Bloomberg News

Garda Tujuh Wants to Increase Coal Output by 67% in 2013

June 28, 2012

PT Garda Tujuh Buana plans to increase coal production by 67 percent next year in response to demand from India.

The company wants to produce 5 million metric tons of coal in 2013 compared with a planned 3 million tons this year, Shael Oswal, the president director of the Indonesian mining company, said in an interview yesterday. The miner exports all its coal to India, he said.

“A lot of power plants in India will be coming in the next five years and they require low-calorific value coal,” Oswal said. “For India, Indonesia is the best place to import because it’s near.”

India’s demand for seaborne thermal coal may rise to 400 million tons by 2030 from 80 million last year, Wood Mackenzie Ltd., an Edinburgh, U.K.-based consultant, said in a report March 14.

Garda Tujuh (GTBO) sells 80 percent of its power-station coal under a long-term contract with fixed prices, Oswal said. The remaining 20 percent is sold on spot market.

Thermal coal at the Australian port of Newcastle, the benchmark price for Asia, cost $83.10 a ton as of June 22, down 20 percent this quarter, according to IHS McCloskey, a coal-data provider. That would be the biggest quarterly slump since the first three months of 2009.

Acquisition

The company is seeking to buy mines that produce coal with a heating value between 5,800 to 6,000 kilocalories a kilogram that’s used in steel mills, Oswal said. Garda Tujuh’s mine in East Kalimantan on the island of Borneo produces low-heating value coal of between 4,800 to 5,100 kilocalories a kilogram, according to the company’s 2011 annual report.

Garda Tujuh has $50 million that it could use to buy a mine should an opportunity arise, Pardeep Dhir, a commissioner at the company, said in a phone interview. It plans $10 million in capital expenditure this year to buy new mining equipment, Dhir said.

To contact the reporters on this story: Fitri Wulandari in Jakarta at fwulandari@bloomberg.net; Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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