Market News Vol. 63

Content:

1. Monet Completes Indonesian Coal Mine Buy for $24 Million

2. APBI Proposed Coal Royalties 6.5 % for the RD

3. Indonesian Coal Miners Urge Govt to Delay Upgrading Rule

4. Harum Energy Obtains Coal Production Boost

5. Indon’s Bukit Asam to Suspend Exploration, Turn to Exploitation

6. Bukit Asam Targets 50% Increase in net Profit

7. Adaro Aims to Double Coal Production

8. Mercator to Spin Off, List Coal Unit

9. Indonesia’s Indo Tambang Raya to Acquire Kalimantan Coal Mine

10. IBT Raises Capacity of Pulau Laut Terminal

11. Indonesia’s Coal Upgrading Rule to Apply When Technology Available

12. Wika Grabs Project from Adaro Indonesia

13. KCPL to Import One Million Tons of 6300 GAD Coal

14. RI Must Boost Exploration, Says Mining Association

15. Berau Energy to Pay Fee to Sojitz

16. TNPL Calls for 160 KT of Non-Coking Coal

17. Indika Buys Mitra Bahtera at US $ 0.183

18. Vallar Finalizes Transaction to Buy 75% of Berau Coal

19. MEC Holdings Eyes Funding for Kalimantan

20. Punj Lloyd to Buy Stake in Indonesia Mine

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Monet Completes Indonesian Coal Mine Buy

for $24 Million

Monnet Ispat and Energy (MIEL) is set to make a

killing following completion of its deal to acquire

PT Sarwa Sembada Karya Bumi's thermal coal

mine in Sumatra, Indonesia, for just $24 million.

Spread over 25,000 hectares in the East Asian

nation's Jambi province, the mine provides MIEL

access to one of the largest thermal coal

deposits in the world and gives it a captive

source to fire its upcoming power projects,

Monnet Group Executive Vice Chairman and

Managing Director Sandeep Jajodia told PTI.

It would also help MIEL cash in on the boiling

coal market by selling the excess production in

open markets, as output would far outstrip its

captive demand.

"The worldwide coal markets are expected to do

very well in the coming years and especially India

and China would remain strong buyers," he

added.

According to Coal Ministry estimates, the coal

deficit being faced by Indian power utilities is

expected to double to 104 million tonnes in the

next financial year.

At present, the deficit is being met through

imports. Of the total installed power capacity of

159,398 mega watt in India, almost 50 per cent is

based on coal.

Coal prices are already ruling high following flash

floods in Australia's Queensland province, a

major producing region.

MIEL has so far explored only about 1,500

hectares of the total lease area and was able to

establish 65 million tonnes of coal reserves in

that area itself.

"We expect these reserves to go up substantially

after completing exploration of the total area,"

Jajodia said, adding that coal from the mine

would help MIEL access low-cost fuel for its

planned coast-based power projects.

MIEL is currently working on a 1,700-mega watt

thermal power plant in Orissa and plans to put

up one more plant of 1,300-mega watt capacity

somewhere in Gujarat or Tamil Nadu to meet the

growing need of the country. The location for

the second plant has not yet been firmed up.

While the plant in Orissa would take another 3-

3.5 years to go onstream, MIEL would

meanwhile sell the fossil fuel in open markets,

ensuring a long-term source of revenue for the

company, Jajodia added.

The acquisition, made by MIEL's wholly-owned

subsidiary Monnet Global (MGL), is also value-

accretive as the logistics cost would be

comparatively lower in view of the excellent

coastal location of the mine in Sumatra.

"Keeping in mind the high coal prices...We have

been able to close the deal at a very low value as

the agreement with PT Sarwa was initially

executed in 2008. However, the process and

regulatory procedures for actual transfer took a

long time to finally close the deal," Jajodia said.

(ITGD Bureau, March 2011)

APBI Proposed Coal Royalties 6.5 % for the RD

The Indonesian Coal Association (APBI) advises

the government to use 6.5% of the coal royalty

funds for research and development (RD). The

move is aimed at improving human resources

(HR) and the quality of Indonesian coal,

according to APBI Chairman, Bob Kamandanu, to

Investor Daily in Jakarta, last weekend.

"Out of the total royalty of 13.5% paid to the

state by the coal businesses, we expect the

government to allocate 6.5% for RD to develop

other sources of energy," he said.

