Coal industry overview

RIO Tinto takes interest in Warkworth. Indonesian company, Indominco Mandiri sells coal assets for US$45 million.

Staff Reporter

Rio Tinto increases holding in Warkworth

Rio Tinto subsidiary, Coal & Allied, has bought Ticor’s 20% interest in the Warkworth coal mine in the Hunter Valley, New South Wales.

Coal & Allied, paid $87.5 million, to increase its interest in the Warkworth mine to 63.75%.

Coal & Allied picked up a 43% stake in January in the 7Mtpa mine when it paid $1 billion for the Australian coal assets of US-based Peabody Resources.

Indonesian coal news

Indonesian coal assets sold to Thai company

The coal assets of Indocoal have been sold to a joint venture between Indonesian company PT Centralink and Thai company Banpu Plc for US$45 million.

Banpu agreed to provide $54 million worth of financial support to PT Centralink to acquire Indocoal from the Indonesian Bank Restructuring Agency (IBRA). The economic crisis of 1997/98 left a number of these large conglomerates with a great deal of debt and limited positive cash flow. As several banks were left in this position, the Indonesian Government funded the IBRA with the mandate to takeover these banks and sell their assets including the companies that owed the debt.

Indocoal is a group of Indonesian coal companies comprising coal mining producers PT Indominco Mandiri and PT Kitadin, together with exploration companies, PT Trubaindo Coal Mining and PT Barasentosa Lestari.

Banpu will have the right to manage the production and distribution of coal produced by Indocoal in exchange for its technical and management support to Centralink.

Indominco Mandiri’s operating coal mines were the 3.5Mtpa Indominco Mandiri open-cut mine, north of Samarinda and the 1Mtpa Kitadin open cut and underground mine in the Mahakam River area.

Gary Cochrane, managing director of coal consulting company Asia Pacific Coal Services, said the Indominco Mandiri mine in particular was over capitalised and carried a great deal of debt as well as the funds put in by the Marubeni group who financed the ship loading facility. Indominco Mandiri owes around US$100 million to Sumitomo Corporation and Marubeni Corporation.

Centralink is a private Indonesian company operating in the coal business while Banpu is an established coal mining company with an existing coal mine in South Kalimantan. This mine, called PT Jorong Grestama, is expanding from 1.5Mtpa in 2000 to 3Mtpa by 2003.

Banpu’s reserves will increase by up to 146 million metric tones, from the current level of 65 metric tones, the company said. Indocoal is expected to contribute an additional four million tons to Banpu's production capacity per annum, from 6.8 million tons currently.