Cokal says it has signed a memorandum of understanding (MOU) with China Railway 21st Bureau Group International Engineering Co (China Rail), to construct the infrastructure planned for mining at Cokal’s BBM metallurgical coal project in Central Kalimantan, Indonesia.

China Rail, a subsidiary of China Rail Construction Corporation (CRCC), has sent a team to the BBM site to carry out a site survey to finalise estimations for the costing of infrastructure construction to enable the parties to conclude a formal contract.

The MOU envisages China Rail carrying out road construction, jetty construction, and overburden stripping and coal mining at the BBM project, the ASX-listed company said.

The Bumi Barito Mineral project (BBM) is a PMA company with an ownership structure of 60% Cokal and 40% Indonesian owners. BBM has defined a total resource of 264 Mt comprised of 10.5 Mt measured, 13.5 Mt indicated and 240 Mt inferred Resources in accordance with the JORC Code 2012.

Road construction at BBM as envisaged in the MOU will be in two areas: 12 km of haul roads from the mine pits to the Krajan jetty to transport coal from both pulverised coal injection and coking coal pits to the Krajan jetty; and upgrading of an existing 55 km logging road to connect to 45 km road already in use leading to a jetty located at Lahung Tuhup, 160 km downstream of the Krajan jetty, bypassing the shallowest parts of the river.

In terms of jetty construction, two barge-loading jetties will be built. The first will be constructed at Krajan adjacent to BBM, and the second at the end of the 100 km haul road at Lahung Tuhup.

The construction of each jetty will incorporate a design to accommodate shallow draft barges, allowance for water depths in excess of 10 m during the wet season, a 1000 t/h barge loading conveyor, and coal handling and storage facilities.

China Railway will also assist in funding the capital investment related to overburden removal, coal mining and associated mine infrastructure including the provision of pit haul roads, sedimentation ponds, camp site facilities, clinic, workshops, fuel storage and mess room, Cokal said.

The MOU specifies a contractual period of five years with an option to extend for an additional five years based on mutual agreement between the parties.

In the meantime, Cokal has signed a barging term sheet with HSM Marine, a Singapore-based barging company with operations in Indonesia, the rest of South East Asia and the Middle East, to barge the coal from BBM.

Cokal’s new strategy to use contractor funding to commence construction, mining and barging has necessitated modifications to its five-year plan, it said. Commencement of the BBM mine construction will begin with China Rail initially constructing a 5 km haul road from Pit 2 (PCI coal production) to the Krajan jetty. At the same time, China Rail will construct a temporary barge loader suitable for initial production.