Punj Lloyd acquires 50% stake in Indonesian coal mining company

Punj Lloyd, an engineering and construction company, said it has acquired a stake in an Indonesian coal mining company, through a subsidiary. Sembawang Engineers and Constructors, a Singapore-based subsidiary of Punj Lloyd, has taken a 50% stake in a thermal coal mining company in Central Kalimantan, Indonesia.

The name of the company being acquired or the financial details of this transaction have not been disclosed. The coal company holds an IUP license, which is needed in Indonesia for coal mining. The company’s concession is estimated to have resources of about 134 million tonnes of thermal coal and potential ‘in situ’ reserves of 57 million tonnes. The second figure is what the company could get from its mining activity.

For Punj Lloyd, this is a diversification from its existing activities and it has not really explained the rationale. India’s power deficit has seen new thermal power plants being set up, which require coal, both from imported and domestic sources.
Power companies themselves are scouting for coal mines in countries such as Australia and Indonesia. In addition, other groups are looking at merchant coal activities. Punj Lloyd’s linkage to the power sector is that it also provides engineering services to power plants. It apparently also wants to sell coal to them as well.

Recently, Monnet Ispat & Energy Ltd completed the acquisition of an Indonesian coal company, with established 65 million tonne of coal reserves, for $24 million or about Rs 108 crore. But it also said that this acquisition was agreed upon in 2008 and regulatory approvals took very long. Current valuations may be different. Also, this acquisition was for a mine located in Sumatra. But this acquisition gives some idea about the likely cost for acquiring a coal mining asset in Indonesia.

Read the press release on the acquisition here.

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