Essar sees delay in Kalimantan coal production start

Indian firm Essar Energy?s Aries coal mine in East Kalimantan will not be able to start production in 2012 as earlier planned due to lengthy process in getting forestry permit.

The company reported on Monday that it has received 'in principle' forestry use permit (Pinjam Pakai) from ministry of forestry. The company expects to spend six months to satisfy conditions and receive final Pinjam Pakai approval which is required to commence mining operations.

?The Company has already commenced the construction of supporting road and port infrastructure and it is expected that first coal will be available within 9-12 months of receipt of the final Pinjam Pakai approval,? the company said in a quarterly report.

Essar did not give detail about the mine?s production plan.

Essar bought the Aries mine in the Kutai region in east Kalimantan ? comprising 64 million tonnes of mineable reserves ? in April this year.

Coal from the Aries coal mine will not be available ahead of the commissioning of its Salaya I 1,200-MW power project in Gujarat, India, the company said. In the interim, the project will have the benefit of a contract with Essar Shipping and Logistics Limited, Cyprus, to source coal at an effective landed price of US$55/tonne.(alex)