Bayan?s unit terminates contract with Petrosea

By Romel S. Gurky

Coal mining firm PT Gunungbayan Pratamacoal (GBP), a subsidiary of PT Bayan Resources Tbk, has notified its contractor PT Petrosea on its intention to terminate its overburden-removal contract with the latter earlier than the initial schedule, citing the low price of coal.

The contract expires in December 2017. It was signed in 2012, the time the coal market remained bullish. Under the contract, GBP has to pay US$471 million for the service of removing overburden at GBP?s mine in Muara Pahu district, East Kalimantan.

However, the continued slide in coal price has forced GBP to propose the termination of the contract now, Bayan Resources said in a statement.

?The contract is terminated because the coal price is continuing to fall. Mining at GBP?s concession becomes uneconomical because with low stripping ratio, the amount of coal than can be extracted is too small, incomparable to the high production costs,? the firm said in the statement.

GBP and Petrosea have agreed to talk to find solution to the matter, the firm said.

Editing by Johannes Simbolon