White Energy updates E. Kalimantan coal upgrading ops
Friday, July 30 2010 - 02:16 AM WIB
PT Kaltim Supacoal?Joint Venture with PT. Bayan Resources (WEC 51%)
Substantial progress has been made over the last quarter at KSC?s Tabang upgrading plant, in terms of both throughput rates of coal processed as well as the quality and energy value of the upgraded coal produced.
During the period KSC has achieved throughput rates up to 80%. The average upgrade in coal quality achieved was impressive. The feedstock coals natural energy content varied between 3,900 kcal/kg to 4,200 kcal/kg. By contrast, the average upgrade achieved produced a coal with an energy content of 5,750 kcal/kg. Significantly, when operating at high throughput rates and for limited production runs, KSC was able to produce coal at the desired 6,100 kcal/kg level - with a moisture level well below 10%. The goal is now to produce this level of high quality product over sustained production runs.
During May 2010, KSC sold its first shipment of upgraded coal. Since then, KSC has sold and delivered a further 11,000 tonnes of upgraded product. Until KSC receives its own export clearances, KSC?s coal is being sold to Bayan Resources who are blending the coal with their own run of mine material and on-selling the blended coal. KSC?s upgraded product has been trucked to the Bayan Resources transfer facility near Tabang where the blending takes place. After blending, the coal has been transferred to Bayan?s coal loading facility at the river port where it has been loaded and subsequently barged down the river to Balikpapan for onward shipping.
KSC negotiated an initial sale price of approximately US$61 per tonne of upgraded coal, less applicable transportation and handling costs. The price agreed with Bayan regarding these initial batches of upgraded product was discounted due to the relatively small quantities involved (which is customary) and the fact that the average calorific value attributed to the initial batches of KSC?s coal was approximately 5,750 kcal/kg. As the energy content increases to specification levels and volumes increase, KSC expects to receive a substantial increase in this price.
Importantly, KSC is working closely with its lawyers in order to obtain the relevant export clearances in its own name as soon as possible. Once the appropriate certification has been provided, KSC will be in a position to sell its upgraded product directly to the marketplace.
As regards the engineering modifications to the coal injection and dust extraction systems foreshadowed in June 2010, we are pleased to report that progress has been made in both of these areas.
As far as the coal injection system is concerned, after making some minor engineering enhancements, KSC has consistently achieved throughput rates ranging between 50% to 80%. Given this improvement, we have delayed any additional modification work until January 2011 when we envisage making some further efficiency improvements to the system.
As regards the dust extraction system, following a visit to site by one of the world?s leading dust extraction specialists in June 2010, KSC decided to implement a low cost solution recommended by the expert, which facilitates the separation of excess dust from the upgraded product at the point of briquetting. The suggested system requires relatively small modifications to be made involving changes to the briquetter hoods. These have now been fabricated with installation expected to be completed by mid August. Once installed, we expect to see a significant increase in product quality and production rates.
Incidentally, during the quarter our partner in KSC, Bayan Resources who produce and sell approximately 12 million tonnes of coal per annum into the Asian and North American markets, announced that 20% of their company was being acquired by Korea Electric Power Corp. (KEPCO). (end of excerpt)