AGREEMENT has been reached with a mining contractor to reduce waste removal base rates by 13% at the Delta Coal Project in East Kalimantan. Project owners PT Delta Ultima Coal (66%) and Altura Mining (33%) say that the successful negotiations will provide a long-term sustainable outcome for the mine.

Altura said the 13% reduction in waste stripping costs was an acceptable result for all parties, and Delta Coal had fairly agreed to a mutual fairness clause whereby it would increase rates based on Indonesian Coal Index (ICI) prices.

“The mine continues to focus on cost reductions and efficiency gains in order to offset historically low coal prices and provide a positive platform to maximise the extraction of the mine’s considerable coal resources.”

Altura moved to producer status in 2013 with completion of the purchase of a 33% stake in PT Delta Ultima Coal. The mine is on a 1260 hectare Izin Usaha Pertambangan (IUP) or mining permit in the Mahakam River Delta, in close proximity to the nearby major centres of Balikpapan and Samarinda.

The lengthy contractor negotiations resulted in significantly lower production during the September quarter. Production of saleable coal amounted to 56,995 tonnes, down from 280,192 tonnes in the corresponding period of 2014. Coal sold totalled 121,692 tonnes, down from 317,820 tonnes in the 2014 period.

Negotiations were finalised at the end of July 2015 which paved the way for recommencement of operations in the newly developed Pit 37 Extension. Both were expected to result in increased production during the December quarter.

Altura said that coal demand was good during the September quarter with all coal produced being sold and longer term contractual arrangements currently being firmed up after recent test shipments providing positive feedback from the end users.

Altura has reviewed a technical assessment of the mine including a new Life of Mine (LOM) plan based on the new contractor rates. The work was undertaken by external Australian-based mining consultants and has formed the basis for the independent technical reports as a pre-requisite for the intended Singapore listing of Delta Coal and the Tabalong Coal concessions.

Upon conclusion of the coal asset listing process in Singapore it is planned that the funds raised will enable a fast-tracking to production at the Tabalong project in South Kalimantan. Altura is seeking the necessary Forestry Land Use approvals to allow mining to proceed.