Adaro’s IPO success and conveyor plan

Bouncing back from transfer pricing allegations, Indonesia’s second-largest coal producer, PT Adaro Energy, has raised US$1.32B in the country’s largest IPO in more than a decade – and unveiled plans to almost double its Kalimantan coal production to 80Mtpa over the next three years.
The Adaro IPO – oversubscribed by 6.57 times – closed this month with shares selling for 1,100 rupiah (US$0.12c) each in an offering representing about 35% of the company’s equity.
Adaro says the proceeds will be used to purchase indirect ownership of 33% in PT Adaro Indonesia, 33% in coal infrastructure company PT Indonesia Bulk Terminal and 36% in coal trader PT Coal Trade.
The company says it also will repay debts of US$100M and fund the expansion of subsidiaries.
Meanwhile, the key to the planned coal production boost is a proposed US$400M project to set up a 68km conveyor – from Adaro’s Wara mine in South Kalimantan to the Kelanis barge terminal on the Barito River, in Central Kalimantan.
Adaro president director, Boy Garibaldi Thohir, reportedly told Asia Pulse that construction of the conveyor will start next year, targeted for commissioning in 2011 and clearing the way for Wara to lift Adaro production from 36Mta to 80Mtpa.
The company plans small-scale mining of the Wara deposit, adjacent to its Tutupan mine, from early next year, with a ramp-up plan linked to sales growth.
Tutupan mine, which is operating at near-optimum capacity, trucks its product 80km by road to the Kelanis terminal.
Adaro also has announced plans to start construction of a 2X30MW power plant – costing about $97M – in the second half of this year, with 75% of project costs funded by loans from local and foreign banks.

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