It is in line with the government’s efforts to

promote development of renewable energy

sources, as stipulated in the Government

Regulation (PP).

The regulation stipulated that each coal

producer is charged Rp 2.7 million per hectare

(ha) for mining activities. The land use payment

will cease after the land is returned to the

government, or permit approval is over.

(Investor Daily, March 2011)

Indonesian Coal Miners Urge Govt to Delay

Upgrading Rule

Indonesian coal miners are urging the

government to delay a planned rule that will

require producers to upgrade low-quality coal

before exporting it, as this could dampen

interest in mining investments, said an industry

official on Tuesday.

The energy and minerals ministry is drafting a

regulation that would by 2014 require coal

producers to upgrade low-quality coal to a

medium-quality coal before exporting. The coal

would need a minimum heating value of 5,600

kcal/kg on an air-dried basis.

The planned regulation is part of a new mining

and coal law introduced in 2009 that requires

miners to process coal and minerals into higher

value products before exporting them, as the

country seeks to boost revenue from the mining

sector.

eople have started investing in mining low-

quality coal. It will cause them financial losses if

the government decides to ban it," said

Supriatna Suhala, executive director of the

Indonesian Coal Mining Association.

About two thirds of Indonesia's 105 billion

tonnes of coal resources was seen as not viable

because of high moisture content and low

heating value. But limited mineable reserves of

high-quality coal have forced miners to tap low-

quality sources to feed growing demand,

particularly from India.

The coal association has said Indonesia's

mineable reserves of low-quality coal may reach

10 billion tonnes or half of current total reserves

of around 21 million tonnes, within the next 2-3

years, as more firms are expected to start

producing coal with a heating value of 3,000-

3,400 kcal/kg.

Indonesia, the world's top thermal coal exporter,

has about 16 firms that produce coal with a

heating value below 4,000 kcal/kg, with

combined production estimated at 7.5 million

tonnes, industry data shows.

However, the technology to transform brown or

low-quality coal worth less than $30 a tonne to a

bituminous-type of coal, whose prices hover at

about $120 a tonne, will still serve as a challenge

for miners.

Some firms have been working to develop such

technology with several pilot projects under way,

but so far there has been none producing large-

scale upgrading.

"We think the government should delay

imposing the regulation until there's a proven

upgrading technology," said Suhala, speaking on

the sidelines of a coal conference.

The association proposes the government should

give incentives to investors or miners who are

interested in investing in coal upgrading

technology.

"It would be good, for example, if the

government cut royalties for miners who set up

an upgrading facility," he said.

(Reuters, March 2011)

Harum Energy Obtains Coal Production Boost

PT Harum Energy Tbk projected coal production

volume to rise 55.4% from last year's position of

7.5 tonnes to 11.5 tonnes following the addition

of a new subsidiary in 2011.

Harum Energy Director, Eddy Sumarsono, said

the increase target could be achieved after PT

Tambang Batu Bara Harum in Kalimantan

operates with extra production of 1.5 tons. The

new mine is slated to produce early in the 2nd

semester of 2011.

"The previous target of 10 million tons for 2011

is expected to come from subsidiaries PT

Mahakam Sumber Jaya with 7.5 tons and PT

Santan Batubara with 2.5 tons," he said on the

sidelines of the third annual conference on

Indonesian coal yesterday.

Eddy said Harum Energy’s production is still on

track up to February 2011. He hopes all the

subsidiaries could increase production as

projected. Mahakam Sumber Jaya is expected to

raise its coal production from 5.3 tons to 7.5 tons

and Santan from 2.1 tons to 2.5 tons.

Production of Harum Energy will also be

supported by one of subsidiaries located in

Australia. "A mine in Australia will support the

company’s production," he said without detailing

the quantities and the mine site.

Eddy is planning to acquire a new mine but was

reluctant to provide further detail.

"Harum has targeted an increase in coal prices

by 6.67% or US$ 5 from the realization last year

of US$ 75 per ton."

Based on Bisnis’ data, Harum Energy has

prepared US$30 million or around Rp267 billion

(US$1 = Rp8,900) for capital expenditures in

2011. The funds will be used among others to

improve coal transportation routes, processing

infrastructure projects and procurement of coal

transport vehicles.

The growth of Harum Energy's coal production

has historically been quite consistent. Harum’s

coal production last year rose by 27.59%

compared with 2009 production of 5.8 million

tons.

