IndoMet Coal Project

The IndoMet Coal Project (previously referred to by BHP Billiton as the Maruwai coal project), covers five potential coal deposits in East and Central Kalimantan in Indonesia. The undeveloped metallurgical and thermal coal deposits are estimated to have a total coal resource of 774 million tonnes. The five deposits -- the Lampunut coal project, the Haju coal project, the Luon coal project, the Bumbun coal project and the Juloi Northwest coal project -- are located within seven Coal Contracts of Work (CCoWs).

Project stalls
In July 2009, following the global financial crisis, BHP Billiton announced that it was shelving the project after reviewing work on the Haju trial mine. In a brief media release the company stated that it had "assessed the progress of the Haju trial mine and determined it is not a sufficient fit with our long term investment strategy." It also stated that "further evaluation of the company’s interests in the Maruwai Coal Project is underway to determine the best future commercial options."

In March 2010 BHP Billiton announced that it had entered into "binding agreements to create a new joint venture for its Indonesian Coal Project (ICP) with a subsidiary of PT Adaro Energy TBK (Adaro), which has agreed to acquire a 25 per cent interest in the ICP joint venture. BHP Billiton holds the remaining 75 per cent." In May 2010 it was announced that Adaro's 25% stake had cost $335 million.

Project regains momentum
By September 2011 -- with metallurgical coal prices still relatively high -- BHP Billiton began to hype the project once again. In a briefing for analysts the company listed the project as one of its major options for expanding metallurgical coal production. The company boldly proclaimed that the "basin has potential to support large scale metallurgical and thermal coal production." Company executives flagged that the initial development would be in the Lahai Contract of Work area (the site of the Haju coal project), which would commence production at approximately 500,000 tonnes a year of raw coal and would "provide initial operating platform and development of transport infrastructure." This, it stated, would facilitate the "larger development at Maruwai and Juloi" contract of work areas. The company executives stated that infrastructure options included barging the coal down the Barito River or the establishment of a railway.

Later that year The Australian reported that BHP Billiton "plans to begin work on the $US1.34 billion ($1.3bn) IndoMet coal project in Indonesia within weeks, opening up a new mining province to help meet Asian demand." The story stated that the Haju mine was the first stage of the IndoMet project "which could be producing five million metric tonnes of coking coal annually by 2017."

In its 2012 annual report the company stated that "study work is underway to identify development options across our CCoWs and early work on infrastructure development has commenced." However, the company does not mention the project in its September 2012 exploration and development report or its December 2012 quarter exploration and development report.

In its Adaro Energy reports that "the IndoMet Coal Project is on track to begin mining from the Haju mine in the third quarter of 2013. The Haju mine is within the concession area held by PT Lahai Coal in Central Kalimantan. Construction of minesite accommodations, port site accommodations, administrative offices and an industrial area, is underway."

Related SourceWatch articles

 * BHP Billiton's coal interests
 * Indonesia and coal

External resources

 * Dave Murray, President BHP Billiton Metallurgical Coal, Analysts and Investors Site Visit", Queensland, June 2, 2005. (See slides 62-68 "BHP Billiton Maruwai Coal Project" for an overview of the proposed project).