Bukit Asam hands over mining permits to subsidiary

State owned coal mining company PT Tambang Batubara Bukit Asam Tbk has named an independent consultant to calculate the value of coal mining concessions in Bangko, South Sumatra which will be transferred to its subsidiary PT Bukit Asam Bangko (BAB), Investor Daily reported on Tuesday.

Bukit Asam?s President Director Milawarma said that the assessment was needed to determine the amount of the compensation that had to be paid by Rajawali Asia Resources.

Bukit Asam holds a 65 percent stake in PT Bukit Asam Bangko, while the other 35 percent is held by Rajawali, its partners in the joint venture.

The local government has revised a regulation on the mining permits which will be transferred to BAB. The transfer will be carried out after the assessment on the value of the coal reserves in mining areas is completed later this year.

Bukit Asam and Rajawali initially set up a joint venture to conduct mining activities in concession areas owned by Bukit Asam.

The joint venture will pay fee to Bukit Asam from the proceeds of coal sales from the areas.

However, such cooperation arrangement could not be implemented because it was against the mining law no 4/2009.

According to the mining law, mining operations should be directly handled by mining permit (concession right) holders.

In order to solve the legal problem, Bukit Asam agreed to transfer the mining permits to BAB to ensure that its subsidiary would be able to operate.

In 2008, the value of the mining areas covered by the mining permits which would be transferred to BAB was estimated to reach US$605 million. The calculation was based on the coal price of $1.21 per ton, and coal reserves amounting to 400 million tons. (*)