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NEWS UPDATES 29 August 2009

Indonesian firms seen eyeing BHP project

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Nine local energy firms including PT Adaro Energy, PT Medco Energi, and PT Indika Energy may be interested to acquire BHP Billiton’s coal project in Maruwai, Central Kalimantan, in Indonesia, according to a report in the Jakarta Post.

Foreign energy companies may also be looking at the possibility of bidding for the project, the daily quoted a government official as saying Thursday.

“Eight to nine domestic companies are interested in purchasing BHP’s concession. Among them are Medco and Adaro,” Bambang Setiawan, director general of the Energy and Mineral Resources Ministry’s division for coal, minerals and geothermal said.

Bambang confirmed that foreign companies might bid for the project. “But, we have not heard [any details] about it yet. In the next few days, we will ask [for] information from BHP about the progress of [their] divestment,” he said.

Earlier, state mining company PT Aneka Tambang (Antam) issued a statement that it is considering acquiring the BHP asset. “The coal is the coking coal which is different from most coal found in Indonesia,” Antam’s president director Alwinsyah Loebis said. 

Coking coal is the coal used in the production of coke which is further used in the production of pig iron.

Australia-based BHP, currently the world’s largest mining company, is in the process of pulling out from its investments in Indonesia.

In June, the company announced that it had decided to stop the development of the Haju mine, one of seven mines under the umbrella of the company’s broad ranging Maruwai coal project in Central Kalimantan.

“BHP Billiton has assessed the progress of the Haju trial mine and has determined it is not a sufficient fit with our long term investment strategy,” the company said in a statement on its website.

BHP had initially planned to spend up to $100 million in capital investment on the development of the Haju mine. The company had originally planned that the mine should begin production of coal as early as the middle of 2009.

Aside from canceling the Haju mine development, BHP has also decided to stop any further work on a feasibility study of the Lampunut Block, another mine in the Maruwai project, while also putting its activities in five other areas in its planned development program under review.

Maruwai is the generic name for a large, high quality coal deposit in Central and East Kalimantan. The project area is extensive and covers a total area of 330,000 hectares.  BHP has yet to announce what value it places upon the project.

“All we can say at this stage is that we are currently reviewing our commercial options in relation to the Maruwai coal contracts of work,” BHP’s media relations’s Samantha Evans said in an email statement.

Bambang said the government would soon address enquiries to  BHP about the divestment progress.


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