Coal & Stone

The group holds interests in respect of two coal mining concessions and two stone deposits, all of which are located in East Kalimantan in Indonesia.

The coal mining concessions comprise a high calorific value deposit near Kota Bangun and the lower grade Liburdinding concession in the southern part of east Kalimantan. The rights in respect of a third coal concession (Muser) have been allowed to lapse as the group concluded that the prospect for this concession were insufficient to justify the costs of extending the Muser licences.

Stone quarrying is classified as a mining activity for Indonesian licensing purposes and is subject to the same regulatory regime as coal mining. The group's stone interests are therefore managed in conjunction with the coal interests through an Indonesian subsidiary company, PT KCC Resources Indonesia, which is 95% owned by the company's UK subsidiary KCC Resources Limited and 5% owned by local partners.

In 2012, in light of the fall in coal prices, the group decided to limit further capital commitment to the coal operations and to concentrate on maximising recoveries of the amounts already invested.  With the recovery in coal prices, in 2017 the group began working to reopen the principal coal concession interest at Kota Bangun. In 2018, the group acquired an established loading point on the Mahakam River, together with a coal conveyor that crosses the Kota Bangun concession and runs to the loading point. The port, loading point and conveyor are being refurbished and preparations are being made to recommence mining.

The operating licence required to establish a simple quarrying and crushing operation on the andesite stone concession was obtained in 2014. The agricultural operations can utilise significant quantities of crushed stone for their building and infrastructure construction programmes and indications are encouraging that there will also be good third party demand for crushed stone for road building and use as a concrete aggregate.

For the present, however, the group is giving priority to reopening of its coal concessions, as these currently offer greater prospects for returns with lower risk than the andesite concession.