Market News Vol. 63
Content:
1. Monet Completes Indonesian Coal Mine Buy for $24 Million
2. APBI Proposed Coal Royalties 6.5 % for the RD
3. Indonesian Coal Miners Urge Govt to Delay Upgrading Rule
4. Harum Energy Obtains Coal Production Boost
5. Indon’s Bukit Asam to Suspend Exploration, Turn to Exploitation
6. Bukit Asam Targets 50% Increase in net Profit
7. Adaro Aims to Double Coal Production
8. Mercator to Spin Off, List Coal Unit
9. Indonesia’s Indo Tambang Raya to Acquire Kalimantan Coal Mine
10. IBT Raises Capacity of Pulau Laut Terminal
11. Indonesia’s Coal Upgrading Rule to Apply When Technology Available
12. Wika Grabs Project from Adaro Indonesia
13. KCPL to Import One Million Tons of 6300 GAD Coal
14. RI Must Boost Exploration, Says Mining Association
15. Berau Energy to Pay Fee to Sojitz
16. TNPL Calls for 160 KT of Non-Coking Coal
17. Indika Buys Mitra Bahtera at US $ 0.183
18. Vallar Finalizes Transaction to Buy 75% of Berau Coal
19. MEC Holdings Eyes Funding for Kalimantan
20. Punj Lloyd to Buy Stake in Indonesia Mine
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Monet Completes Indonesian Coal Mine Buy
for $24 Million
Monnet Ispat and Energy (MIEL) is set to make a
killing following completion of its deal to acquire
PT Sarwa Sembada Karya Bumi's thermal coal
mine in Sumatra, Indonesia, for just $24 million.
Spread over 25,000 hectares in the East Asian
nation's Jambi province, the mine provides MIEL
access to one of the largest thermal coal
deposits in the world and gives it a captive
source to fire its upcoming power projects,
Monnet Group Executive Vice Chairman and
Managing Director Sandeep Jajodia told PTI.
It would also help MIEL cash in on the boiling
coal market by selling the excess production in
open markets, as output would far outstrip its
captive demand.
"The worldwide coal markets are expected to do
very well in the coming years and especially India
and China would remain strong buyers," he
added.
According to Coal Ministry estimates, the coal
deficit being faced by Indian power utilities is
expected to double to 104 million tonnes in the
next financial year.
At present, the deficit is being met through
imports. Of the total installed power capacity of
159,398 mega watt in India, almost 50 per cent is
based on coal.
Coal prices are already ruling high following flash
floods in Australia's Queensland province, a
major producing region.
MIEL has so far explored only about 1,500
hectares of the total lease area and was able to
establish 65 million tonnes of coal reserves in
that area itself.
"We expect these reserves to go up substantially
after completing exploration of the total area,"
Jajodia said, adding that coal from the mine
would help MIEL access low-cost fuel for its
planned coast-based power projects.
MIEL is currently working on a 1,700-mega watt
thermal power plant in Orissa and plans to put
up one more plant of 1,300-mega watt capacity
somewhere in Gujarat or Tamil Nadu to meet the
growing need of the country. The location for
the second plant has not yet been firmed up.
While the plant in Orissa would take another 3-
3.5 years to go onstream, MIEL would
meanwhile sell the fossil fuel in open markets,
ensuring a long-term source of revenue for the
company, Jajodia added.
The acquisition, made by MIEL's wholly-owned
subsidiary Monnet Global (MGL), is also value-
accretive as the logistics cost would be
comparatively lower in view of the excellent
coastal location of the mine in Sumatra.
"Keeping in mind the high coal prices...We have
been able to close the deal at a very low value as
the agreement with PT Sarwa was initially
executed in 2008. However, the process and
regulatory procedures for actual transfer took a
long time to finally close the deal," Jajodia said.
(ITGD Bureau, March 2011)
APBI Proposed Coal Royalties 6.5 % for the RD
The Indonesian Coal Association (APBI) advises
the government to use 6.5% of the coal royalty
funds for research and development (RD). The
move is aimed at improving human resources
(HR) and the quality of Indonesian coal,
according to APBI Chairman, Bob Kamandanu, to
Investor Daily in Jakarta, last weekend.
"Out of the total royalty of 13.5% paid to the
state by the coal businesses, we expect the
government to allocate 6.5% for RD to develop
other sources of energy," he said.
