Adaro acquires majority stake at S. Sumatra coal mine

Coal mining giant PT Adaro Energy Tbk announced on Tuesday that on October 14, 2011 its subsidiary PT Alam Tri Abadi has signed a deal to acquire 46 percent shares of PT Bukit Enim Energi (BEE) for US$46 million from Lucky Star Corp., Oriental Holdings Ltd and Brightpath Corp.

Following the transaction, Adaro owns 61.04 percent of BEE. Other shareholders are PT Pamapersada Nusantara, a unit of PT United Tractors with 20 percent shares, PT Triputra Alam Selaras 13.92 percent and PT Bumi Alam Sejahtera 5.04 percent.

BEE is a greenfield coal mine located in Muara Enim regency in South Sumatra , covering an area of more than 11,000 hectares. BEE holds a mining permit granted in March 2011 for a period of 20 years. According to Adaro, the area contains a network of local roads, which complements its recent coal logistics acquisition in South Sumatra.

Adaro said it was helped by international consultant Marston establish geological studies of the coal potential, on which the valuation was based. Additional drilling and coal analysis are required before a JORC-compliant statement of Resources and Reserves can be issued. Drilling and coal analysis to support such statement will be resumed in 2012, the company said.

Adaro, which operates Indonesia?s largest single open pit mine in South Kalimantan is expanding to South Sumatra. Prior to BEE?s acquisition, the company has announced in August 2011 that it has signed a share purchase agreement to acquire a 75 percent stake of coal mining firm PT Mustika Indah Permai (MIP) for US$222.5 million.

Adaro?s acquisition of MIP is strongly opposed by state coal miner PT Bukit Asam Tbk (PTBA) which considers the area--located in the regency of Lahat?is still logically owned by PTBA.

Earlier this month, the company also announced acquisition of 35 percent shares of integrated coal logistics provider PT Servo Meda Sejahtera (SMS) for $22 million. SMS owns a dedicated haul road in South Sumatra and provides coal hauling services. Via another subsidiary, SMS owns a dedicated coal port on the east coast of South Sumatra and provides barge loading services.(alex)