The company's coal resources stood at 480

million tons while reserves stood at 123 million

tons of coal. In addition to domestic sales, it

exports its coal to Japan, South Korea, and

Taiwan.

Harum Energy previously announced plans to

boost coal production volume in 2012 to 14.5

million tons.

(Bisnis Indonesia, March 2011)

Indon’s Bukit Asam to Suspend Exploration,

Turn to Exploitation

PT Tambang Batubara Bukit Asam (JSX:PTBA)

said it will stop explorations for new coal

reserves until September to concentrate on

exploitation of found reserves.

Bukit Asam is set to boost coal production by 34

per cent to 17.6 million tons this year from 13.1

million tons last year, corporate secretary of the

state company Achmad Sudarto said yesterday.

Achmad said with the rise in production Bukit

Asam hopes to increase sales to 16.9 million

tons or up 30 per cent in a year.

Bukit Asam is building railway tracks and ports

to facilitate transport of its coal from its mines

in South Sumatra. It also plans to acquire two

coal mines in Kalimantan to increase its

production capacity.

(Bisnis Indonesia, March 2011)

Bukit Asam Targets 50% Increase in net Profit

State-owned coal miner PT Bukit Asam is

targeting to boost its net profit this year to up to

Rp 3 trillion (US$345 million), a 50 percent

increase from Rp 2 trillion it booked in 2010.

Bukit Asam president director Sukrisno said

Wednesday in Jakarta he was optimistic that the

company would be able to meet the target,

despite the fact that last year’s net profit had

decreased by 26 percent compared to the Rp 2.7

trillion booked in 2009.

“We’re optimistic because coal prices will

increase this year [...] The drop in the net profit

last year was caused by declining coal prices in

the market,” he said, as quoted by

tempointeraktif.com.

Sukrisno said coal prices stood at Rp 613,000 per

ton in 2010, a drop from Rp 715,000 per ton in

the previous year.

He added that Bukit Asam was targeting to

increase its annual production from 13 million

tons in 2010 to 17 million tons this year.

(The Jakarta Post, March 2011)

Adaro Aims to Double Coal Production

Coal producer PT Adaro Indonesia is planning to

soon boost its production capacity to 80 million

tons annually, almost double the 42.19 million

tons it produced throughout 2010.

The planned boost in production is intended to

support the Indonesian government's policy

placing the private company as among “national

vital objects” in regard to energy production,

Adaro general manager Priyadi said Friday.

“Our production is vital. [If we] halt our supply

for just one week, Java and Bali will suffer from

blackouts,” Priyadi said in Tabalong, South

Kalimantan, as quoted by tempointeraktif.com.

“This year we're targeting to produce up to 48

million tons,” he said.

Priyadi said more than 25 percent of the coal

Adaro produced was aimed at the domestic

market, most of which would be to support

power plants in Java and Bali.

The three coal mines Adaro operates in South

Kalimantan and Central Kalimantan contain

combined total coal reserves of 5.7 billion tons,

he said.

(The Jakarta Post, March 2011)

Mercator to Spin Off, List Coal Unit

Mumbai--Shipping company Mercator Lines Ltd

plans to make the most of a sharp rise in

demand for coal by spinning off and listing its

lucrative coal mining and logistics business.

The listing date hasn't been set yet, but the spin-

off is likely to be completed within a year's time,

Mercator Managing Director Atul Agarwal told

Dow Jones Newswires on Monday.

The company will soon appoint consultants and

investment bankers for the proposed share sale.

Agarwal's comments boosted Mercator's stock,

which was trading 4.2% higher at 40 rupees at

0910 GMT, while the Bombay Stock Exchange

market was up 0.9%. Mercator earlier hit an

intra-day high of 40.50 rupees.

The company's coal business has become its

biggest money spinner, bringing in 4.21 billion

rupees during the October-December quarter,

slightly more than half of Mercator's total

revenue for the period. Demand has surged of

late, with several new power plants coming up

across the country.

Companies in India, where the power sector

accounts for 70% of the country's coal

consumption, are trying to acquire mines abroad

as local supplies aren't enough to feed upcoming

electricity plants.

State-run Indian companies bought overseas coal

assets worth $22 million during 2009 and 2010,

while private Indian companies acquired $1.06

billion worth of coal assets during the period.

A Mercator unit--Oorja HoldingsPte. Ltd--has two

coal mines in Indonesia which together have an

estimated reserve of 25 million tons. There is a

third mine in Mozambique with an estimates

reserve of three billion tons.