It is in line with the government’s efforts to
promote development of renewable energy
sources, as stipulated in the Government
Regulation (PP).
The regulation stipulated that each coal
producer is charged Rp 2.7 million per hectare
(ha) for mining activities. The land use payment
will cease after the land is returned to the
government, or permit approval is over.
(Investor Daily, March 2011)
Indonesian Coal Miners Urge Govt to Delay
Upgrading Rule
Indonesian coal miners are urging the
government to delay a planned rule that will
require producers to upgrade low-quality coal
before exporting it, as this could dampen
interest in mining investments, said an industry
official on Tuesday.
The energy and minerals ministry is drafting a
regulation that would by 2014 require coal
producers to upgrade low-quality coal to a
medium-quality coal before exporting. The coal
would need a minimum heating value of 5,600
kcal/kg on an air-dried basis.
The planned regulation is part of a new mining
and coal law introduced in 2009 that requires
miners to process coal and minerals into higher
value products before exporting them, as the
country seeks to boost revenue from the mining
sector.
eople have started investing in mining low-
quality coal. It will cause them financial losses if
the government decides to ban it," said
Supriatna Suhala, executive director of the
Indonesian Coal Mining Association.
About two thirds of Indonesia's 105 billion
tonnes of coal resources was seen as not viable
because of high moisture content and low
heating value. But limited mineable reserves of
high-quality coal have forced miners to tap low-
quality sources to feed growing demand,
particularly from India.
The coal association has said Indonesia's
mineable reserves of low-quality coal may reach
10 billion tonnes or half of current total reserves
of around 21 million tonnes, within the next 2-3
years, as more firms are expected to start
producing coal with a heating value of 3,000-
3,400 kcal/kg.
Indonesia, the world's top thermal coal exporter,
has about 16 firms that produce coal with a
heating value below 4,000 kcal/kg, with
combined production estimated at 7.5 million
tonnes, industry data shows.
However, the technology to transform brown or
low-quality coal worth less than $30 a tonne to a
bituminous-type of coal, whose prices hover at
about $120 a tonne, will still serve as a challenge
for miners.
Some firms have been working to develop such
technology with several pilot projects under way,
but so far there has been none producing large-
scale upgrading.
"We think the government should delay
imposing the regulation until there's a proven
upgrading technology," said Suhala, speaking on
the sidelines of a coal conference.
The association proposes the government should
give incentives to investors or miners who are
interested in investing in coal upgrading
technology.
"It would be good, for example, if the
government cut royalties for miners who set up
an upgrading facility," he said.
(Reuters, March 2011)
Harum Energy Obtains Coal Production Boost
PT Harum Energy Tbk projected coal production
volume to rise 55.4% from last year's position of
7.5 tonnes to 11.5 tonnes following the addition
of a new subsidiary in 2011.
Harum Energy Director, Eddy Sumarsono, said
the increase target could be achieved after PT
Tambang Batu Bara Harum in Kalimantan
operates with extra production of 1.5 tons. The
new mine is slated to produce early in the 2nd
semester of 2011.
"The previous target of 10 million tons for 2011
is expected to come from subsidiaries PT
Mahakam Sumber Jaya with 7.5 tons and PT
Santan Batubara with 2.5 tons," he said on the
sidelines of the third annual conference on
Indonesian coal yesterday.
Eddy said Harum Energy’s production is still on
track up to February 2011. He hopes all the
subsidiaries could increase production as
projected. Mahakam Sumber Jaya is expected to
raise its coal production from 5.3 tons to 7.5 tons
and Santan from 2.1 tons to 2.5 tons.
Production of Harum Energy will also be
supported by one of subsidiaries located in
Australia. "A mine in Australia will support the
company’s production," he said without detailing
the quantities and the mine site.
Eddy is planning to acquire a new mine but was
reluctant to provide further detail.
"Harum has targeted an increase in coal prices
by 6.67% or US$ 5 from the realization last year
of US$ 75 per ton."
Based on Bisnis’ data, Harum Energy has
prepared US$30 million or around Rp267 billion
(US$1 = Rp8,900) for capital expenditures in
2011. The funds will be used among others to
improve coal transportation routes, processing
infrastructure projects and procurement of coal
transport vehicles.
The growth of Harum Energy's coal production
has historically been quite consistent. Harum’s
coal production last year rose by 27.59%
compared with 2009 production of 5.8 million
tons.
