Sugi Sinar to develop, manage coal waterways project in S. Kalimantan

Malaysian company SUGI Sinar Sdn Bhd plans to take advantage of Kalimantan?s lucrative coal industry to jointly develop and manage a waterways project there as part of its expansion into the Indonesian market, Malaysia's Business Times reported Wednesday.

In a statement, Sugi Sinar said it signed a memorandum of understanding with Indonesia?s PT Arthama Investindo on January 26 to undertake the Asam-Asam Waterways project in Tanah Laut, South Kalimantan.

Sugi Sinar will be the first Malaysian company involved in the waterways development which is expected to open new gateways for its venture in the infrastructure and utilities sectors in Indonesia.

The company, which is active in property, infrastructure and utilities development in Sabah, Labuan and Kuala Lumpur, seeks to benefit from the local government ruling to make the transportation of coal compulsory only through waterways.

Tanah Laut, the largest coal centre in Kalimantan with six large coal miners, will use the Asam-Asam river, its longest river, as the main waterways channel for transporting coal there.

The project is expected to contribute significantly to Sugi Sinar?s cashflow from the 2007 financial year onwards.

PT Arthama through its unit PT Batugeni Tala was given a 15-year concession to collect toll charges based on weight of cargo from the users of the waterways.

?The development of the Asam-Asam river is not only expected to bring progress to the coal industry but also to the port industry and other related industries within the vicinity of South Kalimantan,? it said.

It added that as a result of the chain reaction from the development, the river?s traffic volume is expected to increase drastically in the next three to five years and should contribute significantly to the development and economy of South Kalimantan.

According to a study by Coal Research Group, Kalimantan is poised to become the centre of Indonesia?s coal production with a coal reserve of 21 billion tonnes or 54 per cent of Indonesia?s total coal reserves, which now stand at 38.9 billion tonnes.

As one of the largest coal suppliers in the world, Indonesia?s current 100 million tonnes per year coal output is expected to increase in the next 10 to 20 years as demand increases for coal from its power plants and from the Asian market.(*)