PTBA delays construction of coal railway

IDX-listed coal giant has delayed the start of the construction of its planned coal railway as a key precondition to restructure the mining license of a South Sumatra coal concession has yet to be completed, Kontan daily reported on Friday.

PTBA, through a joint venture firm with the Rajawali Group called PT Bukit Asam Transpacific Railways (BATR), was supposed to start in April the construction of the coal railway, which will be used to transport coal from the Banko concession in Tanjung Enim, South Sumatra, to the coal port in Lampung.

?The (initial) target is for construction to start in April, but has been hampered because the restructuring of the mining license (of the Banko concession) has yet to be completed,? PTBA President Director Milawarma told Kontan.

PBTA holds the IUP mining license for the Banko coal concession. But as part of its deal with the Rajawali Resources, the operation of the Banko concession has been transferred to PT Bukit Asam Banko, which is 65 percent owned by PTBA, and 35 owned by Rajawali Group. Existing regulation, however, stipulates that the Banko concession must be managed by the original holder of the IUP, which is PTBA. The two investors are currently waiting for the completion of the proposed restricting of the Banko concession mining permit.

Another obstacle for the construction of the coal railway is land acquisition problem as PTBA has yet to obtain forest use and borrow permit in the coal concession area from the Ministry of Forestry. If land acquisition has been completed 50-70 percent, BATR will start withdrawing the funding commitment made by Chinese banks to finance the construction of the coal railway. (*)