Locals collect coal from the dump site of an open coal field at Dhanbad district in Jharkhand, India, in this Sept. 19, 2012, file photo. (Reuters Photo/Ahmad Masood)

ABM Investama Gets $396m, 5-Year Contract From Toba Bara

JUNE 03, 2015

Jakarta. ABM Investama, a listed coal miner, has secured a five-year coal-mining service contract from Toba Bara Sejahtra, another listed miner affiliated with President Joko Widodo's chief of staff Luhut Pandjaitan, in a move that will ensure a stream of revenue over the period.

ABM's mining service unit Cipta Kridatama (CK) will work on overburden removal and lease heavy machinery to Adimitra Baratama Nusantara in the company's mine in Sanga-Sanga in East Kalimantan, CK said in a statement on Wednesday.

Irfan Setiaputra, CK's president director, and Adimitra president director Hamid Awaludin signed the contract worth $396 million on Friday, according to the statement.

“We are confident the national coal industry remains positive,” said Irfan, adding that the latest contract would “ensure growth and strengthen business fundamental” in the long term.

Previously, CK had won a $59 million contract from Mitrabara Adiperdana, a coal unit of the Baramulti Group, and a $187 million contract from iron miner Adidaya Tangguh, which is part of the Salim conglomerate.

According to the contract, CK will remove 263 million bank cubic meter of rock or material in the Sanga-Sanga mine.

Adimitra's Hamid said he was confident CK would meet the target in the specified time frame, helping Adimitra to secure its coal production target.

Adimitra plans to sell coal from the mine to the domestic and export markets.

Indonesia's coal-mining sector has taken a hit from weak global demand in the past months, stemming from slowing growth in China and India, the main export markets.

Still, miners hold high hopes for the government to realize its target to add 35,000 megawatts of capacity to the country's electricity grid by 2019, which would stoke domestic demand for coal.

The government set a 425 million metric ton target for coal production this year, down from 435 million tons last year, as it tries to prop up the commodity's price. Indonesia's coal reference price fell to a record low in May as a glut of the fuel enabled buyers to seek discounts from miners.