Adaro sees low cost, higher coal price

Adaro Indonesia, the country?s largest coal producer, is expected to be able to lower production and transportation costs in the second half of 2001, according to Washington Soul H Pattinson Company Limited, an investment firm which indirectly owns 50 percent of Adaro?s stake in its annual report to the Australian Stock Exchange Thursday.

?Profits were adversely affected due to a production shortfall in the first four months of 2001 occasioned by delays in the principal contractor increasing equipment capacity and extremely heavy rainfall and wave conditions reducing coal transportation and loading capacity. This resulted in extended delays to vessel loading and significant demurrage costs,? said the report.

The report said Adaro is currently boosting production at an annualized rate of 20 million tons to recover the shortfall and it is expected that demurrage costs will ease in the second half of the 2001 calendar year.

? Adaro has not benefited from full coal price increases in the year since most of the contracts are long term; however, this should change in the current year on expiration of existing contracts and new price negotiations,? said the report.

Adaro operates a coalmine in South Kalimantan and expects to produce 18 million tons of coal this calendar year.

Adaro?s stake is 50 percent owned by New Hope Corporation Limited, through its wholly owned subsidiary Indonesia Coal Pty Limited, while Mission Energy and a local company PT Asminco hold 10 percent and 40 percent, respectively. (alex)