Janeman Latul

Bhakti Energi wants to expand in East Kalimantan, where coal is the local government’s most dependable revenue source. (Antara Photo/Andika Wahyu)

Bhakti Energi in Talks Over Coal Ventures in Kalimantan

PT Bhakti Energi Persada, one of Indonesia’s biggest miners of brown coal, revealed on Thursday that it was in talks to form a joint venture with MEC Coal and MEC Infra, subsidiaries of Dubai-based MEC Holdings, and the Ras Al Khaimah Investment Authority.

“We’re in preliminary talks with MEC to find ways to cooperate because both companies have mine sites near Muara Wahau, East Kutai district, East Kalimantan,” said Jeffrey Mulyono, president director of Bhakti Energi. “It’s not decided yet but it could be a joint venture on transportation and coal sales.”

MEC and Ras Al Khaimah are planning a $5.2 billion integrated energy project in East Kalimantan, including a coal railway.

“MEC plans to purchase some of our coal while we hope we can transport our coal through their railway, too,” he said.

Jeffrey added that the cooperation will be focused on meeting the growing demand for coal from India’s power plants, where Bhakti Energi’s brown coal, which is low-grade coal, is used as a blending ingredient for higher-rated thermal coal.

Indonesia is the world’s fourth-biggest exporter of thermal coal. Of the 254 million tons produced last year, 78 percent was exported, mostly to China and India, the world’s two biggest importers.

This year, output from Indonesia’s coal producers is expected to total 280 million tons.

MEC Holdings is a subsidiary of the Dubai-based Trimex Group, which invests in the energy and mineral sectors. In December, it announced plans to invest $5.2 billion in East Kalimantan along with Ras Al Khaimah and India’s largest aluminum producer, National Aluminium Co. The development will include 130 kilometers of railway to transport coal and crude palm oil, a coal terminal, aluminium smelter and power plant.

Bhakti Energi is controlled by Benny Subianto and Teddy P Rachmat, two Indonesian businessmen who also hold stakes in the country’s second-biggest coal producer, PT Adaro Indonesia.

The company has eight subsidiaries, of which seven are located in the Muara Wahau district, with total estimated coal reserves of 5.7 billion tons.

“All of Bhakti Energi’s concessions in Muara Wahau are currently undergoing pre-production preparations as the company plans to spend at least $200 million in capital expenditure this year to build our infrastructure and heavy equipment,” Jeffrey said.

He said the company would produce 1.4 million tons a year by next year and two million tons by 2012.

“The company is ideally looking for an investment of at least $1.2 billion up until 2012,” Jeffrey said.

MEC Coal’s subsidiary, PT Tekno Orbit Persada, has two mines in Muara Wahau with two billion tons of proven coal reserves. It expects to start production this year and to be selling 32 million tons a year by 2015.

When contacted by the Jakarta Globe, Mashael Al Naimi, head of corporate communications for MEC, wrote in an email that at the current time MEC had no intention forming joint ventures with other companies in East Kalimantan.

Edwin Sinaga, president director of brokerage firm PT Finacorporindo Nusa noted that international companies generally deny the existence of deals before they have been completed to avoid confusion in the market.

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