Tuesday, July 31, 2007


Andaman group in Kalimantan coal mining foray
May 4 2007 Business Times

THE Andaman group, a privately-held entity, is investing up to RM30 million with a partner to buy the controlling rights for two coal mining concessions in East Kalimantan of Indonesia.

Andaman group is controlled by Datuk Dr Patrick Teoh's family, which is also the major shareholder in main board companies EcoFirst Consolidated Bhd, Meda Inc Bhd and SEG International Bhd.

The group signed an agreement yesterday to buy the two mines that collectively cover 9,952 ha with a concession period of 25 years.

"Coal mining is the perfect diversification opportunity for us. Another main reason why we are
doing this is that we have a good partner. The Indonesian group is wellrespected in Kalimantan," Teoh, who is chairman of the Andaman group, said during the signing ceremony in Subang Jaya.

The mines, located in Kebapatan Kutai Kartanagara and Kebapatan Berau, Kalimantan, are owned by PT Putra Dewa Jaya and PT Putra Bara Jaya respectively.

Upon completion of the acquisition, 40 per cent of the coal mining concession will be retained by the Indonesian partners. The balance 60 per cent will be vested in Andaman's subsidiary, Andaman Reseources Sdn Bhd, which in turn is 55 per cent owned by Andaman and 45 per cent owned by its Bumiputera partner.

With a combined proven coal reserve of more than 70 million cubic metres, these mines are set to be operational in two months.

Teoh said the Kutai mine produces higher quality coal which are suitable for use as coking coal in steel mills, while the Berau mine produces medium quality steaming coal that are used for power generation.

He said the initial production is expected at 50,000 tonne per month for each mine and the group plans to raise the production volume to 200,000 tonne each per month within a year.

More investments may be needed when the production volume is raised, he said, but the group expects to cover any additional investment through the sale of coal productions.

He said the venture is expected to contribute 30 per cent to Andaman group's net earnings, but declined to reveal the group's financial detail since it is a private entity.

Because of the attractive prospect, Teoh said the group and its Indonesia
partner are already in the process of buying a third coal mine in Indonesia.

In future, we may inject these coal mines into any of our public-listed companies (plcs), or the plcs may even buy other new mines directly from the Indonesian government. We don't discount any possibility," Teoh said.

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