Coal producer PT Indo Tambangraya Megah (ITM) achieved a better performance during the third quarter of 2015, booking a 23% increase in net income to US$25 million from US$20 million in the previous quarter. Externally, the downward trend of oil prices contributed to curb mining and logistics costs. Internally, cost efficiency strategies, including mining, supply chain activities and overhead reductions, kept the overall cost lower.
In the nine months to September 30, the company produced 21.5 million tonnes, which was in line with the 2015 target of 28.7 million tonnes. ITM booked sales volume of 20.9 million tonnes, which was also in line with the 2015 sales target.
To cope with prolonged weak prices, the company will continue to employ its cost reduction program and prioritize capex spending.
BHP to boost Indonesian focus
BHP Billiton expects a rebound in global coal markets in the medium term and, accordingly, intends to increase its focus on Indonesian coal by opening a second mine in Kalimantan.
Mining started in 2015 at Haju, which is the first coal deposit mined at the IndoMet Coal Project in Central Kalimantan, a joint venture 75% owned by BHP and 25% by Adaro Energy.
BHP’s Indonesian coal head Mark Small said the company would look to start its next Indonesian mine within two years. “We have commenced construction at a second Coal Contract of Work due to come on stream in 2017.”
BHP’s strategy is to mine the largest mineral resources which can be expanded for generations or even centuries and it rarely goes into a new mining province without evidence of a substantial resource.
A resource of 1.3 billion tonnes has been identified at IndoMet with further exploration planned.
Freeport identifies further deposits
Freeport Indonesia, a subsidiary of Freeport-McMoRan, has found additional copper and gold deposits at its mining area in Papua Province that it says will extend the life of mining in the area beyond 2041.
Freeport Indonesia senior vice president Wahyu Sunyoto said exploration in the area found that potential additional resources likely lie at depths below 2500 metres. These new deposits could total 2.57 billion tonnes, more than the current reserves of 2.27 billion tonnes @ 1.02% copper for 23 million tonnes, 0.83 grams/tonne gold for 1892 tonnes and 4.32 grams/tonne silver for 9801 tonnes.
Freeport Indonesia’s main site is the open pit Grasberg mine, which has proven reserves of 179 million tonnes and has been mined since 1991. The open pit is expected to be depleted in 2017.
Another site, the Deep Ore Zone (DOZ), has 146 million tonnes of reserves and has been in production since 2008. Freeport extracts around 7000 tonnes per day from the DOZ and its reserves are estimated to last until 2020.
In its future production plan, Freeport Indonesia is expecting production from its underground Grasberg mine as well as from the Big Gossan, Deep MLZ and Kucing Liar sites. The underground mine has 1 billion tonnes in proven reserves and is expected to be in operation from 2016 until 2043.
Review identifies manganese supplies
A review of manganese prospects and deposits in Indonesia conducted for Gulf Manganese by SRK Geological Consulting has found that there are ample domestic supplies to feed the company’s proposed ferromanganese alloy smelter at Kupang in West Timor.
The study was a geological assessment of manganese deposits in Indonesia that could supply ores matching the specific requirements of the proposed smelter.
It was undertaken as a desktop review, using publicly available data, SRK’s in-house project database and subscription based mineral industry databases. It covers key criteria including geology, deposit style and potential grade and tonnage.
SRK concluded that there is a potential extractable manganese mineralization of 29 million tonnes for production IUPs and 114 million tonnes for exploration and production IUPs combined.
Arc enters MoU on Trenggalek
Arc Exploration has signed a non-binding MoU with PT Danusa Tambang Nusantara to explore the Trenggalek Gold-Copper Project in East Java. Danusa, a subsidiary of one of Indonesia’s largest contract miners, has an exclusive right to conduct due diligence for two months.
Subject to satisfactory due diligence, the parties have agreed to an indicative investment structure that would provide Danusa with the opportunity to progressively earn up to 80% of the project for expenditure of up to US$10 million within four years.
The progressive earn-in process contemplates a minimum expenditure of US$1 million every 6-8 months with agreed milestones. If Danusa moved to 80%, Arc would retain a 15% interest and also receive a royalty of 0.7% of sales revenue on gold production of between 500,000 and 1.5 million ounces from epithermal mineralization conditional upon the LME gold price being above US$1000 per ounce.
Reliance to sell three mines
Anil Ambani-led Reliance PowerBSE will sell three coal mines in Indonesia and concentrate on coal mining in India to support Prime Minister Narendra Modi’s ‘Make in India’ initiative.
In 2008, the company, through its subsidiary Reliance Coal Resources (RCRPL), acquired three companies with mines in South Sumatra, Indonesia, with total reserves of 2 billion tonnes - Srivijaya Bintangtiga Energy, Bryayan Bintangtiga Energy and Sugico Pendragon Energy.
ATPK seeks high quality mine
PT Bara Jaya Internasional Tbk (ATPK) plans to invest US$150 million to acquire and operate a high calorific coal mine in Central Kalimantan next year. The company is looking to improve its performance as current production is centred on non-profitable, low calorific coal.
The company needs a mine with coal quality above 5000 kcal/kg to earn a higher margin from consumers.