Indonesia is a nation rich in natural resources and with increasing energy demand to fuel the country’s continued economic growth.
As Indonesia continues to move forward, coal will be a vital source in meeting the country’s growing domestic electrification needs, as urbanisation and a growing middle class have created the need for greater access to electricity across the archipelago.
Demand for electricity is expected to rise, as the country’s political and business leaders are prioritising energy, infrastructure and electrification projects in the immediate future. In 2013, the national electrification rate rose to 80% with national electricity demand expected to grow at 8.4% annually from 2013-2022. In Sumatra, electricity demand is expected to grow by 10.6% annually (source PLN RUPTL 2013-2022).
In Riau province – the location of BlackGold’s assets – the electrification rate is behind the rest of Sumatra, creating an opportunity for future power generation. BlackGold Group’s coal concessions are strategically located in proximity to regional power plants and meet the calorific requirements for coal utilisation.
BlackGold Group has secured coal supply contracts with several power plants, including the Tenayan project, an initiative by Indonesian state-owned electricity company, PT PLN. With the revision of mine-mouth coal pricing regime, the Group qualifies as a mine-mouth coal supplier for the tender won, as such, the Group will be able to sell its coal to the power plant at a benchmarked production cost plus a 25% margin. This ensures that BlackGold Group enjoys profit stability in the long run despite any future fluctuations in the coal prices.
The Group, through its local subsidiaries, has the rights to three coal concessions in Riau, a region rich in natural resources.
Currently, the Group, through its subsidiary PT Samantaka Batubara, has over 200 MT of coal resources (JORC code) from an area of only 7,500 hectares whereas the total asset portfolio comprises 48,910 hectares that possesses potential additional exploration upside.