The company's coal resources stood at 480
million tons while reserves stood at 123 million
tons of coal. In addition to domestic sales, it
exports its coal to Japan, South Korea, and
Taiwan.
Harum Energy previously announced plans to
boost coal production volume in 2012 to 14.5
million tons.
(Bisnis Indonesia, March 2011)
Indon’s Bukit Asam to Suspend Exploration,
Turn to Exploitation
PT Tambang Batubara Bukit Asam (JSX:PTBA)
said it will stop explorations for new coal
reserves until September to concentrate on
exploitation of found reserves.
Bukit Asam is set to boost coal production by 34
per cent to 17.6 million tons this year from 13.1
million tons last year, corporate secretary of the
state company Achmad Sudarto said yesterday.
Achmad said with the rise in production Bukit
Asam hopes to increase sales to 16.9 million
tons or up 30 per cent in a year.
Bukit Asam is building railway tracks and ports
to facilitate transport of its coal from its mines
in South Sumatra. It also plans to acquire two
coal mines in Kalimantan to increase its
production capacity.
(Bisnis Indonesia, March 2011)
Bukit Asam Targets 50% Increase in net Profit
State-owned coal miner PT Bukit Asam is
targeting to boost its net profit this year to up to
Rp 3 trillion (US$345 million), a 50 percent
increase from Rp 2 trillion it booked in 2010.
Bukit Asam president director Sukrisno said
Wednesday in Jakarta he was optimistic that the
company would be able to meet the target,
despite the fact that last year’s net profit had
decreased by 26 percent compared to the Rp 2.7
trillion booked in 2009.
“We’re optimistic because coal prices will
increase this year [...] The drop in the net profit
last year was caused by declining coal prices in
the market,” he said, as quoted by
tempointeraktif.com.
Sukrisno said coal prices stood at Rp 613,000 per
ton in 2010, a drop from Rp 715,000 per ton in
the previous year.
He added that Bukit Asam was targeting to
increase its annual production from 13 million
tons in 2010 to 17 million tons this year.
(The Jakarta Post, March 2011)
Adaro Aims to Double Coal Production
Coal producer PT Adaro Indonesia is planning to
soon boost its production capacity to 80 million
tons annually, almost double the 42.19 million
tons it produced throughout 2010.
The planned boost in production is intended to
support the Indonesian government's policy
placing the private company as among “national
vital objects” in regard to energy production,
Adaro general manager Priyadi said Friday.
“Our production is vital. [If we] halt our supply
for just one week, Java and Bali will suffer from
blackouts,” Priyadi said in Tabalong, South
Kalimantan, as quoted by tempointeraktif.com.
“This year we're targeting to produce up to 48
million tons,” he said.
Priyadi said more than 25 percent of the coal
Adaro produced was aimed at the domestic
market, most of which would be to support
power plants in Java and Bali.
The three coal mines Adaro operates in South
Kalimantan and Central Kalimantan contain
combined total coal reserves of 5.7 billion tons,
he said.
(The Jakarta Post, March 2011)
Mercator to Spin Off, List Coal Unit
Mumbai--Shipping company Mercator Lines Ltd
plans to make the most of a sharp rise in
demand for coal by spinning off and listing its
lucrative coal mining and logistics business.
The listing date hasn't been set yet, but the spin-
off is likely to be completed within a year's time,
Mercator Managing Director Atul Agarwal told
Dow Jones Newswires on Monday.
The company will soon appoint consultants and
investment bankers for the proposed share sale.
Agarwal's comments boosted Mercator's stock,
which was trading 4.2% higher at 40 rupees at
0910 GMT, while the Bombay Stock Exchange
market was up 0.9%. Mercator earlier hit an
intra-day high of 40.50 rupees.
The company's coal business has become its
biggest money spinner, bringing in 4.21 billion
rupees during the October-December quarter,
slightly more than half of Mercator's total
revenue for the period. Demand has surged of
late, with several new power plants coming up
across the country.
Companies in India, where the power sector
accounts for 70% of the country's coal
consumption, are trying to acquire mines abroad
as local supplies aren't enough to feed upcoming
electricity plants.
State-run Indian companies bought overseas coal
assets worth $22 million during 2009 and 2010,
while private Indian companies acquired $1.06
billion worth of coal assets during the period.
A Mercator unit--Oorja HoldingsPte. Ltd--has two
coal mines in Indonesia which together have an
estimated reserve of 25 million tons. There is a
third mine in Mozambique with an estimates
reserve of three billion tons.