Agarwal said the company plans to acquire at

least one more block in Indonesia this year.

In spite of a recovery in global trade, bulk freight

and tanker rates continue to be low, denting

revenue for shipping companies.

Mercator's plan to demerge its coal mining

division is in line with moves by its peers in the

shipping industry, which have announced plans

to hive off their more lucrative non-shipping

businesses to increase market valuation as well

as offset the volatility of the shipping industry.

For instance, Essar Shipping Ports & Logistics Ltd

said last year that it would separate its shipping,

logistics and oilfields business from its high-

margin ports business.

(Wall Street Journal, March 2011)

Indonesia’s Indo Tambang Raya to Acquire

Kalimantan Coal Mine

Indonesia's Indo Tambangraya Megah, a unit of

Thai's Banpu, plans to buy a coal mine in

Kalimantan with annual capacity of one million

tonnes, the firm's CEO said on Monday.

The country's no.3 coal miner expects to

produce 25 million tonnes of coal this year, up

from 22 million tonnes last year, said Somyot

Ruchirawat. Rumchirawat said the company has

been looking to expand output by mine

acquisitions and expects one deal this year.

"There are two or three potential coal miners

that are targeted, but we will acquire a coal mine

in Kalimantan with production capacity of 1

million tonnes a year," he said after a

shareholders meeting in Jakarta.

The firm's coal shipments to Japan are

continuing after the recent devastating tsunami,

as its buyers are located in areas of the country

that have been unaffected, he added.

"There are a lot of orders and no cancellations so

far," Ruchirawat said.

Indonesia is the world's top exporter of thermal

coal, and Japan is the largest buyer of Indonesian

coal for power stations. The Indonesian Coal

Mining Association has said damaged ports

meant some Japan-bound coal has been

redirected to China.

(Reuters, March 2011)

IBT Raises Capacity of Pulau Laut Terminal

The Jakarta Post reported that, coal

infrastructure and logistics firm PT Indonesia

Bulk Terminal (IBT), a subsidiary of PT Adaro

Energy Tbk, plans to increase the capacity of its

handling service by 15 percent to 6 million tons

this year.

IBT’s marketing manager Bram A. Surjadi said in

Pulau Laut, South Kalimantan province, over the

weekend that the extra capacity was needed to

meet the surging demand for exports, as quoted

by The Jakarta Post.

“The growing demand for coal from China and

India means more traders need coal handling

services and IBT will seize this good

opportunity,” Bram said during a press tour at

IBT on Saturday.

IBT previously handled the larger part of its

parent company PT Adaro Energy’s coal, Bram

said. Now, the majority of Adaro Energy is

handled by the company’s Permata Barito

floating crane in the Taboneo Sea, South

Kalimantan, he said.

With the change, 80 percent of IBT’s coal

handling capacity can now be offered to other

coal miners, he said.

IBT is the developer and operator of Pulau Laut

Coal Terminal on the southern tip of the island of

Pulau Laut. It offers coal stockpiling, blending

and loading.

Bram expressed optimism that the target could

be achieved despite the tough competition.

IBT’s coal blending facility allows its customers to

blend their various coal products to meet market

requirements either through stockpile

recirculation or during out-loading, he said.

Currently, IBT is in contract talks with five

traders. “The traders are expected to sign a long-

term contract with IBT. Besides, the number of

inquiries is on the increase,” he said.

Bram also unveiled IBT’s plan to double the

number of stockpiles to 16 from the current

eight as part of its long-term expansion program.

The company’s eight stockpiles have a total

capacity of 800,000 tons.

Separately, IBT port manager Trevor Shipton said

the company represented a key link between the

fast expanding coal mining industry in Indonesia

and its customers worldwide, enabling

Indonesian coal to increase its significant role in

the world coal industry.

(The Jakarta Post, March 2011)

Indonesia’s Coal Upgrading Rule to Apply When

Technology Available

Indonesia is likely to delay a regulation requiring

miners to upgrade their low-quality coal, until

the technology is commercially available, said a

senior mining official said on Tuesday.

Coal producers in the world's top exporter of

thermal coal had urged the government to delay

the rule as they said it could dampen interest in

mining investments.

The energy and minerals ministry has been

drafting a regulation that would by 2014 require

coal producers to upgrade low-quality coal to a

medium-quality coal before exporting. The coal

would need a minimum heating value of 5,600

kcal/kg on a air-dried basis.

