ITMG to acquire Kalimantan coal mines

Petromindo|Khalsa

IDX-listed coal mining firm PT Indo Tambangraya Megah Tbk (ITMG) plans to acquire coal mines in Kalimantan in a bid to increase its coal reserves.

ITMG Finance Director Yulius Gozali said on Monday that the company was looking at five to 10 acquisition targets. ?The coal mines are located in Kalimantan,? he said, adding that coal mines in Kalimantan offer better quality coal than mines in Sumatra.

He said that the company is looking to acquire mines with reserves of less than 100 million tons.

He said that the company has allocated US$200 million of internal funds to help finance the planned coal mine acquisition program. He added that the company may look for other funding sources including bank loans in case the internal fund is not enough to complete the acquisition program. As per the first quarter this year, ITMG holds cash reserves of $404.2 million.

Elsewhere, Yulius said that the company has decided to delay construction of three planned coal-fired power plant projects including one in Sumatra which is now considered inefficient due to the high investment requirement, and two in Kalimantan where the government has recently issued a policy to convert coal-fired power plant projects into mine mouth power plant projects, forcing ITMG to make some adjustment.

Yulius, however, said that the company remains firm with its diversification strategy into the power business, which is projected to contribute about 30 percent to ITMG?s revenue in the future. (*)