Indus to sign Indo power deal

INDUS Coal has signed a memorandum of understanding with a large Chinese power plant engineering and construction company to develop a power plant to be built at the mouth of its proposed mine at the Jambi coal project, Block 9, Indonesia.
Indus to sign Indo power deal Indus to sign Indo power deal Indus to sign Indo power deal Indus to sign Indo power deal Indus to sign Indo power deal

Drilling progress to date on Indus Coal's Block 9 concession

Haydn Black

The unidentified Chinese concern will finance and develop not only the power plant, but the mine construction, and all associated infrastructure.

Indus owns 38% of Block 9 through its ownership of BMC, and controls a 95 million tonne thermal coal resource.

It bought its BMC stake in early 2013, paying $US6.5 million for the interest and 38% in Batanghari Energi Prima for the nearby blocks seven and eight.

Since then Indus has loaned BMC a further $4.2 million to drill out the coal resource.

That looks like paying off with the Chinese firm seeking to become an independent power producer in Indonesia – and it wants Indus’ coal to do it.

The key terms of the JV require BMC and the Chinese firm to negotiate with the state-owned power producer Perusahaan Listrik Negara for the approval to build the coal-fired steam power plant at the mouth of a mine proposed to be constructed within Block 9.

PLN would purchase all the electricity produced from the plant, which would be fed over its life by coal supplied by BMC at commercial prices.

By building the plant at the mine mouth it means Indus will not have to barge the coal to the coast for export.

Block 9 already has a granted mining lease.

Investment commitments from foreign investors into power plant projects in Indonesia rose tenfold in the first quarter of 2015, reflecting an improved certainty in Indonesia’s push for increasing electricity generation.

Investments rose from $780 million in the March 2014 quarter to $8.9 billion this year, with facilities targeted for Aceh, Banten, West Sulawesi and North Sumatra.

The Indonesian government plans to build power plants with total generation capacity of 35,000 megawatts by 2019, with about 39% of capacity being actioned to investors by PLN.

Indus’ shares have been suspended from trading on the Australian Securities Exchange since September while the company seeks to restructure its two bond issues.

It is hopeful of resuming trading within two weeks.

Indus has also appointed CPS Capital to raise $500,000 for working capital, and it was low on cash in its last quarterly report in September.

As part of the issue Jason Peterson will be appointed to the board.

Indus has also elevated director Vinay Hariani to the position of executive chairman to work with BMC and the Chinese partners.

Hariani is an Indonesian businessman who founded 3 million tonne per annum coal miner Param Dwi Jaya, and is one of Indus’ major shareholders.

Indus previously indicated there were interested parties in buying Block 9, however, no sale has eventuated.