RMMI to begin work on Indonesian rail project

Commodity Online, 2009-03-23 10:50:00

SINGAPORE: The Government of Ras Al Khaimah was formally awarded a license by the Regency of East Kutai in Indonesia for the procurement, construction and operation of a special purpose rail network.

The project work would be undertaken by PT Trans Kutai Kencana, an Indonesian Special Purpose Vehicle (SPV) of RAK Minerals & Metals Investments (RMMI). PT Trans Kutai Kencana is the vehicle for a joint venture between PT Kutai Timur Investama, the investment authority of East Kutai Regency and Middle East Coal Private Limited (MEC), a SPV of RAK Investment Authority.

The commitment to invest into East Kutai from the Government of RAK was announced earlier this month during the signing of a Government-to-Government socio-economic agreement between RAK and East Kalimantan Province in Indonesia. The signing was witnessed by His Highness Sheikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of RAK, and His Excellency President Susilo Bambang Yudhoyono of the Republic of Indonesia at the World Islamic Economic Forum in Jakarta on March 3, 2009.

“East Kalimantan is the largest producer and supplier of thermal coal to both domestic and international markets. The planned infrastructure will strengthen East Kalimantan’s competitiveness by allowing economical coal transportation from the resource-rich hinterland of East Kutai Regency in a scalable and efficient manner,” said Madhu Koneru, Managing Director of RMMI and Vice Chairman of MEC.

Koneru stated that the first phase of the development program will involve the commissioning of a 17 Million Mt/a coal transportation and handling facility by 2012, while the civil and track work will be completed for a 60 Million Mt/a capacity.

MEC was set up last year to drive investments related to large-scale coal and coal-related infrastructure projects in Indonesia. Headquartered in Singapore, MEC will oversee the construction of the railway and a coal-loading jetty in the province of East Kalimantan. Mr. Koneru shared further updates on the project. “With the completion of the feasibility study by our technical partners ARUP and KMPG and with the license in place, we are definitely set to move forward and fulfill our commitment to build a sustainable investment in Indonesia.”

Global engineering firm ARUP has completed the Detailed Feasibility Study (DFS) and Engineering Design for the 150-kilometer railway line that will connect the district of Muara Wahau to the East Kutai coast in East Kalimantan. The railway will enable the speedy and cost-effective transport of the coal, mined from remote, inaccessible interiors to the coal-loading jetty for easy movement domestically and through to international markets. Construction is estimated to be completed in roughly 30 months upon land and licenses approval. Parallel activities for the construction of ancillary infrastructure is also currently in the pipeline.

ARUP has detailed the railway alignment and transport corridor plan including the requisite foundation infrastructure such as roads and bridges, loading and unloading facilities, terminal and jetty structure, and cargo handling facilities. It has also prepared the procurement costs and construction timetable in close collaboration with consulting firm KMPG, which has developed the overall financial model and risk matrix for the project.

Developing greenfield mineral reserves and investing to build infrastructure where there is none form part of RMMI’s overall long-term strategy. This is done with the objective of securing the power requirements of Ras Al Khaimah as well as mobilizing supply for various markets such as Indonesia, India and Japan, Mr. Koneru said. “Infrastructure investments would allow RAK to maintain a high level of cost management and therefore stabilize prices of energy resources in the long-run,” he added.

PT Trans Kutai Kencana also commences development of a coal-loading jetty with mounted conveyors in the coming weeks. Land acquisition of 250 hectares for the terminal has already been completed. The railway network and the coal-loading jetty infrastructure project is the first initiative under the large-scale socio-economic development partnership between the Government of RAK and the Government of East Kalimantan province, and further cements RAK’s commitment to Indonesia on collaborations for future development, a press release said.