Bumi to boost output, expand after selling stake to Tata

Publicly-listed coal mining company PT Bumi Resources will boost its coal output to around 60 million metric tons this year from 53.5 million tons in 2006 as it is getting large fresh funds from the sale of some stake in its East Kalimantan-based coal mines to Indian firm Tata Power Co.

Bumi?s revenue is expected to increase 12 percent to US$2.52 billion this year from $1.85 billion last year, Bumi?s commissioner Nalin Kantrathok told reporters.

Bumi has signed an agreement with Tata Power, a subsidiary of Indian conglomerate Tata Group, to sell 30 percent stake in each of its subsidiaries PT Kaltim Prima Coal and PT Arutmin Indonesia and a part of its trading company to the Indian company.

Tata Power will pay Bumi $1.3 billion for the assets, including $1.1 billion in base price payment and $200 in working capital injection.

Bumi has earmarked $200 million from the sale of the assets to expand its coal production, Kantrathok told reporters.

Under the contract with Tata Power, Bumi will export 10 million tons of coal a year to India beginning 2009 and the amount will rise to 10.8 million tons a year from 2011 onwards.

Bumi hopes to boost coal production to 90 million tons by 2009, Kantrathok said, adding that Tata has the right to buy about half of that amount.

Tata Power?s purchase gives Bumi a much-needed injection of cash not only to fund its expansion but also to repay its around $1 billion in debts this year.

"This year, Bumi will have zero debts," he said.

Kenneth P. Farrell, Bumi?s director, said the company is also looking to expand into copper, iron ore and gold.

Bumi owns mining concessions in Palu in Central Sulawsi province and Gorontalo province. The Gorontalo site is estimated to contain 27 million tons of copper, while the Palu site may hold as much as 8 million tons in gold reserves, Farrell said.

Bumi is currently conducting feasibility studies at the two sites and hopes to start production by 2010, Farrell said. Bumi will need to invest $400 million-$1 billion to develop the sites, he added.

Farrell added that Bumi is cooperating with another investor to develop a site in Mauritius that contains "billions of tons" of iron ore. Production at the site still "four to five years away," he said. (Godang)