July 22,
> Key rail project to face funding, regulatory challenges
> Central Kalimantan rail project already facing cost delays
> Slow progress to keep global coking coal supplies tight
Indonesia’s plans to unearth and export its vast coking coal resources could stumble over the need for large rail projects, meaning little relief for the tight global market for at least the next five years. Central Kalimantan Province holds 1.4 billion tonnes of mostly high quality metallurgical Coal reserves, the government says, but these are buried deep in the rugged mountains and forests of Indonesian Borneo. Despite the difficulties, soaring prices for the steel-making raw material mean the world’s top miners, including BHP Billiton Ltd, are still interested.
But regardless of how much is mined, a lack of funds and uncertainty over government rules could obstruct the infrastructure needed to get the Coal to port and on board ship. Low water levels in the key Barito river during the dry season from May to September can also limit Coal boat trips to offshore loading facilities for up to five months a year. “There’s no shortage of investor interest in Indonesia’s Coal rail infrastructure, that much is clear,” said Andreas Bokkenheuser, a commodities analyst at UBS in Singapore. “But difficulties for firms in securing capital commitment, land acquisition issues and tough terrain are posing big obstacles to these projects. I wouldn’t expect anything to materialise in the near term.”
Source:Reuters
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