Agarwal said the company plans to acquire at
least one more block in Indonesia this year.
In spite of a recovery in global trade, bulk freight
and tanker rates continue to be low, denting
revenue for shipping companies.
Mercator's plan to demerge its coal mining
division is in line with moves by its peers in the
shipping industry, which have announced plans
to hive off their more lucrative non-shipping
businesses to increase market valuation as well
as offset the volatility of the shipping industry.
For instance, Essar Shipping Ports & Logistics Ltd
said last year that it would separate its shipping,
logistics and oilfields business from its high-
margin ports business.
(Wall Street Journal, March 2011)
Indonesia’s Indo Tambang Raya to Acquire
Kalimantan Coal Mine
Indonesia's Indo Tambangraya Megah, a unit of
Thai's Banpu, plans to buy a coal mine in
Kalimantan with annual capacity of one million
tonnes, the firm's CEO said on Monday.
The country's no.3 coal miner expects to
produce 25 million tonnes of coal this year, up
from 22 million tonnes last year, said Somyot
Ruchirawat. Rumchirawat said the company has
been looking to expand output by mine
acquisitions and expects one deal this year.
"There are two or three potential coal miners
that are targeted, but we will acquire a coal mine
in Kalimantan with production capacity of 1
million tonnes a year," he said after a
shareholders meeting in Jakarta.
The firm's coal shipments to Japan are
continuing after the recent devastating tsunami,
as its buyers are located in areas of the country
that have been unaffected, he added.
"There are a lot of orders and no cancellations so
far," Ruchirawat said.
Indonesia is the world's top exporter of thermal
coal, and Japan is the largest buyer of Indonesian
coal for power stations. The Indonesian Coal
Mining Association has said damaged ports
meant some Japan-bound coal has been
redirected to China.
(Reuters, March 2011)
IBT Raises Capacity of Pulau Laut Terminal
The Jakarta Post reported that, coal
infrastructure and logistics firm PT Indonesia
Bulk Terminal (IBT), a subsidiary of PT Adaro
Energy Tbk, plans to increase the capacity of its
handling service by 15 percent to 6 million tons
this year.
IBT’s marketing manager Bram A. Surjadi said in
Pulau Laut, South Kalimantan province, over the
weekend that the extra capacity was needed to
meet the surging demand for exports, as quoted
by The Jakarta Post.
“The growing demand for coal from China and
India means more traders need coal handling
services and IBT will seize this good
opportunity,” Bram said during a press tour at
IBT on Saturday.
IBT previously handled the larger part of its
parent company PT Adaro Energy’s coal, Bram
said. Now, the majority of Adaro Energy is
handled by the company’s Permata Barito
floating crane in the Taboneo Sea, South
Kalimantan, he said.
With the change, 80 percent of IBT’s coal
handling capacity can now be offered to other
coal miners, he said.
IBT is the developer and operator of Pulau Laut
Coal Terminal on the southern tip of the island of
Pulau Laut. It offers coal stockpiling, blending
and loading.
Bram expressed optimism that the target could
be achieved despite the tough competition.
IBT’s coal blending facility allows its customers to
blend their various coal products to meet market
requirements either through stockpile
recirculation or during out-loading, he said.
Currently, IBT is in contract talks with five
traders. “The traders are expected to sign a long-
term contract with IBT. Besides, the number of
inquiries is on the increase,” he said.
Bram also unveiled IBT’s plan to double the
number of stockpiles to 16 from the current
eight as part of its long-term expansion program.
The company’s eight stockpiles have a total
capacity of 800,000 tons.
Separately, IBT port manager Trevor Shipton said
the company represented a key link between the
fast expanding coal mining industry in Indonesia
and its customers worldwide, enabling
Indonesian coal to increase its significant role in
the world coal industry.
(The Jakarta Post, March 2011)
Indonesia’s Coal Upgrading Rule to Apply When
Technology Available
Indonesia is likely to delay a regulation requiring
miners to upgrade their low-quality coal, until
the technology is commercially available, said a
senior mining official said on Tuesday.
Coal producers in the world's top exporter of
thermal coal had urged the government to delay
the rule as they said it could dampen interest in
mining investments.
The energy and minerals ministry has been
drafting a regulation that would by 2014 require
coal producers to upgrade low-quality coal to a
medium-quality coal before exporting. The coal
would need a minimum heating value of 5,600
kcal/kg on a air-dried basis.
