While Indonesia is a great coal producing country, surpassing former coal leading producers, Australia and South Africa, what actually made companies mining for coal in Indonesia profiting from mining there is the savings on transportation cost.
The coal mine properties of KAL Energy are situated close to the Mahakam and Kadang Pahu Rivers in East Kalimantan, Indonesia, then transportation of coal is by barge, hence the low cost.
In any mining activity, companies should keep overhead cost at a minimum. It looks like KAL Energy is able to do that. Check KAL Energy website for more information.
KAL Energy Uses Indonesian Infrastructure Advantages to Propel Business
A 2006 report by AME Mineral Economics states that Indonesia has become the world’s top thermal coal-producing area, taking a distinct lead over former top producers Australia and South Africa. While many in the industry might attribute the change to better mining techniques or higher quality product, the real answer lies within a somewhat surprising realm -- transportation.
“A low cost transportation infrastructure is essential to the economic exporting of coal,” states KAL Energy CEO Cameron Reynolds. “It’s one of the reasons Indonesia has jumped ahead in the market; other areas in the world have simply failed to, or can’t, overcome infrastructure constraints.”
KAL Energy’s mineral claims are located in East Kalimantan, Indonesia -- a region of active coal export since the 1980s. According to Reynolds, several infrastructure elements allow the region to maintain world-leading production rates. Among these are rapid rates of scale production, a minimization of front-loaded capital expenditures and diminished unit costs in comparison to competitors. The close proximity of Kal Energy’s mine properties to both the Mahakam and Kadang Pahu Rivers provide for low cost barge transport of coal.
“While other regions around the world are stuck at a certain level of production, places like Kalimantan, in Indonesia, continue to ramp their production massively,” says Reynolds. “It’s definitely a factor that I think investors are starting to realize.” Kal Energy has recently become a public company, trading under the symbol KALG.
KAL Energy has already secured the rights to an estimated geological resource of 192 million tons of thermal coal. This coal has been identified to have a very low sulphur and ash content which allows it to be utilized for more environmentally friendly electricity generation than many other Asian coals. They have made plans to produce and ship 200,000 tons of its product to end users in the latter half of 2007, with additional plans to scale production to 5 million tons per year within the next four years and 15 million tons per year on a long-term basis, after the successful completion of the exploration program and subsequent world class mining feasibility study. The company expects further long-term demand through Coal-to-Liquid (CTL) technologies.
“When you find an advantage, you exploit it in every way possible; and that’s exactly what we plan to do long into the future,” adds Reynolds.
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