Tag Archives: Cokal

Contract miner CBI to develop underground mine at BBM in Indonesia

Coal technology, Mine operation news, Mineral project development, Mining services, Steel and iron ore, , , , , ,

Cokal Limited’s 60% owned subsidiary, PT Bumi Barito Mineral (BBM), has signed a binding agreement with PT Cipta Bersama Indonesia (CBI) to develop an underground mining operation at Pit 1 of the BBM Metallurgical coal mine, to produce a pulverised coal injection (PCI) product.

This strategic agreement represents a significant windfall for Cokal, as there were no plans to develop underground operations at BBM Pit 1 within the foreseeable future, given capital constraints and a high-level of requisite technical expertise, it says.

The BBM feasibility study, completed by Cokal in 2014, highlighted the importance of an underground mining operation at BBM Pit 1. A significant volume of Cokal’s JORC coal resources are considered to be most viably accessed through underground development in order to maximise financial outcomes, given lower strip-ratios, unit production costs, and the outlook for the long-term market for PCI coal products.

As part of the agreement, BBM will obtain the necessary regulatory approvals to conduct underground mining operations at BBM Pit 1. BBM has appointed CBI as the contractor in charge of the development of an underground
mine at BBM Pit 1, and the ongoing mining contractor operations for PCI coal production.

CBI has agreed to pay all mine development costs, and 100% of ongoing operating costs until delivery of coal to run of mine stockpile.

As part of this, Cokal will undertake the transport of product coal from BBM ROM to Batu Tuhup jetty, and then to market and will be responsible for the sales and marketing of the coal product. BBM shall be responsible for developing and managing additional coal transport infrastructure capacity for the delivery of coal product from the BBM Pit 1 underground mine to market.

The company added: “BBM is not required to reimburse CBI for any of the upfront capital or ongoing operating costs incurred by CBI. Rather BBM and CBI will share revenue from sale of the coal product in the following proportions: BBM 40%/CBI 60%.”

CBI has also undertaken to develop coal processing infrastructure at BBM in the near term, for use by both the underground operations and other BBM production.

The term of the agreement is for the life of the mine for the underground mining at BBM Pit 1.

BBM and CBI will immediately commence development of the BBM Pit 1 underground coal mine operations, with three key stages, each designed to optimise operations and ensure seamless integration with existing infrastructure. Stage one constitutes feasibility study and reconnaissance. Stage two is infrastructure development. Stage three is operations and logistics.

The timeline for stage one is six months, while stage two is expected to be completed in next 12 months thereafter.

Cokal CEO, Karan Bangur, said: “This agreement is another major milestone in BBM’s development and production ramp-up. Importantly, prior to the agreement with CBI, BBM did not anticipate any underground mine development for at least another decade. This agreement brings that production forward and is entirely in addition to the current targets of coal production from the open-pit operations at BBM. This will add additional cashflow and enhanced value to Cokal.

“In addition, the additional coal volumes will utilise and enhance the value of the extensive coal transport logistics chain that Cokal has developed and is expanding.

“Cokal and CBI anticipate that development of the underground project to first coal production will require approximately 18 months. During that time Cokal will further develop and enhance its logistics infrastructure capacity to accommodate a substantial increase in transported coal tonnages.”

Cokal secures HPU as contract miner for BBM coking coal project

Coal technology, Mineral project development, Mining services, Steel and iron ore, , , , , ,

Cokal has entered into a binding agreement with PT Harmoni Panca Utama (HPU) to provide contract mining services for development and mining of the Bumi Barito Mineral (BBM) coking coal project in Indonesia.

The ASX-listed company named HPU as the preferred tenderer to provide contract mining services for the project back in November.

The five-year agreement represents a significant milestone in Cokal’s strategy for the near-term development of BBM into an operating coal mine for minimal upfront capital costs, producing premium export quality coking and pulverised coal injection coal (PCI) products, the company said.

HPU will carry out contract mining of overburden and associated services, including project management, mine planning, surveying, supervision, site security, materials, equipment, equipment maintenance, labour, transportation, medical services, consumables and site infrastructure, Cokal said.

Use of contract mining provides significant strategic and financial advantages for Cokal, with the costs of these services linked to international coking coal prices, the company said. This is aimed at protecting Cokal’s operating margin through the cycle.

Cokal says it is now endeavouring to commence development of BBM in an expedited timeframe and is working with HPU on the necessary operational and logistical matters.

BBM is in the Central Province of Kalimantan and is Cokal’s most advanced project. It has a mining lease area of 14,980 ha and a remit to produce premium coking coal and PCI products for the nearby Asia steel markets.

Cokal drafts in PT Harmoni Panca Utama for contract mining at BBM coal project

Coal technology, Mineral project development, Mining services, Steel and iron ore, , , , , , ,

Cokal Limited has selected PT Harmoni Panca Utama (HPU) as the preferred tenderer to provide contract mining services for the development and mining of Cokal’s BBM coal project in Indonesia.

Aahana Mineral Resources SDN BHD (Cokal’s largest shareholder), through its experience and influence in developing and operating coal assets in Indonesia, significantly contributed to the selection process, Cokal said.

BBM is in the Central Province of Kalimantan, and is Cokal’s most advanced project. It has a mining lease area of 14,980 ha and a remit to produce premium coking coal and pulverised coal injection products for the nearby Asia steel markets.

Through its Indonesian subsidiary, PT Bumi Barito Mineral, Cokal has agreed to contract HPU for a period of five years to provide services such as open-pit overburden removal, provision of the required mining fleet and associated equipment, and coal hauling from in-pit to near-out-of-pit intermediate stockpile facilities.

HPU, one of the largest mining services companies in Indonesia, Cokal says, has agreed to mobilise upon receiving notice from Cokal to do so.

“The appointment of HPU remains subject to finalising formal contracts,” Cokal said. “However, Cokal’s commercial team have negotiated the key commercial terms, which are substantially attractive for Cokal, thus providing the opportunity to achieve favourable profit margins to be enjoyed by Cokal shareholders.”

Cokal Jakarta-based Director, Karan Bangur, said: “The team we have brought together at Cokal have extensive experience in the start-up and logistical solutions for coal mines in Indonesia. They have first-hand experience with major contractors and have ensured this award has been concluded on competitive terms with a strong contractor.

“The use of contract mining enables reduction of upfront capital requirements for commencement of mining and expedites the development of BBM. The company looks forward to working with HPU to maximise value from the production of premium export quality coking coal and PCI products.”

Cokal and China Rail set out five-year plan at BBM coal project

Bulk handling, Coal technology, Mineral project development, Mining project news, Mining services, Steel and iron ore, , , , , , , ,

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.