MHU?s coal production undermined by lingering land acquisition problem

By Godang Sitompul

East Kalimantan coal miner PT Multi Harapan Utama (MHU) has requested for a downward revision of its 2013 coal production target from its Busang/Jonggon, Tanjung Laung, and Loa Kulu coal blocks in the province.

The move came amid lingering obstacles the company has been facing over the past three years in concluding land acquisition process, forcing the company to mine in less economically feasible areas, where the stripping ratio is quite high, resulting in negative net profit margin, explained Edi Prasodjo, Director of Coal Mining Business Management at the Ministry of Energy and Mineral Resources.

Edi said that to make things worse, the lingering land acquisition problem covered mining areas where the coal reserves are mainly located.

He said that MHU initially proposed production target of 1.4 million tons for this year under its work and budget plan, but considering the negative net profit margin, the proposed budget was rejected by his office, forcing the company, according to the PKP2B coal mining contract system, to resort to the previous budget plan, setting coal production target of 1.37 million tons.

But due to the land acquisition problem, the company could only realized production from January until March, totaling 60,000 tons. ?Generally, the company has no longer in production until August,? Edi said.

As a result, MHU has requested for another downward revision of its 2013 coal production target, he said.

Editing by Reiner Simanjuntak