UT wins $1 billion mining contract

Rendi A. Witular, The Jakarta Post, Jakarta

A unit of publicly listed heavy equipment company PT United Tractors (UT) has won a 10-year coal exploration contract worth over US$1 billion from the country's second largest coal producer, PT Kaltim Prima Coal (KPC).

UT said in a press statement on Tuesday that the contract was granted to its mining contractor subsidiary PT Pamapersada Nusantara (Pama) to mine coal at a KPC site in Bendili, East Kalimantan.

"Pama ... has just signed a new contract of coal exploration for KPC on April 8," said the company in the statement.

KPC, which is owned by publicly listed energy firm PT Bumi Resources, plans to produce around 25 million tons of thermal coal this year, up from 16.5 million last year.

Pama currently holds similar exploration contracts with PT Adaro Indonesia -- the country's largest coal producer -- state- owned PT Tambang Batubara Bukit Asam, PT Indominco Mandiri, PT Multi Harapan Utama and PT Kideco Jaya Agung.

The mining contractor produced 27.7 million tons of contracted coal last year.

Pama plans to buy equipment from UT to fulfill the KPC contract, and the purchase is expected to help increase UT's sales by 10 percent this year.

To support the operation, UT will provide Pama with maintenance services, a new workshop and a new warehouse at the Bendili site.

Following the announcement of the contract, UT shares rose by 8.1 percent, or Rp 125, to a record high of Rp 1,675. Automotive giant PT Astra International owns 49 percent of UT.

Despite a slight decline in sales, UT recorded a net profit of Rp 342 billion (US$40.2 million) last year, up from Rp 300 billion in 2002. During the same period, the company's sales dropped to Rp 6.87 trillion from Rp 6.88 trillion.