Adaro Energy to invest $100 mln for port expansion

PT Adaro Energy Tbk (ADRO) plans to increase loading capacity in its Kelanis port in Central Kalimantan by 45 percent to 80 million tonnes, from currently 55 million tonnes, analysts report show.

The project will need US$100 million investment and is expected to be completed in the second half of 2012, the company said in a recent briefing with analysts.

The port expansion is part of the firm?s plan to increase its production capacity to 80 million tonnes by 2012. Adaro produced 42.2 million tonnes last year and is Indonesia?s second biggest coal producer.

Java Sea via Barito River has capacity to transport up to 70 million tonnes of coal annually in which two third is transporting Adaro?s Coal.

Barito?s transporting capacity is expected to reach 200 million tonnes a year in the coming year, which will enable expansion of the port.

Meanwhile, production at Tutupan and Wara reached 120,000 tonnes per day and 45,000 tonnes per day in the second quarter of 2011. This translated into total production of 5-12 million tonnes or grew by 8.5-13 percent compared to previous quarter.

Adaro is expected to produce 21.6 million tonnes in the first half of 2011.

Weather around the mine has been normal and dry. Tutupan and Wara are expected to produce 4.4-2 million tonnes per month and 0.06 million tonnes per month respectively. The firm is on track to produce 47-48 million tonnes of coal this year as drier weather help to boost output.

Adaro expect production target will be achieved despite delay in shipments of heavy equipment from Hitachi and Komatsu.

The firm was also expected to announce acquisition of two new coal mines in the third or early fourth quarter.

Cost of production in the second quarter averaged US$ 38-40/tonnes.

Earlier, Adaro Energy through its unit PT Adaro Indonesia (AI), has signed load agreement worth US$ 750 million from four banks. The loan will be used to finance capital expenditure, working capital and other corporate activities.

DBS Bank Ltd, Bank Mandiri, OCBC Ltd, The Bank of Tokyo-Mitsubishi UFJ Ltd Singapore Branch, and The Bank of Tokyo Mitsubishi UFJ Jakarta Branch were lead mandatory arranger.

?The interest rate is LIBOR+ applicable margin,? said Devindra Ratzarwin, the firm?s corporate secretary.

Adaro will spend 10 rupiah trillion for acquisition and other investment expenditure. The firm will spend a total of US$ 603-628 million capital expenditure or Rp 5,4-5,6 trillion. The funds will be used to finance regular expenses worth US$175 million and purchase of heavy equipment US$ 250 million.(*)