"There are some pilot projects but so far there is

no proven upgrading technology," said Bambang

Setiawan, director general of minerals and coal

at the energy and minerals ministry.

"We can't tell them to upgrade if there's no

technology available. We will see if the

technology will be available in the next 3-4

years," said Setiawan.

The planned regulation was part of a mining and

coal law introduced in 2009 that requires miners

to process coal and minerals into higher value

products before exporting them, as the country

seeks to boost revenue from the mining sector.

The Indonesian Coal Mining Association has said

Indonesia's mineable reserves of low-quality coal

may reach 10 billion tonnes, or half of current

total reserves of around 21 million tonnes,

within the next 2-3 years, as more firms are

expected to start producing coal with a heating

value of 3,000-3,400 kcal/kg.

(Reuters, March 2011)

Wika Grabs Project from Adaro Indonesia

One of Indonesia's largest thermal coal PT Adaro

Indonesia has finally mandated PT Wijaya Karya

Tbk (WIKA) as a contractor to install and manage

overburden crushing and conveying system with

a total contract of US$175 million, as quoted by

Insider Stories.

Insider Stories further said, Adaro Corporate

Secretary Devindra Ratzarwin, in an official

statement submitted to Indonesia Stock

Exchange (IDX) today, said Adaro Indonesia, a

wholly owned subsidiary of PT Adaro Energy Tbk

(ADRO), entered into agreement with Wijaya

Karya on March 25 2011.

By installing the system, Adaro expects it will

improve efficiency regarding to the manage

overburden removal as well as maintain its

annual production growth.

In parallel with the appointment, Adaro

Indonesia also signed an agreement of

equipment procurement with FLSmidth Spokane

Inc.

Previously, Adaro Indonesia aimed to build

overland conveyor belt. The company had also

appointed PT Tripatra Engineers & Construction

for the project.

However, Adaro had dropped the project of

overland conveyor belt. "We don't have any

constraint to build overland conveyor belt. But,

we see that the project could benefit us,"

Devindra said in October last year, as quoted by

Insider Stories.

(Insider Stories, April 2011)

KCPL to Import One Million Tons of 6300 GAD

Coal

Karnataka Power Corporation a state utility of

Karnataka, India called for open tender for

supply of one million tons of 6300 Kcal/kg coal

on air dried basis on delivered basis. The delivery

of first cargo should starts from June this year.

The supplier must supply atleast 100,000 MT of

every month starting from June 2011.

This coal supply is destined for its 1,720MW

Raichur thermal power station(RTPS) in Raichur

Karnataka. Due to short of domestic coal linkage

to RTPS, the KPCL has to resort to higher usage

of imported coal.

Earlier in 2010 due to acute shortage of domestic

coal RTPS has concluded two imported coal

tenders of 900K MTs and 500K mts respectively.

Both the tenders have been bagged by

Nagpur based Gupta Coal Corporation, an Indian

coal trading company and the contracts are

under execution. According to a coal trader

based in Karnataka, the existing tender was

awarded at US$ 67 per MT on delivered basis for

6300 GAD kacal/kg coal with 16 percent total

moisture.

The current Indonesian coal prices with 6300

kcal/kg on air dried basis and 16 percent is being

offered high eighties from medium scale

suppliers are high nineties or hundred plus from

premium scale suppliers.

A prorata penalties are applicable for Gross

calorific value and total sulphur and weight basis

penalties are applicable for Ash content, Total

Moisture and size.

(www.coalspot.com, April 2011)

RI Must Boost Exploration, Says Mining

Association

Indonesia needs spend between US$500 million

and $1 billion each year to fund exploration

activities, to maintain the current level of

mineral resource production, the Indonesian

Mining Association announced on Tuesday.

Association chairman Martiono Hadianto, who is

also the president director of PT Newmont Nusa

Tenggara, said in the past decade Indonesia had

allocated around $10 million annually to

exploration to find new mineral reserves outside

existing mining areas.

"If the government wants to maintain current

production levels, it must encourage off-site

mineral explorations," Martiono told a discussion

at the 5th Australian Mining Exhibition and

Conference, Ozmine 2011, in Jakarta.

He added that the government of Indonesia had

to work harder to create a more competitive and

investor-friendly fiscal regime to attract more

investment in the mining sector. "The mining

sector is a capital-intensive industry. The

government must offer competitive incentives to

be able to compete in attracting investors to

conduct businesses in Indonesia," Martiono said.

