Coal Fe ?not to renew? licenses of RI projects amid mining downturn

By Ruli Setiawan

ASX-listed Coal Fe Resources Limited said Friday that it has decided not to renew the exploration licenses for the Palapa coal project in South Sulawesi and the Andalas iron ore projects in West Sumatra due to the bearish condition in the global mining market.

?Owing to this prolonged bearish market sentiments and the risks involved in pursuing some of the exploration projects being undertaken by the company in Indonesia, the board of directors have taken the decision during the last financial year not to renew the exploration licenses for the Palapa Project and Andalas Project. This has resulted in a total impairment of A$1,847,485 of exploration expenditure in both the projects during the last financial year,? the company said in a note to investors at a shareholders meeting Friday.

Elsewhere, the company said the global coal market downturn has caused many miners in Kutai Kartanegara Regency, East Kalimantan, where its PT Pancaran Surya Abadi (PSA) coal project is located, to suspend production as they operate at a loss.

?On the positive side, owing to the tightly controlled mining costs in the Coal Fe and Toba Jaya joint operations, the PSA Coal Mine has continued its operations throughout the financial year albeit at a lower production,? the company said, referring to its local partner.

The company entered into a joint venture and mine management agreement with PT Toba Jaya in 2009 to jointly develop the PSA project.

Coal Fe said that there is possibility for it to renew talks over the acquisition of Toba Jaya. ?There is willingness between the company and Toba Jaya to recommence negotiation on the proposed acquisition of Toba Jaya when the market conditions stabilize. The completion will undoubtedly put Coal Fe in a much stronger footing in the coal industry in Indonesia,? it said in the statement.

Editing by Reiner Simanjuntak