Darma Henwa starts mining under contract with KPC

Leony Aurora, The Jakarta Post, Jakarta

After securing financing of about US$175 million for heavy equipment and infrastructure, PT Darma Henwa has begun to mine coal in Belongan, East Kalimantan, under a contract to supply Kaltim Prima Coal (KPC) with six million tons a year.

PT Darma Henwa recently changed its name from PT Henry Walker Eltin Indonesia because its owner, the Henry Walker Eltin Group Ltd., sold all of its shares to Zurich Asset International and local PT Indotambang Makmur, director Hari Widodo said on Monday.

"The transfer took place in Sydney on May 5," said Widodo, who declined to name the value of the acquisition. Zurich acquired 95 percent of Darma Henwa's shares while Indotambang bought the rest.

With the new shareholders ready to inject $150 million of funds needed for heavy equipment and $25 million for infrastructure to fulfill Darma Henwa's contract, the company said it was positive that it could mine six million tons of coal a year for KPC.

"In the first three years we'll mine six million tons (per year) and in the fourth year we'll double that output," said Widodo, adding that the increase of production would depend on KPC's requests.

Darma Henwa's contract with KPC started last year and will expire in 2014.

In the first four months this year, the company only mined some 400,000 tons of coal for KPC as only half of its equipment had arrived on site.

However, Widodo said the company would be able to fulfill its contract as the rest of the heavy equipment was expected to arrive in June.

The country's major coal mining companies are targeting higher production to cash in on the surging overseas demand for coal and the higher prices the resource is fetching on the international market.

KPC has said that it aims to increase production by 15 percent to about 25 million tons this year to meet higher demand from both domestic and international markets.