Medco cancels coal acquisition plan

By Hiski Darmayana

PT Medco Energi Mining Internasional, a subsidiary of IDX-listed energy company PT Medco Energi Internasional Tbk, has canceled an earlier plan to acquire coal concessions in Bengkulu and East Kalimantan provinces.

This was said by CEO of Medco Energi Mining Internasional Arie Prabowo to Petromindo.com recently. The company unveiled the acquisition plan in July of last year.

?For the concession in Bengkulu, we canceled the acquisition plan because of the emerging land and port issues in the province, which will hamper our activities there later on,? he explained.

Arie added that the company decided to cancel the acquisition of the concession in East Kalimantan due to the lingering government policy in the sector particularly with regards to the planned increase in the coal royalty tariff.

The government reportedly plans to start increasing the royalty tariff for coal miners holding the so-called IUP mining license to 13.5 percent in April from the current 3.5-7 percent.

?If we, for instance, acquire the concession, and turns out the government increase the coal royalty, it would cause losses to us. So we decided to focus on our (existing) concessions,? Arie said.

The company, through subsidiaries PT Duta Tambang Rekayasa (DTR) and PT Duta Tambang Sumber Alam (DTSA) currently owns two coal concessions in Nunukan Regency, East Kalimantan. The DTR concession has reached production stage, while the DTSA concession is expected to start production in 2015.

Editing by Reiner Simanjuntak