"There are some pilot projects but so far there is
no proven upgrading technology," said Bambang
Setiawan, director general of minerals and coal
at the energy and minerals ministry.
"We can't tell them to upgrade if there's no
technology available. We will see if the
technology will be available in the next 3-4
years," said Setiawan.
The planned regulation was part of a mining and
coal law introduced in 2009 that requires miners
to process coal and minerals into higher value
products before exporting them, as the country
seeks to boost revenue from the mining sector.
The Indonesian Coal Mining Association has said
Indonesia's mineable reserves of low-quality coal
may reach 10 billion tonnes, or half of current
total reserves of around 21 million tonnes,
within the next 2-3 years, as more firms are
expected to start producing coal with a heating
value of 3,000-3,400 kcal/kg.
(Reuters, March 2011)
Wika Grabs Project from Adaro Indonesia
One of Indonesia's largest thermal coal PT Adaro
Indonesia has finally mandated PT Wijaya Karya
Tbk (WIKA) as a contractor to install and manage
overburden crushing and conveying system with
a total contract of US$175 million, as quoted by
Insider Stories.
Insider Stories further said, Adaro Corporate
Secretary Devindra Ratzarwin, in an official
statement submitted to Indonesia Stock
Exchange (IDX) today, said Adaro Indonesia, a
wholly owned subsidiary of PT Adaro Energy Tbk
(ADRO), entered into agreement with Wijaya
Karya on March 25 2011.
By installing the system, Adaro expects it will
improve efficiency regarding to the manage
overburden removal as well as maintain its
annual production growth.
In parallel with the appointment, Adaro
Indonesia also signed an agreement of
equipment procurement with FLSmidth Spokane
Inc.
Previously, Adaro Indonesia aimed to build
overland conveyor belt. The company had also
appointed PT Tripatra Engineers & Construction
for the project.
However, Adaro had dropped the project of
overland conveyor belt. "We don't have any
constraint to build overland conveyor belt. But,
we see that the project could benefit us,"
Devindra said in October last year, as quoted by
Insider Stories.
(Insider Stories, April 2011)
KCPL to Import One Million Tons of 6300 GAD
Coal
Karnataka Power Corporation a state utility of
Karnataka, India called for open tender for
supply of one million tons of 6300 Kcal/kg coal
on air dried basis on delivered basis. The delivery
of first cargo should starts from June this year.
The supplier must supply atleast 100,000 MT of
every month starting from June 2011.
This coal supply is destined for its 1,720MW
Raichur thermal power station(RTPS) in Raichur
Karnataka. Due to short of domestic coal linkage
to RTPS, the KPCL has to resort to higher usage
of imported coal.
Earlier in 2010 due to acute shortage of domestic
coal RTPS has concluded two imported coal
tenders of 900K MTs and 500K mts respectively.
Both the tenders have been bagged by
Nagpur based Gupta Coal Corporation, an Indian
coal trading company and the contracts are
under execution. According to a coal trader
based in Karnataka, the existing tender was
awarded at US$ 67 per MT on delivered basis for
6300 GAD kacal/kg coal with 16 percent total
moisture.
The current Indonesian coal prices with 6300
kcal/kg on air dried basis and 16 percent is being
offered high eighties from medium scale
suppliers are high nineties or hundred plus from
premium scale suppliers.
A prorata penalties are applicable for Gross
calorific value and total sulphur and weight basis
penalties are applicable for Ash content, Total
Moisture and size.
(www.coalspot.com, April 2011)
RI Must Boost Exploration, Says Mining
Association
Indonesia needs spend between US$500 million
and $1 billion each year to fund exploration
activities, to maintain the current level of
mineral resource production, the Indonesian
Mining Association announced on Tuesday.
Association chairman Martiono Hadianto, who is
also the president director of PT Newmont Nusa
Tenggara, said in the past decade Indonesia had
allocated around $10 million annually to
exploration to find new mineral reserves outside
existing mining areas.
"If the government wants to maintain current
production levels, it must encourage off-site
mineral explorations," Martiono told a discussion
at the 5th Australian Mining Exhibition and
Conference, Ozmine 2011, in Jakarta.
He added that the government of Indonesia had
to work harder to create a more competitive and
investor-friendly fiscal regime to attract more
investment in the mining sector. "The mining
sector is a capital-intensive industry. The
government must offer competitive incentives to
be able to compete in attracting investors to
conduct businesses in Indonesia," Martiono said.
