Indo Tambangraya to invest $200m in 2009

The Jakarta Post, Jakarta | Thu, 11/27/2008 11:04 AM  

PT Indo Tambangraya Megah (ITM), the Indonesian subsidiary of Thailand's biggest coal producer Banpu Pcl., plans to raise its capital expenditure in Indonesia by more than double next year compared to a year earlier, to increase its production capacity. 

Somyot Ruchirawat, ITM's president director, said the company would spend US$200 million next year, up from $71.5 million forecast for 2008. 

"The funding is from our internal budget. We would not use any loans," Ruchirawat said. 

The budget will mainly be used to expand the company's mining capacity in Tandung Mayang, Kutai Kartanegara Regency in East Kalimantan, which is operated by PT Kitadin, one of ITM's subsidiaries. 

"We are going to invest in equipment to increase freight capacity. This project alone will cost us about $60 million," Ruchirawat said. 

He was quick to add that these figures and the size of the project could still change, if adjustments were needed due to the current financial situation. 

"Because of the economic situation, we are reviewing some projects and acquisition plans to see whether what we are going to invest will satisfy our shareholders or not." 

The company however will move forward with projects such as the expansion of its coal port facility in Bontang, East Kalimantan to increase handling capacity to 18.5 million tons from the current capacity of 12.5 million tons. 

ITM is the fourth largest coal producer in Indonesia. 

As of September this year, the company produced 13.2 million tons of coal, up from 12.9 million tons in the same period last year. 

It has reduced its 2008 coal sales target to 18.1 million tons from an initial target of 19.5 tons, because of heavy rain in Kalimantan which has made mining more difficult. 

The company hopes to produce 20.5 million tons of coal next year. It exports 90 percent of its production. 

As the domestic obligation for coal producers will be enforced next year, ITM will increase its sales to domestic buyers, Ruchirawat said. -- Alfian