is also looking for mines within 10-15 km distance from its existing mines in East Kalimantan for easy transportation.
“We’re looking for small mines because mines with bigger reserves aren’t readily available in Kalimantan,” said Gozali. “We’re also prefer mines closer to our mines, so we can easily connect with our main road for transportation,” said Gozali, adding that the company is open to any calorific value.
The acquisition move came as coal prices have bounced back from multi-years low while demand, from China, India as well as from emerging buyers, have soaked up oversupply.
Last year, PT Indo Tambangraya acquired a 70% state of PT Tepian Indah (TIS) at a deal valued at USD 9.5 million. TIS has a mining permit for concession area of 2,065 hectares with 4.7 MnT of reserves which is located adjacent to Trubaindo Coal Mining’s mine in East Kalimtan. Trubaindo is a unit of PT Indo Tambangraya.
The acquisition of TIS, which mines high calorific value of coal, PT Indo Tambangraya increased its reserves to more than 80 MnT, from 77 MnT which comes from drilling and exploitations.
TIS may start producing coal next month, Gozali said. He declined to comment on the budget to be spent for acquiring mines and which mines the company are in talks to buy.
Japan’s Purchase Up
The company expects Japan is likely to be the top buyer for its coal, taking over China. Shipments to Japan may account 24-26% of PT Indo Tambangraya’s exports for this year, while China may contribute 22-23% as a ban to receive imported coal on several ports in the country is seen reducing China’s purchase of overseas coal.
“Exports depend on China because its imports can go up and down. Last year, China was the biggest buyers, Japan came second,” said Gozali. “This year, Japan will be our biggest buyers.”
In the first quarter of this year, PT Indo Tambangraya sold 4.4 MnT of coal with Japan taking 20% of the shipment or 900,000 tons and China 16%. Indonesia’s market accounted for 11% of its sales in the first quarter. The company’s sales in the period, however, fell 19% from 5.4 MnT in the same period last year as heavy rainfall curbed output.
The company has set target to sell 25 MnT of coal this year. Out of the planned sales volume, about 69% have been contracted, according to the company’s data.
In the first quarter of this year, PT Indo Tambangraya mined 4.4 MnT of coal, down from 5.4 MnT as it started pre-stripping process to start mining its coal deposit. Gozali said production will gradually increase from the second quarter as the company will start mining its deposit.
Ouput is expected to climb to 5.1 MnT in the second quarter, the company said in its presentation published in its website. With output from the newly stripped mines, PT Indo Tambangraya will mine 22.5 MnT this year, up from 22.1 MnT in 2017.
Investment in Renewable Energy
The company also plans to invest in renewable energy by building solar and hydro power plants with generating capacity between 100 to 200 MW, Gozali said. Investment for renewable energy will be done through its joint venture, PT ITM Banpu Power. PT Indo Tambangraya has a 70% stake in the joint venture, while Banpu holds the remaining stake.
PT ITM Banpu is currently conducting a study for developing a hydro power plant in Kalimantan, he said.
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