(The Jakarta Post, April 2011)
Berau Energy to Pay Fee to Sojitz
One by one, London-based company Vallar Plc
and backed-up by Bakrie family have removed
several stumbling blocks that could jeopardize
closing date of acquisition on two coal precious
assets in Indonesia, PT Bumi Resources Tbk
(BUMI) and PT Berau Coal Energy Tbk (BRAU).
After Bakrie family, via PT Bakrie & Brothers Tbk
(BNBR) and Long Haul, successfully transferred
5.19 billion shares or 25% shareholding in Bumi
to Vallar for the exchange of 49.39 million of
new shares issuance by Vallar to Bakrie family,
Bakrie family has finally reached an agreement
with a Japanese single minority shareholder in PT
Berau Coal, a 90% stake owned by Berau Energy,
Sojitz Corporation.
In an official statement to Indonesia Stock
Exchange (IDX) late last week, Berau Energy
President Director Rosan P. Roeslani, said that
Berau Energy has entered into consent
agreement with Berau Coal, Aries Investment
Limited, PT Armadian Tritunggal, and Sojitz.
Referring to the agreement, Sojitz can eventually
provide its consent to Berau Coal in relation to
financing, additional financing, and guarantee
approval by Berau to several creditors of Berau
Energy.
In return, Berau Energy has committed to pay an
annual ongoing fee as much as 0.4% of total
financing and additional financing owed to Sojitz.
The payment will be made in quarterlly basis to
Sojitz.
Rosan said the payment of ongoing fees will not
make Berau Energy to breach a shareholder
agreement with Sojitz. Berau Energy can secure
additional financing in which Berau Coal as
guarantor.
(Insider Stories, April 2011)
TNPL Calls for 160 KT of Non-Coking Coal
Tamil Nadu Newsprint and Papers Limited
(TNPL), is seeking to procure another 160,000
MT +/- 5 percent of Non-Coking imported Coal
with Gross Calorific Value (ADB) 6000 Kcal/Kg, on
delivered at TNPL factory siding at Pugalur basis,
according to the tender MM/SP/TENDER
201195059 released today.
Total tendered quantity to be delivered in four
shipments starting from July 2011. The price
should be quoted on C&F Tuticorin basis
inclusive of all port charges.
Bidders are request to offer price based on C&F
Tuticorin basis inclusive of all port charges and
arrange delivery of such Coal to TNPL site by
wagons (all activities of stevedoring, handling,
arranging railway rakes, loading, transportation
etc are in supplier’s scope), the tender terms
said.
According to the tender issued on 2nd April
2011, the quality of coal should be Gross
Calorific Value (adb) 6000 Kcal/Kg basis and will
be rejected if GCV is below 5600 kcal/kg. The
Inherent Moisture (adb) of around 10 pct, Total
Moisture (arb) 15 pct basis and above 23
pct will be rejected. The Ash content (adb) 8
pct max , Sulphur (ADB) 0.8pct max and Volatile
Matter (adb) 25 to 45 pct and above 45 pct will
be rejected.
TNPL is a traditional consumer of Indonesian
coal, for its paper factory in Karur district, India.
TNPL has closed its latest tender at US$ 97.10
PMT.
Probably TNPL got their comfortable numbers in
its latest tender and encouraged by the response
they rushed back to procure one more batch.
The reference price (HPB) set by Indonesia for
coal grade of 5,667 GAR kcal/kg heating value
was at a US$ 103.50 a ton based on March 2011
HBA. However, TNPL's last coal purchased price
was much lesser than Indonesian declared price
for 5667 GAR coal. Suppliers are requested to
submit offers by April 16, 2011.
(www.coalspot.com, April 2011)
Indika Buys Mitra Bahtera at US $ 0.183
PT Indika Energy Tbk (INDY), integrated energy
company, today has exercised an option
agreement to acquire 51% shareholding in newly
listed coal tug boat and barge operator PT
Mitrabahtera Segara Sejati Tbk (MBSS) at
Rp1,630 (0.183 USD) per share, said Insider
Stories.
Retina Rosabai, Indika's Head of Investor
Relations, confirmed that Indika has exercised
the option at Rp1,630 (0.183 USD) per share,
entitling the company with 51% stake ownership
or 892.51 million shares in Mitrabahtera which
initiated its trading debut at Indonesia Stock
Exchange today, as qouted by Insider Stories.
