Indonesia's Bukit Asam in $1.8 bln coal transport project

Fri Feb 29, 2008 8:07am EST

JAKARTA, Feb 29 (Reuters) - Indonesian coal miner PT Tambang Batubara Bukit Asam Tbk PTBA.JK said on Friday it plans to improve coal deliveries with new infrastructure projects worth a combined $1.8 billion.

Ageing infrastructure has hampered Bukit Asam's ability to deliver coal to its customers, who include the state electricity firm.

Bukit Asam -- the smallest of Indonesia's three listed coal miners, with a market value of $2.9 billion -- said it will upgrade the existing railway linking its coal mine in Sumatra to the port, and will build a new railway in the same area.

Sukrisno, president director of Bukit Asam, said the firm plans to form a joint venture with PT Kereta Api Indonesia to upgrade the infrastructure by improving stations, coaches, bridges and tracks.

"PT KA (Kereta Api) and PT BA (Bukit Asam) will work together to improve the infrastructure in a bid to raise the company's annual capacity to transport coal to 20 million tonnes by 2012," Sukrisno told Reuters.

Bukit Asam produced 8.5 million tonnes of coal in 2007 and wants to increase its production to 9.3 million in 2008.

PT Kereta Api could not be reached for comment.

Bukit Asam estimated that upgrading the railway would cost $734 million, and could be funded out of cashflow or using bank loans, Sukrisno said.

The Indonesian coal miner will team up with China Railways Engineering and PT Trans Pacific to build a second railway line and a port in Bandar Lampung, on the southern tip of Sumatra.

The project, worth $1.1 billion, will increase its coal transport capacity by a further 20 million tonnes by 2011, Sukrisno said.

Bukit Asam reported unaudited net profit of 760 billion rupiah ($83.8 million) for 2007, compared to 485.67 billion in 2006. Sales revenue climbed 16 percent to 4.11 trillion rupiah.

Work on the project will start at the end of this year or early next year, Sukrisno said, adding that the firm expects its coal output to reach 50 million tonnes a year in five years' time.

Indonesia is the world's top thermal coal exporter. Coal prices was quoted at $130 a tonne free on board Newcastle port late on Wednesday. Coal prices hit an all-time high of $150 a tonne for a spot deal struck earlier this month.

($1=9,070 rupiah) (Reporting by Mita Valina Liem and Andreas Ismar, editing by Sara Webb)