Darma Henwa starts mining under contract with KPC

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.