Saturday, March 14, 2009

Indonesia's Adaro plans acquisition to improve supply

JAKARTA, March 12 (Reuters) - Indonesia's second-largest coal producer, PT Adaro Energy Tbk (ADRO.JK), plans to acquire a coal barging and transshipment company to improve its supply chain, the company said in a statement.

Adaro did not identify companies being targeted for acquisition, but said negotiations were taking place and an announcement was planned in the coming weeks.

"As our coal mine is located quite far inland, it is imperative we acquire direct control of the inland waterway transportation and ship loading," Ah Hoo Chia, Adaro's operations director, said.

"We already control a portion of the mining and overland transportation and own a port facility; now we can be completely linked from pit to port."

The firm said it expected the acquisition value would not exceed $100 million and it would be funded from existing cash and operating cash flows.

With the planned acquisition, the firm said it expected additional capital expenditure on top of the $120 million capital expenditure planned for this year.

Adaro said it was still planning a 68 km (42.25 mile) overland conveyor, alongside the existing haul road, from the excavation area, near Tanjung South Kalimantan, to the final processing facility, the Kelanis river terminal in the Barito river.

The overland conveyor would have a production target of 80 million tonnes by 2013, the firm said.

Adaro was also sticking to a plan to construct a mine mouth power plant with two generating units of 30 megawatts each to power the overland conveyor at an expected cost of around $140 million, it said. Continued...

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