Cipaganti enters coal mining business

Public transportation company Cipaganti Group has expanded into a coal mining business in Kalimantan through its subsidiary PT Cipaganti Inti Resources.

Cipaganti Group?s president director, Adianto Setiabudi, said in Jakarta Thursday that PT Cipaganti Resources had acquired five coal concessions in East Kalimantan, with combined reserves of about 223 million tons.

?The acquisition began in 2008 with a price of between Rp 20 billion and Rp 50 billion each,? he added.

Two of the concession ? Penajam block with 3 million tons reserves of coal with 5,500 to 5,800 kilocalorie (kcal) and the Laut Tambang in Damai, East Kuta, with total reserves of about 30 million tons of coal with a calorie 6,400 and 6,600 kcal -- are expected to begin production this year.

The other three mines are expected to begin production next year. They include the Sandaran block in East Kutai wth total reserve of 150 millions of coal and calorie of between 5,400 and 5,600 kcal, the Bentian block in West Kutai with total reserve of 20 million tons of coal and calorie of between 7,500 and 8,000 kcal and the Bongan block in West Kutai with total reserve of 20 million tons and calorie of between 7,500 and 8,000 kcal.

Adianto hoped peak production could be achieved in the next five years at 12 million tons a year. An initial production is about one million tons. He said about 70 percent of the production will be exported with the rest to be sold to PT Indonesia Power.

The company will need at least US$15 million in investment to be able to produce one million tons a year.

Adianto said that Cipaganti Resources planned to sell about 30 percent of its shares through an initial public offering (IPO) in the first semester of this year to raise the required funds for the mining operation. (giok)