Referring to the exercise price, Indika has spent
Rp1.45 trillion (US$ 163,564,579.81) to acquire
Mitrabahtera, a company which was controlled
by Prasatya family.
Ingrid Ade Sundari Prasatya and Patricia Pratiwi
Suwati Prasatya were both controlling share
holders in MBSS with 15.4% shareholding each.
PT Patin Resources previously also controlled
56.2% stake in MBSS.
MBSS enrolled Indonesian logistics markets as a
family company led by Francesca Hadinata and
Bing Prasatya in 1993.
As of September 30 2010, MBSS owned 51 tug
boats, 47 barges, and 4 floating cranes. The
company is underway to construct a new floating
crane scheduled to be commercially operated in
February this year. Patricia Prasatya, with
support of Jon Vassella, is in charge of the day-
to-day running of the company and business
development.
Patin Resources, Ingrid Prasatya, and Patricia
Prasatya, acting as sellers, entered into an option
agreement with PT Indika Energy Tbk (INDY),
controlled by Indonesian billionaire Agus
Lasmono Sudwikatmono, son of Indonesian
tycoon Sudwikatmono who just passed away,
and Wiwoho Basuki Tjokronegoro, on November
26 2010.
Accion Capital
On June 14 2010, MBSS also entered into an
investment agreement with Accion Capital
Management Pte Ltd (ACM) for convertible loan
with principal amount of US$5 million in which
ACM acts as investor agent and Accion Asia
Growth Fund as newly investor.
Under the agreement, when MBSS has listed
shares at IDX, each investor must convert the
loan into new shares of MBSS with condition the
market capitalization is above US$300 million or
Rp2.66 trillion (assuming US$1 equals Rp8,865).
If MBSS's market capitalization is below US$300
million, investors will not obliged to convert the
loan into new shares until July 8 2013. With
US$300 million capitalization, MBSS's per share
equals Rp1,485. By selling 12.5% new shares via
IPO, MBSS is targeting about Rp327 billion
(US$ 36,886,632.83) cash.
In the first day trading, MBSS jumped 11.25% to
Rp1,780 per share from the IPO level at Rp1,600
(US$ 0.180). Today's closing price equaled to
US$358 million market capitalization.
Under the investment agreement, each holder of
convertible loan must convert the loan into new
shares of MBSS.
(Insider Stories, April 2011)
Vallar Finalizes Transaction to Buy 75% of Berau
Coal
Nathaniel Rothschild’s investment vehicle, Vallar,
completed acquiring a 75 percent stake in Berau
Coal Energy from Bukit Mutiara on Friday,
Recapital Group said.
The transfer was completed at 10:40 a.m. local
time, said Thomas Warren Shreve, chief
executive of Recapital Group, the parent of Bukit
Mutiara. Shreve is also a director at Berau.
Vallar agreed in November to invest $3 billion in
Bumi Resources and Berau Coal in a stock and
cash transaction to tap access to an emerging
market in Indonesia, the world’s largest thermal-
coal exporter, amid surging demand for the fuel
from China and India. Vallar will be renamed
Bumi, after the completion of the deals.
The purchase was set to become effective after
the share swap between Vallar and Berau Coal at
the open of the London Stock Exchange, Shreve
said.
“The acquisition has brought together significant
holdings in Indonesia’s largest and fifth-largest
coal producers to create a London-listed
Indonesian coal champion,” Rothschild, co-
chairman of Vallar, wrote on Friday in an
e-mailed statement.
“Both Bumi and Berau have strong organic
growth profiles, with operations and projects
that are perfectly positioned to take full
advantage of the current high demand for coal
from the fast growing markets of Asia.”
Vallar planned to buy 26.2 billion shares of Berau
Coal at Rp 540 each or for a total of Rp 14.1
trillion ($1.64 billion), Recapital, which helped
sell the stake, said in a statement to the stock
exchange on Wednesday. Vallar acquired a 25
percent stake in Bumi last month.
After the purchases, Bakrie Group, the parent of
Bumi, will own about 54.6 percent of Vallar, and
Bukit Mutiara will have about 13.2 percent in the
Jersey, Channel Islands-based company, Vallar
said in a statement last month.
Bakrie & Brothers gained 3.1 percent to Rp 67
per share before settling at Rp 66, 1.5 percent
higher, in trading on the Indonesia Stock
Exchange (IDX). Berau was unchanged at Rp 560
per share.
