20 percent of coal wasted during processing

A study conducted by a U.S. research institute, Duckett Resources Inc., shows that the Indonesian government suffers a potential loss of $226,800 from the processing of every 500,000 tons of coal by coal mining companies in Indonesia.

The study conducted almost one year from 2000 through 2001 at a coal mining company in East Kalimantan revealed that the coal processing in Indonesia was very inefficient, resulting in the loss of about 20 percent of coal being processes.

Thus, in every 500,000 tons of processed coal, about 100,000 tons were wasted and disposed as waste, according to the result of the study.

The study also reveals that if mining companies use better coal processing system, namely using the fine coal recovery circuit, they could recover about 80 percent of the lost coal, that totaled 20 percent of the processed coal.

Thus, using this fine coal recovery circuit, about 80,000 tons of the 100,000 tons of lost coal in every 500,000 tons of processed coal could be recovered as a high quality coal.

This recovered coal has 6,723 kilo calorie per kilogram, better than the coal produced by state-owned PT Tambang Batubara Bukit Asam that has 5,500 kilo calorie per kilogram.

Therefore, when it is valued in U.S. dollar, if coal mining contractors adopt the fine coal recovery circuit, the government could collect an additional income of US$226,800 from every 500,000 tons of processed coal.

This figure was obtained using the assumptions that coal mining companies could recover 80,000 tons from every 500,000 tons of processed coal, and an average international coal price of US$21 per ton of coal.

The 80,000 tons of recovered coal would sell at about US$1,680,000. As the government is entitled with 13 percent of royalty, thus, it would get $226,800, the study revealed.

The research institute said coal mining contractors would need to invest around $1.225 million for the fine coal recovery circuit system with capacity of 500,000 tons per annum.

This investment would not affect the company's net revenue in the first year of investment, the institute said assured.

The institute noted that a coal mining company that invested in the fine coal recovery circuit would get various benefits, including increasing amount of recovered coal, decreasing amount of waste and dust, and improving earnings as well as contribution to the government.

According to data at Petromindo, national coal production reaches between 70 million tons and 74 million tons per annum. If all coal contractors invest in the fine coal recovery circuit, about 11.2 million tons of coal could be recovered per annum and would not be disposed as waste, and this would contribute additional income both for the contractors and the government. (*)