Jakarta. Mining and logistics company RMK Energy and coal miner Bukit Asam on Friday signed an agreement on the logistical support for the latter’s 2.5 million tons of coal starting in 2023.

RMKE represented by subsidiary Royaltama Mulia Kencana will build a hauling road from Bukit Asam’s mining sites and provide railway transport, loading and unloading services, stockpile services, and loading and transshipment to the mother vessel, the company said in a statement.

“The collaboration between RMKE and Bukit Asam is a fine-tuner to our synergy with [state-run railway company] KAI in implementing the seamless coal transportation in South Sumatra,” RMKE Chief Executive Officer Tony Saputra said. 

“RMKE’s logistical solution which has been integrated with the KAI railroad networks allows Bukit Asam to optimize [productivity] from its abundant resources, making this agreement mutually beneficial to all the three parties,” he added.

Tony stressed that the company remains in full support of the government’s zero emissions targets and renewable energy programs but post-pandemic challenges and the current geopolitical situation have put many countries on the brink of an energy crisis that requires urgent solution for energy security and boosts demands for coal until the global economy recovers to the pre-pandemic levels.

RMKE has targeted to transport 20 million tons of coal under collaboration with other mining firms and sell 5 million of its own coal annually.

The volume is expected to rise by 2.5 times in 2026.

Prior to the agreement signing with RMKE, Bukit Asam reached a deal with KAI to transport 20 million tons of coal a year from Tanjung Enim to Keramasan in South Sumatra. The railroad is set to be operational in the fourth quarter of 2024.

Another railroad heading to Perajen Port is being built with a capacity of 20 million tons, expected to be completed in 2026.

How RMKE Did the Unthinkable
It’s hard to define the core business of RMKE because nearly 80 percent of revenue is generated from coal sales but the company’s infrastructural backbone has been coal logistics.

While the Indonesia Stock Exchange puts RMKE into the group of energy stocks, the company describes itself as "the largest coal logistic provider in South Sumatra".

RMKE has earned a reputation as the only private mining company to build its own railway system to carry coal from mining sites in South Sumatra jungles to the nearest port when most other companies depend on the government for that service.

The biggest problem in Indonesia’s coal mining is that “we can hardly bring them out”, RMKE Finance Director Vincent Saputra told the Jakarta Globe in a recent interview. 

That led to the idea of building its own railroads that may open opportunities for logistics businesses serving fellow miners in the province.

In 2014, RMKE executives met with Ignasius Jonan, then the president director of state-run railway company Kereta Api Indonesia (KAI), to propose the construction of railroads in Muara Enim, South Sumatra.

After securing KAI support, RMKE began to search steel rails and it's lucky for them that a discontinued Russian railway project in Kalimantan provided exactly what they needed, Vincent said.

The new railroad, spanning around 10 kilometers, was completed in just two years and even Jonan was surprised. The railway is jointly operated by KAI which provides carriages and manpower and RMKE which loads and unloads coals from in-house and third-party's mining.