(The Jakarta Post, April 2011)

Berau Energy to Pay Fee to Sojitz

One by one, London-based company Vallar Plc

and backed-up by Bakrie family have removed

several stumbling blocks that could jeopardize

closing date of acquisition on two coal precious

assets in Indonesia, PT Bumi Resources Tbk

(BUMI) and PT Berau Coal Energy Tbk (BRAU).

After Bakrie family, via PT Bakrie & Brothers Tbk

(BNBR) and Long Haul, successfully transferred

5.19 billion shares or 25% shareholding in Bumi

to Vallar for the exchange of 49.39 million of

new shares issuance by Vallar to Bakrie family,

Bakrie family has finally reached an agreement

with a Japanese single minority shareholder in PT

Berau Coal, a 90% stake owned by Berau Energy,

Sojitz Corporation.

In an official statement to Indonesia Stock

Exchange (IDX) late last week, Berau Energy

President Director Rosan P. Roeslani, said that

Berau Energy has entered into consent

agreement with Berau Coal, Aries Investment

Limited, PT Armadian Tritunggal, and Sojitz.

Referring to the agreement, Sojitz can eventually

provide its consent to Berau Coal in relation to

financing, additional financing, and guarantee

approval by Berau to several creditors of Berau

Energy.

In return, Berau Energy has committed to pay an

annual ongoing fee as much as 0.4% of total

financing and additional financing owed to Sojitz.

The payment will be made in quarterlly basis to

Sojitz.

Rosan said the payment of ongoing fees will not

make Berau Energy to breach a shareholder

agreement with Sojitz. Berau Energy can secure

additional financing in which Berau Coal as

guarantor.

(Insider Stories, April 2011)

TNPL Calls for 160 KT of Non-Coking Coal

Tamil Nadu Newsprint and Papers Limited

(TNPL), is seeking to procure another 160,000

MT +/- 5 percent of Non-Coking imported Coal

with Gross Calorific Value (ADB) 6000 Kcal/Kg, on

delivered at TNPL factory siding at Pugalur basis,

according to the tender MM/SP/TENDER

201195059 released today.

Total tendered quantity to be delivered in four

shipments starting from July 2011. The price

should be quoted on C&F Tuticorin basis

inclusive of all port charges.

Bidders are request to offer price based on C&F

Tuticorin basis inclusive of all port charges and

arrange delivery of such Coal to TNPL site by

wagons (all activities of stevedoring, handling,

arranging railway rakes, loading, transportation

etc are in supplier’s scope), the tender terms

said.

According to the tender issued on 2nd April

2011, the quality of coal should be Gross

Calorific Value (adb) 6000 Kcal/Kg basis and will

be rejected if GCV is below 5600 kcal/kg. The

Inherent Moisture (adb) of around 10 pct, Total

Moisture (arb) 15 pct basis and above 23

pct will be rejected. The Ash content (adb) 8

pct max , Sulphur (ADB) 0.8pct max and Volatile

Matter (adb) 25 to 45 pct and above 45 pct will

be rejected.

TNPL is a traditional consumer of Indonesian

coal, for its paper factory in Karur district, India.

TNPL has closed its latest tender at US$ 97.10

PMT.

Probably TNPL got their comfortable numbers in

its latest tender and encouraged by the response

they rushed back to procure one more batch.

The reference price (HPB) set by Indonesia for

coal grade of 5,667 GAR kcal/kg heating value

was at a US$ 103.50 a ton based on March 2011

HBA. However, TNPL's last coal purchased price

was much lesser than Indonesian declared price

for 5667 GAR coal. Suppliers are requested to

submit offers by April 16, 2011.

(www.coalspot.com, April 2011)

Indika Buys Mitra Bahtera at US $ 0.183

PT Indika Energy Tbk (INDY), integrated energy

company, today has exercised an option

agreement to acquire 51% shareholding in newly

listed coal tug boat and barge operator PT

Mitrabahtera Segara Sejati Tbk (MBSS) at

Rp1,630 (0.183 USD) per share, said Insider

Stories.

Retina Rosabai, Indika's Head of Investor

Relations, confirmed that Indika has exercised

the option at Rp1,630 (0.183 USD) per share,

entitling the company with 51% stake ownership

or 892.51 million shares in Mitrabahtera which

initiated its trading debut at Indonesia Stock

Exchange today, as qouted by Insider Stories.

