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UAE’s Ras Al Khaimah to Invest $5.2b in East Kalimantan Project
Janeman Latul | December 15, 2009

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Valkyrie
5:49pm Jan 11, 2010

Who knows? Perhaps their black gold will soon be no more? The other black alternative maybe?

John Ralph
5:17pm Jan 11, 2010

MEC Infra obviously paid too much for the land, but serious, why develop such a low grade deposit. It just does not make sense when it is essentially sub economic to marginal at todays coal prices. Who makes what money from this project is the real business, and the middle east parties have never negotiated smart deals in Indonesia.

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Shrugging off neighbor Dubai’s debt problems, the smaller United Arab Emirate of Ras Al Khaimah announced on Tuesday that it would increase its planned in Indonesia from $1 billion to $5.2 billion to develop an integrated energy project in Kalimantan.

“This type of public-private, Middle Eastern-Indonesian initiative is a fantastic example of what can be accomplished when the fundamentals make sense for all parties involved,” said Sheikh Saud Bin Saqr Al Qasimi, the crown prince of Ras Al Khaimah, after a meeting with President Susilo Bambang Yudhoyono in Dubai on Sunday.

The project would help meet the development needs of East Kalimantan communities, while serving to meet the energy challenges in Asia, particularly India and China, Al Qasimi said.

The latest agreement is an expansion of a deal signed in February. At that time, representatives of East Kalimantan province and its East Kutai district met with the Ras Al Khaimah Investment Authority and its subsidiary, RAK Minerals and Metals Investments. The two companies agreed to invest in a 139-kilometer coal railway project in the province worth $1 billion.

However, now the emirate will also commit to building a coal terminal, aluminium smelter and a power plant, worth a total of $4.2 billion.

Madhu Koneru, the chief executive of MEC Holdings, the company which will oversee development of the East Kalimantan project, said the total investment could create as many as 5,000 new jobs in the area within five years.

Gita Wirjawan, the chairman of Indonesia’s Investment Coordinating Board (BKPM), said MEC Infra, a subsidiary of MEC Holdings, will invest $1 billion in the railway project.

“Despite certain perceptions about Indonesia, MEC Infra was able to purchase and clear the land for the entire corridor within a few months,” Gita said.

According to a written statement from MEC, the company will also invest $250 million to build the coal terminal.

It will also invest $2 billion in cooperation with NALCO, Asia’s largest integrated aluminum producer, to build a smelter with an estimated production capacity of 500,000 tons annually. An additional $2 billion will be invested by MEC Coal to build a 1,250 megawatt power plant for the smelter.

Ras Al Khaimah produces less oil than Dubai and its oil-rich neighbor Abu Dhabi, and has instead focused on developing its industrial sector.

It opened its first cement company in 1970s and is now the UAE’s largest producer of cement. In the 1980s, the emirate established RAK Ceramics, now one of the world’s biggest ceramics producers.