Page 2 of
2 Indonesia's richest man loses his
mine By Bill Guerin
associated with new coal-fired
plants in 2006 helped PLN cut losses to just over
Rp1 trillion ($95 million) from Rp4.92 trillion in
2005.
Meanwhile, exports are expected to
reach 160 million tonnes in 2008, up slightly from
an expected 156 million tonnes this year, amid
surging demand from China and India. Both
energy-starved economic giants continue to seek
out regionally long-term secure coal supplies.
Analysts at UBG Investment Research predict that
up to
73% of China's new power capacity built between
now and 2020 will be coal-fired; southern China's
Guangdong province imported 4.5 million tonnes of
Indonesian coal in the first half of 2007, almost
two and a half times the amount in the same period
last year.
Coal prices are expected to
remain strong as production continues to lag
behind demand, creating lucrative investment
incentives for foreign acquisitions or minority
share purchases of local mining companies. China's
largest coal miner Shenhua Energy reportedly plans
to buy Indonesian coal operations and India's Tata
Power has bought 30% stakes in both PT Kaltim
Prima Coal and PT Arutmin.
They paid $1.3
billion in April to Bumi Resources (Bumi) for
shares in the two mines that have made Bumi the
country's top coal producer. It is controlled by
the Bakrie family, including holdings by the
country's coordinating minister for people's
welfare Aburizal Bakrie.
In March 2006,
Bumi announced an agreement to sell the lucrative
mines for $3.2 billion to a consortium headed by
Borneo Lumbung Energi, an affiliate of
Jakarta-based investment bank Renaissance Capital,
and the Marubeni Corp, Japan's fifth-largest
trading company. Marubeni was expected to fund up
to 50% of the purchase, rationalizing that it
needed more coal to boost existing supplies from
its own mines in Australia and Canada to meet
increased demand for coal at power plants in both
Japan and China.
Bumi's total outlay for
the two mines had been just under $251 million, so
the sale would have earned it a net profit of just
under $3 billion. Renaissance Capital could not
close the deal, which was officially canceled a
few weeks later. Another recent Bumi deal was the
joint-venture agreement struck with Australia's
coal-seam gas company Westside Corp Ltd to develop
these types of projects in Kalimantan along with
PT Arutmin.
Thailand's biggest coal miner,
Banpu, is also planning an initial public offering
of its 95%-owned local unit PT Indo Tambangraya
Megah, which operates four coal-mining concessions
in Indonesia. The IPO, expected during the first
quarter of next year, will still leave Banpu
owning 80% of its Indonesian unit.
Surging
regional demand and skyrocketing prices for coal
mean the recent Singaporean court decision against
Tanoto represents a big loss to his company's
future profitability. A spokesman for Beckkett has
said it is too early for the company to make a
decision on whether it will move to appeal the
verdict to Singapore's Supreme Court, although the
option is not being ruled out and the company is
also still considering filing a counter-lawsuit in
Indonesia.
A Deutsche Bank statement in
Hong Kong suggested that the verdict fully
vindicated the bank's legal position and actions
in recovering a long overdue debt. "In confirming
the lender's rights, it will be welcomed by the
broader banking community," spokesman Mike West
said in the statement. Whether it will be welcomed
by the broader borrowing community is still open
to debate, however.
Beckkett noted in its
written statement that the verdict had actually
affirmed the claims it had made all along: that
Deutsche Bank did not undertake the share sale in
a proper manner. For its part, RGM International
is forging ahead with a $4 billion expansion of
its pulp-and-paper, palm-oil, energy, and other
interests toward the aim of increasing its asset
base by 70% by 2009, Tanoto told Reuters in an
interview in May.
Meanwhile, Indonesian mining
firm PT Darma Henwa shares soared nearly 70% in
their stock-market debut on Wednesday, making it
one of Jakarta's best-performing first-day issues
this year. The shares opened at Rp550 and then
quickly rose to Rp565, well above the offer price
of Rp335. The firm's businesses include mining,
infrastructure services, coal marketing and power
generation. Darma Henwa, owned by British Virgin
Islands-based Zurich Assets International and
local company PT Indotambang Perkasa, raised
$117.25 million from the IPO for its working
capital.
Bill Guerin, a
Jakarta correspondent for Asia Times Online since
2000, has been in Indonesia for more than 20
years, mostly in journalism and editorial
positions. He specializes in Indonesian political,
business and economic analysis, and hosts a weekly
television political talk show, Face to Face,
broadcast on two Indonesia-based satellite
channels. He can be reached at
softsell@prima.net.id.
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Asia Times Online Ltd. All rights reserved. Please
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