Nalco Key to Indonesia coal mine plan - MEC

1
Nalco Key to Indonesia coal mine plan - MEC
Group CEO MEC Holdings (Singapore and
Indonesia) Executive Director Trimex
International FZE (Dubai) 
2
Nalco Key to Indonesia coal mine plan - MEC
Indian state aluminium maker NALCO's
participation was a key factor in Middle East
Coal's (MEC) decision to develop a coal mine and
rail line in Indonesia's East Kalimantan, MEC
Executive Vice Chairman Madhu Koneru said on
Tuesday. Speaking on the sidelines of a
Coaltrans conference in Mumbai, Koneru said his
company had 35 years of experience in trading
bulk minerals and many years of operating in
Indonesia. "We picked Indonesia as a place to go
into coal mining because we're used to the style
of mining there," he said. "But with planned
capex of 1 billion for the mine, rail line and
port we couldn't depend entirely on the Indian
market to sell coal, we needed local support and
the locals wanted jobs," he said. "We will
create around 1,000 jobs so we talked to Nalco
who wanted to build a new smelter and asked if
they wanted to partner up," he said.
3
Nalco Key to Indonesia coal mine plan - MEC
Nalco will build a captive power plant at the
mine head to fuel its smelter to refine Indian
alumina, increasing the total number of jobs
created to 5,000, he said. Nalco will also take
6 million tonnes a year of run of mine unwashed
coal from MEC. Koneru would not give details of
the coal supply contract to Nalco other than to
say that it would be cheaper for Nalco to build a
power plant and smelter in Kalimantan than in
India, where its bauxite mines and smelters
are. Asked if the Indian government was pushing
95 percent state-owned Nalco to create these jobs
in India, Koneru said "nobody in the Indian
government is pushing Nalco." Since the South
African power crisis in 2008 many in the
aluminium industry have concluded that no metals
company should build a smelter dependent on coal
power because it is too expensive.
4
Nalco Key to Indonesia coal mine plan - MEC
Asked to comment on this, Koneru said "Nalco
have done all the feasibility studies, it's
cheaper in Indonesia." MEC will sell 10 million
tonnes a year of sub-bituminous coal to two
Indian end-users on 15-year contracts. Tata
Power is expected to sign a long-term contract
with MEC. The contracts are essentially cost
plus, he said, with a cap and collar of around
30-36 a tonne FOB. MEC will also sell 5
million tonnes a year to either Indian or Chinese
end-users and a further 2 million on the spot
market. SWAMP MOUNTAIN MEC's planned mine is
in an undeveloped part of East Kalimantan without
road or river connections to a port. A new rail
line and cape-size port will be built as part of
the project but MEC's cash costs will still be
competitive, he said.
5
Nalco Key to Indonesia coal mine plan - MEC
Indonesian mining sources and Indian firms
looking for Indonesian coal assets said this part
of Kalimantan will be costly and difficult to
develop. The part of Kalimantan where the
project is located was easy to obtain permits
for, he said, because only one regional
government authority was involved rather than
several, as is often the case. MEC will rail
coal to its port rather than trucking and
barging. The rail line will cross 20 km of swamp
which will be treated to take the line and tunnel
through 85-90 metres of mountain, Koneru said.