Allied Indo Coal starts deep mining in Sumatra

Allied Indo Coal starts deep mining in Sumatra

Kasparman Piliang, The Jakarta Post, Padang, West Sumatra

PT Allied Indo Coal (AIC) has started a deep mining operation
at its 884-hectare concession site in Parambahan, Sawahlunto
Sijunjung, West Sumatra, with a total investment of Rp 90 billion
(US$10.6 million).

Previously, AIC had exploited only 764 hectares of its
concession area through open-pit mining.

"We are now in a deep mining phase, doing so with technical
assistance from Chinese experts," chief commissioner Ali Amran
said on Sunday.

With a production of 1,000 tons per day, the company expected
to reach its investment break-even point within 10 years, Ali
said.

AIC's announcement is an another blow to state-owned PT Bukit
Asam's Ombilin Production Unit (BA-UPO), which had planned to
exploit up to 100 million tons of coal at its Sawahlunto
concession site through deep mining.

BA-UPO has postponed the project because of its troubled
financial situation and a lack of investment. It blames
increasing illegal mining at its concession site for its
problems.

"If the government doesn't resolve the problem related to
illegal mining, then PT BA-UPO's 950 employees could face lay-
offs," deputy general manager Eko Budhiwijayanto said.

Head of the West Sumatra mining agency Bambang Istijono said
his office would work together with the Sawahlunto mining agency
to immediately address the situation.

According to agency data, there are 31 coal mining companies
operating in the region, whose production fills Padang-based
cement company PT Semen Padang's demand of 60,000 tons of coal a
month.

Coal production in West Sumatra was at 1.43 million tons in
2002, and reached only 457,000 tons during the first seven months
of last year.