Referring to the exercise price, Indika has spent

Rp1.45 trillion (US$ 163,564,579.81) to acquire

Mitrabahtera, a company which was controlled

by Prasatya family.

Ingrid Ade Sundari Prasatya and Patricia Pratiwi

Suwati Prasatya were both controlling share

holders in MBSS with 15.4% shareholding each.

PT Patin Resources previously also controlled

56.2% stake in MBSS.

MBSS enrolled Indonesian logistics markets as a

family company led by Francesca Hadinata and

Bing Prasatya in 1993.

As of September 30 2010, MBSS owned 51 tug

boats, 47 barges, and 4 floating cranes. The

company is underway to construct a new floating

crane scheduled to be commercially operated in

February this year. Patricia Prasatya, with

support of Jon Vassella, is in charge of the day-

to-day running of the company and business

development.

Patin Resources, Ingrid Prasatya, and Patricia

Prasatya, acting as sellers, entered into an option

agreement with PT Indika Energy Tbk (INDY),

controlled by Indonesian billionaire Agus

Lasmono Sudwikatmono, son of Indonesian

tycoon Sudwikatmono who just passed away,

and Wiwoho Basuki Tjokronegoro, on November

26 2010.

Accion Capital

On June 14 2010, MBSS also entered into an

investment agreement with Accion Capital

Management Pte Ltd (ACM) for convertible loan

with principal amount of US$5 million in which

ACM acts as investor agent and Accion Asia

Growth Fund as newly investor.

Under the agreement, when MBSS has listed

shares at IDX, each investor must convert the

loan into new shares of MBSS with condition the

market capitalization is above US$300 million or

Rp2.66 trillion (assuming US$1 equals Rp8,865).

If MBSS's market capitalization is below US$300

million, investors will not obliged to convert the

loan into new shares until July 8 2013. With

US$300 million capitalization, MBSS's per share

equals Rp1,485. By selling 12.5% new shares via

IPO, MBSS is targeting about Rp327 billion

(US$ 36,886,632.83) cash.

In the first day trading, MBSS jumped 11.25% to

Rp1,780 per share from the IPO level at Rp1,600

(US$ 0.180). Today's closing price equaled to

US$358 million market capitalization.

Under the investment agreement, each holder of

convertible loan must convert the loan into new

shares of MBSS.

(Insider Stories, April 2011)

Vallar Finalizes Transaction to Buy 75% of Berau

Coal

Nathaniel Rothschild’s investment vehicle, Vallar,

completed acquiring a 75 percent stake in Berau

Coal Energy from Bukit Mutiara on Friday,

Recapital Group said.

The transfer was completed at 10:40 a.m. local

time, said Thomas Warren Shreve, chief

executive of Recapital Group, the parent of Bukit

Mutiara. Shreve is also a director at Berau.

Vallar agreed in November to invest $3 billion in

Bumi Resources and Berau Coal in a stock and

cash transaction to tap access to an emerging

market in Indonesia, the world’s largest thermal-

coal exporter, amid surging demand for the fuel

from China and India. Vallar will be renamed

Bumi, after the completion of the deals.

The purchase was set to become effective after

the share swap between Vallar and Berau Coal at

the open of the London Stock Exchange, Shreve

said.

“The acquisition has brought together significant

holdings in Indonesia’s largest and fifth-largest

coal producers to create a London-listed

Indonesian coal champion,” Rothschild, co-

chairman of Vallar, wrote on Friday in an

e-mailed statement.

“Both Bumi and Berau have strong organic

growth profiles, with operations and projects

that are perfectly positioned to take full

advantage of the current high demand for coal

from the fast growing markets of Asia.”

Vallar planned to buy 26.2 billion shares of Berau

Coal at Rp 540 each or for a total of Rp 14.1

trillion ($1.64 billion), Recapital, which helped

sell the stake, said in a statement to the stock

exchange on Wednesday. Vallar acquired a 25

percent stake in Bumi last month.

After the purchases, Bakrie Group, the parent of

Bumi, will own about 54.6 percent of Vallar, and

Bukit Mutiara will have about 13.2 percent in the

Jersey, Channel Islands-based company, Vallar

said in a statement last month.

Bakrie & Brothers gained 3.1 percent to Rp 67

per share before settling at Rp 66, 1.5 percent

higher, in trading on the Indonesia Stock

Exchange (IDX). Berau was unchanged at Rp 560

per share.

