Stone & Coal
The group has made loans to certain Indonesian companies with interests in respect of 2 stone deposits and 2 coal mining concessions, all of which are located in East Kalimantan in Indonesia.
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.
The operating licence required to establish a simple quarrying and crushing operation on the andesite stone concession was obtained by PT Aragon Tambang Pratama (ATP) in 2014. The group’s agricultural operations can utilise significant quantities of crushed stone for their building and infrastructure construction programmes. ATP will also supply stone for road building to a coal company neighbouring the group’s estates. Further ahead, the civil works to establish the proposed new Indonesian Capital City in East Kalimantan are likely to require large quantities of crushed stone.
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. In 2012, in light of the fall in coal prices, the group decided to limit further capital commitment to the coal companies and to concentrate on maximising recoveries of the amounts already invested. With the recovery in coal prices in 2017, work began to reopen the Kota Bangun concession held by PT Indo Pancadasa (IPA). In 2018, an established loading point on the Mahakam River was acquired, together with a coal conveyor that crosses the Kota Bangun concession and runs to the loading point. In 2019, IPA appointed a contractor to provide mining services and manage the port facility, as well as funding all further expenditure in exchange for a participation in profits from the mine.
To the extent that any further loan capital is to be committed to the stone and coal interests, the group will give priority to that which will offer quicker repayments with lower risk.