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.