Indonesia orders temporary halt at Bayan coal mine

Reuters, Fri Mar 20, 2009 8:23am EDT

JAKARTA, March 20 (Reuters) - Indonesia has ordered a coal mining unit of PT Bayan Resources (BYAN.JK) to temporarily stop production for operating outside approved areas, a government official said on Friday.

Bayan said that the move would not hit the firm's production.

PT Teguh Sinar Abadi, which operates a coal mine in East Kalimantan, had operated in areas outside those approved by the government in its feasibility study, said MS Marpaung, director of engineering and environmental at the energy and mines ministry.

"The firm has to make a new feasibility study when exploring a new block," Marpaung said.

"We ordered them to temporarily stop production and to fix the problem before resuming operations," he said, adding the ministry has sent the letter to inform the company.

Teguh Sinar Abadi started operations in 2008 and it is expected to produce 1 million tonnes of coal this year, Bayan said previously in a presentation to investors.

In a statement issued late on Friday, Bayan confirmed its unit had received the government order and had complied with the directive.

It said the unit had moved its operations to other blocks within the same concession that had previously received government approval.

"Bayan does not anticipate any material interruptions to its subsidiary's operations or its coal production targets as a result of this directive from Mining Department," the statement said.

Bayan, Indonesia's eighth-largest coal producer, plans to produce 9.5 million tonnes of coal this year, up 56 percent from an estimated 6.1 million tonnes in 2008, it said.

The firm has eight mining companies with total concession areas of 81,265 hectares (200,800 acres).

The firm expects to sell 10 million tonnes of coal this year, up from 6.7 million tonnes in 2008. It said that demand remained strong and that all coal sales volumes were fully committed. (Reporting by Fitri Wulandari; Editing by Ed Davies)