Indonesia’s South Sumatra provincial government has banned miners in the region to use public road for transporting coal since November 8, which could potentially disrupt supply to local power plants and overseas buyers if it’s ongoing for weeks.
Rizal Cavalry, spokesman for the Independent Power Producers Association of Indonesia (APLSI), said over the weekend that the South Sumatra provincial government has revoked a 2012 regulation, which allowed miners to use public road to transport coal. Instead, miners are told to use a hauling road operated by Servo Lintas Raya, the hauling road unit of PT Titan Infra Energy.
Cavalry said Titan’s hauling road isn’t sufficient to serve some 30 miners operating in the province. As many as 2,000 trucks delivering 60,000-70,000 MT of coal will pass Servo’s hauling road. With each truck has to do four trips a day, it means there will be 8,000 trips going in and out of the road to Titan’s port.
“We don’t think the road is ready. It’s just a try out,” said Cavalry in text messages to CoalMint. Titan’s port won’t be able to accommodate a huge volume of coal and banning the public road for transporting the coal could jeopardize 23 MnT of the province’s annual coal sales, he added.
Southern part of Sumatra stores more coal resources than Kalimantan, Indonesia’s main coal producing island on the Borneo. However, lacking the network of rivers and poor infrastructure has hampered efforts to boost production in the region.
PT Titan Infra Energy operates 110 km dedicated ‘all weather’ coal hauling will be enough for 2×60 trailers with capacity of more than 30 MnT per year, the company said on its website.
But Cavalry claimed the hauling road’s actual capacity doesn’t match as what the company offers.
Cavalry said Titan is also deemed to have problem loading coal according to the miners’ schedule because the company’s stockpile facilities aren’t sufficient to accommodate coal from 30 different miners, which come in a wide variety of calorific value and specification.
Additionally, Titan only has one port, which has to accept coal delivered from eight ports, Cavalry said. According to PT Titan Infra, the company operates blending facilities and 6 stockpiles with 25,000 MT capacity each.
“It will create a horrendous traffic it’s too close to the mine and it will take time to weigh the coal entered the port. Thus, it will create a long and uncontrollable queueing. It could potentially spin into a chaos on the field,” he said.
Additionally, Titan port is only equipped with one manual jetty, while at the eight port, there are nine manual jetty loading to help load coal. Titan also only operates two conveyors while currently loading at other ports are served by 11 conveyors, Cavalry added.
Taufik M. Ahmad, compliance and external affairs at PT Titan Infra Energy, said as quoted by financial newspaper Kontan, there are eight companies with Mining Business Licences (IUP) that have delivered their coal using PT Titan Infra’s dedicated hauling road for the past three months.
The company has been stepping up works to maintain infrastructure, preparing transportation, and other supporting facilities to improve the hauling road, Ahmad said.
“Based on the data, there are 5 MnT of coal delivered using the public road. We are preparing so that those 5 million can be delivered using dedicated road without problems,” he added as quoted by the newspaper.
Ahmad added the business deal between PT Titan and miners using its road service is simple. The miners can send their coal to two Intermediate Stockpile. From the two Intermediate Stockpile, PT Titan Infra delivers the coal to port using 30/120 MT truck. Then from the port, PT Titan will deliver the coal to barges that have been assigned according to the miners’ schedule, Ahmad said.
Ahmad declined to reveal the exact tariff for distributing the coal, but it will be negotiated with miners according to the type of their mines.
Default Shipments
As of the weekend, the miners were unable to deliver their coal, Cavalry said. However, there has yet report of producers defaulting shipments to buyers.
“It’s only been effective for a couple of days, we will see in a week,” he said.
If the South Sumatra went ahead with permanently banning using the public road, it could hamper coal delivery to power plants in the country’s main island, Java, Cavalry said. According to Cavalry, South Sumatra supplies 15 MnT of coal to power generation in Java annually.
APLSI has requested the South Sumatra provincial government to revoke the regulation until there’s a solution for both miners and the government.
“The economy and social impacts from the ban will be significant. South Sumatra could lose USD 1.2 Billion a year from coal sales if the ban on public road for coal transportation continues,” said Rizal.
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