Indonesia’s Adaro to Double Australia’s Kestrel Mine Production

Coal mine - Photo by Adaro Energy

JAKARTA (TheInsiderStories) – Indonesian coal miner PT Adaro Energy Tbk (IDX: ADRO) aims to double Kestrel Mine‘s production to bring the company become one of the world’s largest coking coal producers, said the chief executive on Tuesday (17/07).

In March 27, the company joint with private equity manager EMR Capital acquired 80 percent of Rio Tinto‘s coal asset Kestrel in Australia for US$2.25 billion. Kestrel produced 4.25 Metric ton (Mt) of hard cooking coal, had marketable reserves of 146 Mt and resources of 241 Mt.

Garibaldi Thohir, chief executive of Adaro has said on Tuesday (17/07), the acquisition is a significant milestone in the company’s strategic expansion of its portfolio of metallurgical coal, as well as one of its largest investments outside of Indonesia.

He continued, the acquisition of Kestrel Mine its expected to finalize in the coming months, including the shifting in management control. He aimed to raise Kestrel Mine’s current production to 10 million metric tons of coking coal per year from 5.5 million tons currently.

Thohir stated, once the financial deal is completed, Adaro will have a 49 percent stake, while the United States-based private equity firm EMR will hold the controlling share. The publicly lister miner is reportedly using internal cash and loans from 11 banks to finance the acquisition.

Furthermore he said, the company also plans to triple its domestic coking coal production mine in South Kalimantan from 1 million tons per annum currently.

Global coking coal production is currently still dominated by Anglo-Australian multinational BHP, which produces 30 million tons annually, followed by Rio Tinto with 25 million tons. The Australian miner decided to sell its stake in Kestrel Mine to focus on its iron ore, copper and aluminum business.

Recently, Thohir said his company eyeing power plant projects in Vietnam, Laos, Myanmar and other regional nations, looking to enter global market through its overseas investment arm Arindo Holdings, an affiliate of the company based in Mauritius.

Arindo recently raised $12.1 million from an initial public offering at the Stock Exchange of Mauritius. The Mauritius-based company put up 1.3 million shares or equivalent to 5 per cent of its equity, at $11.45 apiece.

Arindo is an investment holding firm founded in Mauritius on March 28, 2005, with the important role of facilitating investment opportunities abroad. Adaro is targeting expansion of its logistics and power generation business, as well as optimizing its mining sites for future projects.

He mentioned how his company intends to develop power plants in South Kalimantan, in collaboration with state-owned power producer PT Perusahaan Listrik Negara it will focus on mine-mouth power projects in Kalimantan and several other areas across the country. Adaro says it aims to build 5,000 megawatts (MW) of power generation capability, up from a current 2,260 MW.

A unit of investment company PT Saratoga Investama Sedaya Tbk (IDX: SRTG) has three arms to manage power plants in the country, namely, PT Makmur Sejahtera Wisesa, owned and operate of the 2x30MW at Kalsel Bhimasena Power (100 per cent); 2x1000MW power plant project in Central Java Jateng Power (34 per cent) and 2x100MW power plant project in South Kalimantan (65 per cent).

Written by Staff Editor, Edited by Linda Silaen, Email: