BHP sees FS completion for giant Kalimantan coal project in 2007

Global resources company BHP Billiton is working towards the completion of feasibility study (FS) on its giant metallurgical coal project in Central and East Kalimantan.

Indra Diananjaya, a BHP Indonesia official told Petromindo.Com on Wednesday that the FS would be completed in February 2007. He did not give further detail. BHP in September 2004 announcement said that the FS for the project would be completed by the end of 2004.

BHP is planning the Maruway coal project to commence production in 2010 as part of its global effort to double its metallurgical coal production capacity to 100 MTPA by 2010.

The project is expected to produce initial capacity of up to 5 MTPA of high quality hard coking coal, with mine life expected at around 50 years. Full production capacity would be set at 17.5 MTPA.

The project has some significant technical challenges, as the reserves are located in the heart of Kalimantan, which would require 560-700 kms transportation before reaching the sea. Transportation will consist of up to 250 kms of hauling road and up to 500 kms of barging distance, making transportation cost skyrocketed to $25-35 per tonne, compared to $2-5 per tonne range for average Indonesian other coal miners which are located close to sea.

BHP is planning to invest US$1.8 billion for the project. (godang)