Taking longwalls to Indonesia

PAN Asia is on the verge of developing an Indonesian longwall coal mine at its TCM project in South Kalimantan.
Taking longwalls to Indonesia Taking longwalls to Indonesia Taking longwalls to Indonesia Taking longwalls to Indonesia Taking longwalls to Indonesia

Kopex managing director (Asia) Maciej Sciazko and Pan Asia chief executive Alan Hopkins sign the TCM agreement in Jakarta.

Lauren Barrett

Pan Asia has partnered with Kopex to do preliminary studies on the project and has also commissioned the Polish underground equipment supplier to carry out TCM’s bankable feasibility study.

The mine has the potential to produce 1.5 to 2 million tonnes per annum of product over an initial 15-30 year mine life and could be in development by June next year, Pan Asia chief executive Allan Hopkins told ILN.

If progress continues at the current pace the BFS for the project would be completed by March next year, with open pit production beginning in June next year, which would be the first phase of development to the underground mine, he said.

While Hopkins admitted the company was taking a risk by establishing the first underground mine in Indonesia, he said Pan Asia was setting the precedent for the future of Indonesia’s coal industry.

“It’s going to be big news in Indonesia because it’s going to set the standard for the next generation of coal mining,” he said.

Hopkins said other companies had not been successful in developing an underground coal mine in Indonesia because mine developers had not struck the balance of investing a large amount of money with having a partner that knew underground mining.

While Hopkins is confident that Pan Asia has the right blend of capital and local expertise to see the project through, he said developing coal in Indonesia was a bit like gambling.

“There is a risk, but there’s also an opportunity, as long as you’re prepared to be flexible,” he said. “You’ve got to be prepared to change and adapt.

“With this game it’s hard to follow what the opportunities and outcomes will be, because there are a lot more outcomes.

“[In] Indonesia, you have to pay a bit more upfront so entry costs are more, but you’ve got more flexibility, so if you position yourself right it can really pay off.

“But the risk is you can spend money twice as fast.

“As a company we’re only small but the next year has a lot of promise for us – we know where we want to go.”

While its coal industry is only young compared to Australia’s, Indonesia is already the world’s largest exporter of thermal coal.

According to a Wood Mackenzie report, Indonesia will make up 39% of global increases in coal export in the next decade, beating Australia with a 36% growth figure.

The emerging coal country is well positioned to cater for China and India’s insatiable demand for energy, and with a handful of Indonesian coal assets to its name, Pan Asia is keen to capitalise on Indonesia’s coal future.

While the company only consolidated in January and re-listed on the ASX in February this year after acquiring coal assets in Indonesia, it has been busy in the last six months exploring and developing the TCM project.

Hopkins said acquiring a 75% stake in TCM put Pan Asia in a great position to achieve its goal of becoming a key supplier of coal to the Asian markets.

“When we put this little company together we said ‘let’s have a project that’s pre-development, would generate cash flow, and has big tonnage potential’,” he said.

On top of this the mine had high quality export coal, an established operating partner and infrastructure up and ready, and was immediately adjacent to an open cut mine called the Arutmin ATA mine, he said.