Vallar may raise its stake in Bumi this year to 51
percent, the Financial Times reported on
Thursday, citing Andrew Beckham, chief financial
officer of both Vallar and Bumi. Eddy Soeparno,
CFO at Bakrie & Brothers, confirmed the plan
without specifying stake sizes.
Rothschild is a former co-president of New York-
based hedge-fund firm Atticus Capital and the
only son of British financier Lord Jacob
Rothschild. Vallar raised 707.2 million pounds
($1.16 billion) in an initial public offering on the
London Stock Exchange in July.
(Bloomberg, April 2011)
MEC Holdings Eyes Funding for Kalimantan
MEC Holdings is seeking more loans from local
commercial banks to help finance its big
investment in development projects in East
Kalimantan, an executive said on Tuesday.
“MEC has placed a billion dollars on
infrastructure construction. It has secured a
lending deal with international lenders and is
looking for possible lending from national
commercial banks,” Charles Gaylord Watkins, an
MEC director, said on the sidelines of the
Indonesia International Infrastructure
conference in Jakarta.
The nation is hosting a three-day forum on
developing the nation. At the meeting, which
was organized by the Indonesian Chamber of
Commerce and Industry (Kadin), the government
is offering projects such as roads, seaports and
airports to foreign investors.
Watkins said the company, a subsidiary of the
Dubai-based Trimex Group, had already secured
a commitment from US lenders Standard
Chartered Bank and Export-Import Bank. Trimex
had held several discussions with Indonesian
banks, he continued, but had yet to receive any
loan commitments.
Madhu Koneru, executive vice chairman of MEC
Holdings, said in July that Standard Chartered
was ready to lend $750 million to the company.
MEC has secured 5,000 hectares of land in East
Kalimantan for its infrastructure work, Watkins
said. The project includes 130 kilometers of
railway, a seaport and a mine for low-grade coal.
The mine is expected to produce two million to
three million tons of coal in the first year before
rising to seven million tons by the end of 2014,
while the port will be able to harbor two cape-
sized ships and have a holding capacity of 34
million tons.
“The project will start as soon as we are clear on
the financing,” Watkins said.
The company first announced the project in
2009, but a delay in land acquisition caused MEC
to postpone the project. The company’s Web
site shows the land acquisition was finalized last
year.
Watkins said he appreciated the government’s
effort to improve regulations. He said investors
were not the only thing the government needs
to secure, but also making it easier to implement
investment.
Coordinating Minister for the Economy Hatta
Rajasa said the government had a number of
policies to ease infrastructure investment. They
include land reform to prevent uncontrollable
price increases and securing land for the public
interest. The land acquisition bill is in the final
stages in the legislature, Deputy Finance Minister
Anny Rachmawati said.
Vice President Boediono reiterated the state’s
commitment to development at the conference.
“We will do our part to minimize the risk in
infrastructure investment,” he said.
(The Jakarta Globe, April 2011)
Punj Lloyd to Buy Stake in Indonesia Mine
Punj Llyod on Monday said it will buy 50 per cent
stake in a thermal coal mine in Indonesia, joining
a select band of private Indian power companies
to acquire coal assets abroad.
The size of the acquisition has not been
disclosed. The purchase will be done through
Sembawang Development, which is a Punj
Llyod’s Singapore-based subsidiary.
Company officials did not give details saying it
was confidential.
The Indonesian mine company is located in
Barito Utara district in Central Kalimantan and
has estimated resources of 134 million tonnes
(mt) and its potential in situ reserves are
estimated at 57 mt, Punj Lloyd said in a filing to
the Bombay Stock Exchange.
Analysts are of the opinion that there are two
main reasons why a company, which has not yet
set foot in the power generation business,
decided to purchase a coal mine.
“The company may be planning to get into the
coal trading business shortly because of the way
coal prices are moving,” said Anupam Gupta, an
analyst with IIFL.
Another analyst who did not want to be
identified said either the company has plans for
power generation or wants to profit from the
highly lucrative coal trading business.
“Coal prices are mostly moving northwards. They
want to benefit from this or may be they want to
tie up coal for power projects they want to set
up in the future,” the analyst said.
Indian power majors such as Lanco Infratech and
Adani Enterprises have bought coal mines in
Australia last year to fuel their power stations in
India.
(The Economic Times, April 2011)
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