SINGAPORE - Geo Energy Resources' unit, PT Tanah Bumbu Resources (TBR), has completed its first shipment of 50,000 tonnes of coal worth more than US$2 million from its TBR mine to PT Sulawesi Mining Investment, part of Chinese state-owned Tsingshan Holding Group.
The shipment will be part of the group's fulfilment of its domestic market obligation (DMO) requirement set by the Indonesian government, Geo Energy noted. The Indonesian government has set DMO guidelines where 25 per cent of planned production is to be set aside for domestic market consumption for all coal producers based in Indonesia to fulfil the nation's growing energy needs.
The shipment came out of TBR's total production of around 88,000 tonnes as at July 31, 2018, the mainboard-listed coal producer announced on Friday morning (Aug 10).
Production of the mine commenced in June 2018, following its development with PT Bukit Makmur Mandiri Utama, one of Indonesia's largest mining services companies which is listed on the Indonesia Stock Exchange under PT Delta Dunia Makmur Tbk.
Geo Energy signed an overburden removal agreement with BUMA in March 2018 for the entire life of the TBR coal mine with a guaranteed minimum annual production volume.
Buyer Tsingshan mainly produces stainless steel ingots, steel bars, plates, wires and seamless tubes, and through its subsidiaries owns and operates stainless-steel factories, nickel mines and smelters in Indonesia, Geo Energy said.
The sale "marks the start of a partnership with Tsingshan", which has a strong domestic presence in Indonesia, said Geo Energy Resource's chief executive Tung Kum Hon.
"We expect TBR's coal production to be ramped up in the coming months and we target a coal sale of 100,000-150,000 tonnes for August 2018. We are working towards our target of total coal production for both (our other coal mine) SDJ and TBR of 11 to 12 million tonnes in 2018," Mr Tung added.
Geo Energy's counter last ended at 23.5 cents on Wednesday, before the announcement was made.