Banpu sees Indonesian production costs up on fuel price hike

Thai energy conglomerate Banpu PCL estimates its Indonesian coal production costs to increase by US$2.2 per tonne in 2005, or 10 percent higher percent increase from 2004 as the impact of diesel price from 23 cents per litre to the current market price of approximately 48 cents per litre.

The company in its statement released recently said that the costs would increase further by $1.2 per tonne in 2006 should the 48 cent per litre price continue.

State oil and gas company PT. Pertamina raised price of diesel fuel for mining and oil companies on July 1. All mining companies, which previously purchased portion of their fuel at subsidized price, now will be charged at market prices for all of their consumption.

?Although the sharp rise in diesel has not been fully anticipated by the company, we believe the overall operation outlook remains intact. In addition, the company should be able to maintain its competitiveness under the current fuel price environment. While higher diesel cost is inevitable for all coal suppliers, we are emphasizing more on energy conservation and cost saving schemes at all mines, including those located in other countries. Study of innovative measures to enhance logistic efficiency is also in the pipeline,? the company said in a statement.

Banpu operates seven coalmines in Indonesia including three producing coalmines; Jorong Barutama Greston in South Kalimantan, Indominco Mandiri, Trubaindo and Kitadin in East Kalimantan.

The company has targeted to raise its production by 19 percent from 11.95 million tons last year to 14.3 million tons this year. (alex)