Vallar may raise its stake in Bumi this year to 51

percent, the Financial Times reported on

Thursday, citing Andrew Beckham, chief financial

officer of both Vallar and Bumi. Eddy Soeparno,

CFO at Bakrie & Brothers, confirmed the plan

without specifying stake sizes.

Rothschild is a former co-president of New York-

based hedge-fund firm Atticus Capital and the

only son of British financier Lord Jacob

Rothschild. Vallar raised 707.2 million pounds

($1.16 billion) in an initial public offering on the

London Stock Exchange in July.

(Bloomberg, April 2011)

MEC Holdings Eyes Funding for Kalimantan

MEC Holdings is seeking more loans from local

commercial banks to help finance its big

investment in development projects in East

Kalimantan, an executive said on Tuesday.

“MEC has placed a billion dollars on

infrastructure construction. It has secured a

lending deal with international lenders and is

looking for possible lending from national

commercial banks,” Charles Gaylord Watkins, an

MEC director, said on the sidelines of the

Indonesia International Infrastructure

conference in Jakarta.

The nation is hosting a three-day forum on

developing the nation. At the meeting, which

was organized by the Indonesian Chamber of

Commerce and Industry (Kadin), the government

is offering projects such as roads, seaports and

airports to foreign investors.

Watkins said the company, a subsidiary of the

Dubai-based Trimex Group, had already secured

a commitment from US lenders Standard

Chartered Bank and Export-Import Bank. Trimex

had held several discussions with Indonesian

banks, he continued, but had yet to receive any

loan commitments.

Madhu Koneru, executive vice chairman of MEC

Holdings, said in July that Standard Chartered

was ready to lend $750 million to the company.

MEC has secured 5,000 hectares of land in East

Kalimantan for its infrastructure work, Watkins

said. The project includes 130 kilometers of

railway, a seaport and a mine for low-grade coal.

The mine is expected to produce two million to

three million tons of coal in the first year before

rising to seven million tons by the end of 2014,

while the port will be able to harbor two cape-

sized ships and have a holding capacity of 34

million tons.

“The project will start as soon as we are clear on

the financing,” Watkins said.

The company first announced the project in

2009, but a delay in land acquisition caused MEC

to postpone the project. The company’s Web

site shows the land acquisition was finalized last

year.

Watkins said he appreciated the government’s

effort to improve regulations. He said investors

were not the only thing the government needs

to secure, but also making it easier to implement

investment.

Coordinating Minister for the Economy Hatta

Rajasa said the government had a number of

policies to ease infrastructure investment. They

include land reform to prevent uncontrollable

price increases and securing land for the public

interest. The land acquisition bill is in the final

stages in the legislature, Deputy Finance Minister

Anny Rachmawati said.

Vice President Boediono reiterated the state’s

commitment to development at the conference.

“We will do our part to minimize the risk in

infrastructure investment,” he said.

(The Jakarta Globe, April 2011)

Punj Lloyd to Buy Stake in Indonesia Mine

Punj Llyod on Monday said it will buy 50 per cent

stake in a thermal coal mine in Indonesia, joining

a select band of private Indian power companies

to acquire coal assets abroad.

The size of the acquisition has not been

disclosed. The purchase will be done through

Sembawang Development, which is a Punj

Llyod’s Singapore-based subsidiary.

Company officials did not give details saying it

was confidential.

The Indonesian mine company is located in

Barito Utara district in Central Kalimantan and

has estimated resources of 134 million tonnes

(mt) and its potential in situ reserves are

estimated at 57 mt, Punj Lloyd said in a filing to

the Bombay Stock Exchange.

Analysts are of the opinion that there are two

main reasons why a company, which has not yet

set foot in the power generation business,

decided to purchase a coal mine.

“The company may be planning to get into the

coal trading business shortly because of the way

coal prices are moving,” said Anupam Gupta, an

analyst with IIFL.

Another analyst who did not want to be

identified said either the company has plans for

power generation or wants to profit from the

highly lucrative coal trading business.

“Coal prices are mostly moving northwards. They

want to benefit from this or may be they want to

tie up coal for power projects they want to set

up in the future,” the analyst said.

Indian power majors such as Lanco Infratech and

Adani Enterprises have bought coal mines in

Australia last year to fuel their power stations in

India.

(The Economic Times, April 2011)

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