Bukit Asam Targets 20% Buy to Grow Coal Transport Capacity

By webadmin on 11:04 pm Jan 04, 2011
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Francezka Nangoy

Coal producer Tambang Batubara Bukit Asam is considering buying an additional 20 percent stake in Bukit Asam Transpacific Railway from the Rajawali Group, a company executive said.

“By increasing ownership in the railway company, we expect to have an additional 25 million tons of transport capacity for our coal,” Achmad Sudarto, corporate secretary of Tambang Batubara Bukit Asam, said in an interview with the Jakarta Globe.

Bukit Asam has an option to buy an additional 20 percent stake in Transpacific, he said. It currently holds a 10 percent stake in the railway.

“We are planning to buy the stake from the Rajawali Group, and we will use our internal funds to finance the purchase,” he said, adding that Bukit Asam would need $320 million to buy the additional 20 percent.

However, Bukit Asam’s president director, Sukrisno, told Bisnis Indonesia on Monday that the company would seek $272 million in bank loans to fund the purchase, a Bloomberg report said.

Bukit Asam Transpacific is 80 percent controlled by Transpacific Railway Infrastructure, a corporation owned by the Rajawali Group. The remaining 10 percent is owned by the China Railway Engineering Corporation.

The railway company plans to build a 307-kilometer rail line from Tanjung Enim in South Sumatra to Bandar Lampung in Lampung. Bukit Asam has a coal mine in Tanjung Enim.

Rajawali Group representatives were not immediately available for comment.

Ibrahim, a senior commodities analyst for Askap Futures, said bad winter weather in Europe and the United States had pushed oil prices higher and had also affected coal prices since many people use coal for energy.

“Coal prices will continue to increase in the first half of 2011, at least until the bad weather in Europe and America ends,” he said.

Bukit Asam forecast its coal sales would reach 14 million tons by the end of 2010. It sold 9.8 million tons of coal in the first nine months of last year, 12 percent higher than the 8.7 million tons it sold the first nine months of 2009, the company said in November.

The company signed a head of agreement in August to develop a coal train railroad and a coal terminal with Adani Global, an Indian company, and the South Sumatra provincial government. The HoA covers developing railroads for coal-carrying trains from Tanjung Enim to Samutra Tanjung Api-Api Harbor.