KPC wins 15-year coal contract from J-Power
KPC wins 15-year coal contract from J-Power
Bloomberg, Jakarta
Kaltim Prima Coal, Indonesia's largest coal exporter, won a 15-
year contract to supply 45 million tons of coal to Electric Power
Development Co., Japan's fifth-largest power generator, a Kaltim
Prima executive said.
Kaltim Prima will ship 3 million tons a year of thermal coal
to Electric Power Development, which is known as J-Power, Evan
Ball, the miner's managing director, said on Tuesday in a
telephone interview from Kalimantan.
That represents one-sixth of the Japanese utility's current
annual coal consumption, he said.
Indonesia, the fourth-largest coal producer in the Asia
Pacific region, shipped 15 percent more of the fuel last year as
China reduced exports and congestion disrupted shipments from
Australia.
Kaltim Prima is spending $30 million to boost output and meet
demand from Asian utilities.
"This is our first contract to J-Power and they are a
significant consumer of coal," Ball said. "For us to sign a long-
term contract with them shows their confidence in KPC."
The agreement was signed on May 9, Ball said. For the first
year, the contracted price is $50 per ton, he added.
The spot price of coal delivered from Newcastle in Australia
rose 0.6 percent to $52.12 a ton in the week ended May 6,
according to the global Coal NEWC Index. Annual contract prices
for thermal coal rose by between 15 percent and 20 percent from
April 1.
"The volume per year is set and every year the price will be
re-negotiated, depending on what other utilities pay for their
settlements," Ball said.
Kaltim Prima, which produced 24 million tons of coal last year
from its East Kalimantan mine, is aiming to raise output to 30
million tons this year, Ball said.
Kaltim Prima is a unit of PT Bumi Resources, which bought two
coal companies this decade to become among the top five global
exporters of thermal coal.
Most of Indonesia's coal is thermal coal.
Mitsubishi Corp. brokered the J-Power contract for Kaltim
Prima, Ball said. J-Power is lifting spending as it begins
construction in August 2005 of an additional generator at the
Isogo thermal power plant, and its first nuclear power plant in
Aomori prefecture starting August 2006.
Japan was Kaltim Prima's second-largest market in 2004,
accounting for 23 percent of sales. Taiwan was the company's
biggest market, accounting for 30 percent.
J-Power, which generates 7 percent of Japan's electricity, was
set up in 1952 to increase Japan's power output using coal and
hydropower.
J-Power has 67 power stations with 16,380 megawatts of
capacity and a nationwide transmission network with 2,404
kilometers of power lines.