STX Acquires Stake in Indonesian Coal Mine

Construction launched on new blast furnace with annual output capacity of
4 mln tons of steel plates



(L) STX Chairman Kang Duk-soo and the location of a coal mine in Kintap, Kalimantan, Indonesia, in which STX acquired a 40 percent stake.

STX is pushing forward with its bid to strengthen its presence in the overseas exploration of natural resources by acquiring a 40 percent stake in a coal mine in Kintap, Kalimantan, Indonesia, from PT Indoasia Cemerlang (IAC) for $30 million.
A ceremony to sign an MOU on STX’s acquisition was held with Lee Sang-joo, head of STX’s natural resources business division, and IAC CEO Jason Surjiana Tanuwidjaja, in Indonesia on April 2. STX’s deal was approved by local investment authorities and the acquisition process has been finished.
The agreement allowed STX to not only acquire the right to operate the coal mine, but also to secure the right to sell all of its production. The IAC coal mine now produces 100,000 tons of coal per month. STX plans to increase its monthly production to 200,000 tons to reach 2.4 million tons per annum.
A Korea Resources Corp. official said the IAC mine covering 907 hectares has enough reserves to produce coal for the next 15 to 20 years. One of the mine’s strengths is lower excavation costs due to the features of the Warukin formation, including seams measuring 10 meters in thickness, he added.
The IAC mine has better transportation access at only 15 km away from a port, compared to distances ranging from 50 km to 100 km for other Korean firms’ coal mines.
STX’s acquisition of the IAC mine is considered to be a quick win investment since it is expected to bring about more than $100 million in sales, dividends and other proceeds for STX, business sources said.
STX is considering a strategy for maximizing profits by supplying the production from the IAC mine to both local and overseas buyers, officials said. Now that the demand for thermal coal for generating power is forecast to be on the rise in the wake of the spiraling nuclear disaster in Japan, Indian power companies have proposed long-term coal supply contracts. Korean companies have also made requests to be clients of the IAC mine. Korea East-West Power Co., one of the nation’s five power companies, was selected as the company to be supplied with 65,000 tons of coal on April 2.
Aside from its acquisition of the IAC mine, STX has a virtuous cycle of hedging energy prices and creating added values among its subsidiaries, including STX Energy, which procures about 4.5 million tons of bituminous coal per annum, and will inaugurate a private sector-invested thermal power plant in Donghae in 2014.
STX plans to set up a network for supplying 5 million tons of bituminous coal per year by additionally purchasing coal mines closer to the IAC mine, which will likely serve as a center. STX also plans to expand its resources exploration environs in both Korea and abroad, including China and India.
STX strives to grow into an energy total solution provider by making the most of the capability among its subsidiaries in business areas ranging from bituminous coal trading to the operation of maritime loading facilities and shipping. nw

Photos on courtesy of STX