Adaro Expects to Double Production at Australia's Kestrel Coal Mine

Adaro Energy president director Garibaldi Thohir said the company will soon finalize a deal for the acquisition of a 49 percent stake in Kestrel Mine in Central Queensland, Australia, from Rio Tinto. (Reuters Photo/Beawiharta)

By : Sarah Yuniarni | on 11:24 PM July 17, 2018
Category : Business, Commodities

Jakarta. Indonesian miner Adaro Energy expects to double coking coal production at Kestrel Mine in Central Queensland, Australia, in the medium to long term, as part of its plan to become one of the world's largest coking coal producers.

Adaro Energy president director Garibaldi Thohir said the company will finalize a deal within a month or two for the $2.25 billion acquisition of Kestrel Mine, currently controlled by Rio Tinto, an Anglo-Australian multinational and one of the world's largest metals and mining corporations.

"The shifting in management control is in progress. The acquisition process and financial deal will be completed in the third quarter of this year," Garibaldi said during the 10th anniversary of Adaro's initial public offering on Monday (16/07).

He said Adaro hopes to raise Kestrel Mine's current production to 10 million metric tons of coking coal per year from about 5.5 million tons currently. Coking coal is in high demand in the production of steel, compared with lower-grade coal, which is generally used for power generation.

Garibaldi said he also plans to triple domestic coking coal production from the company's mine in South Kalimantan from 1 million tons per annum currently.

The company will also invest in new infrastructure to boost production at its mining operations in both Indonesia and Australia.

However, he did not disclose how much they plan to invest in infrastructure.

Rio Tinto currently controls 80 percent of Kestrel Mine and Australia-based Mitsui Kestrel Coal Investment the remainder.

Garibaldi said once the financial deal is completed, Adaro will have a 49 percent stake, while United States-based private equity firm EMR Capital will hold the controlling share.

Adaro is reportedly using internal cash and loans from 11 banks, including state-controlled lenders and international banks, to finance the acquisition.

Global coking coal production is currently still dominated by Anglo-Australian multinational BHP, which produces 30 million tons annually, and Rio Tinto with 25 million tons.

Rio Tinto decided to sell its stake in Kestrel Mine to focus on its iron ore, copper and aluminum business.

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