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Tassia Sipahutar

The Jakarta Post

Publication Date : 03-01-2013

Indonesia's state-owned coal miner PT Bukit Asam (PTBA) plans to spend more than 2.5 trillion rupiah (US$258.13 million) to fund expansion projects including the coal port expansion in Tarahan, Lampung.

The company’s president director, Milawarma, said in Jakarta on Monday that the expansion of the coal terminal was one of important programmes needed to achieve the company’s target to increase coal sales by 25 per cent to 20 million tonnes this year.

The port expansion project, estimated to cost 1.5 trillion rupiah, will consist of the construction of a new ship loader and a new dock, and the purchase of four new rotary car dumper (RCD) units.

The project will enable the port to manage large vessels and increase its annual coal handling capacity to between 22 million tonnes and 25 million tonnes from the current 15 million tonnes per year, according to Milawarma.

At the moment, the port, which has only two RCD units, is only able to handle medium-sized vessels. The newly revived Tarahan port is scheduled start operation in the middle of 2013.

By accommodating large vessels, the publically listed company also hopes to reduce its overseas freight costs as the Tarahan port functions as the point of origin for its exports to China, India, Japan, Taiwan and Vietnam. “The bigger the vessel, the cheaper the cost will be. We may be able to reduce the freight costs to China, for example, by $3 per ton. The reduction will certainly benefit us,” he said in Jakarta on Wednesday.

This year’s expansion funds will come from the company’s internal cash. However, according to Milawarma, the expansion budget does not include funds to finance future mine acquisitions. The firm had held talks with other parties, but had not yet finalised any deals, he said.

Bukit Asam operates coal mines in South Sumatra and Kalimantan, with coal reserves and coal resources estimated to reach 1.99 billion tonnes and 7.29 billion tonnes, respectively.

Exports currently account for 45 per cent of Bukit Asam’s sales. The company exports its high-calorie coal and offers its medium-calorie coal on the local market.

According to Bukit Asam corporate secretary Joko Pramono, the company has no plans yet to open new foreign markets. “We began exporting a small volume of our coal to India last year. So in 2013, we will just focus on developing existing markets,” he said.

To support the Tarahan port operation, Bukit Asam is constructing a coal-fired power plant, with a capacity of 2x8 megawatts. The plant, estimated to cost $29.1 million, is slated to begin operations in the second half of this year.

Besides expanding the Tarahan port, the company is also upgrading its loading facilities at the Kertapati port in Palembang, South Sumatra. The upgrade process will cost $18 million. Bukit Asam is also increasing the capacity of the railroad used to transport coal from the company’s mining concession in Tanjung Enim, South Sumatra to the Tarahan coal terminal.

*US$1= 9,645 rupiah