Australian firm wins $1.2b deal from KPC

Australian firm wins $1.2b deal from KPC

Australian mining contractor Henry Walker Eltin Ltd. won a US$1.2 billion contract in Indonesia on Friday, almost doubling its order book, thanks to continued strong demand for thermal coal in Asia.

The ten-year deal to build and operate the new Bengalon mine for Indonesia's PT Kaltim Prima Coal (KPC), a unit of PT Bumi Resources, will add roughly $100 million to Henry Walker's annual sales from 2006.

"The Bengalon contract will bring our total work on hand to A$3.5 billion and generate a return that is more than commensurate with the risk profile of the project," said Chief Executive Bruce James.

Analysts believe the deal is evidence that Henry Walker is on the road to recovery after restructuring forced the company into the red during fiscal 2003.

The company will provide infrastructure development and coal mining services at Bengalon, a resource estimated to contain 160 million metric tons of thermal coal.

The deposit is in eastern Kalimantan about 25 kilometers north of KPC's main mining operation, which exports nearly 40 million tons of coal a year mostly to Europe and Asia.

KPC has hired Switzerland's Glencore International AG (GNC.YY) as the marketing agent for Bengalon's output outside of Japan, with that country covered by Mitsubishi Corp.

Plant and mining equipment worth around US$120 million is needed to reach the initial production target of 6 million tons a year, he added. -- Dow Jones