Bukit Asam Sells Coal to Indonesia Plant at $80 a Ton

By Leony Aurora

Aug. 11 (Bloomberg) -- PT Tambang Batubara Bukit Asam, holder of a quarter of Indonesia's coal reserves, sold coal to the Tanjung Jati B power plant in Java at $80 a ton, its record price for the domestic market.

Bukit Asam shipped 60,000 metric tons in August and may sell a further 120,000 tons to the power plant by year end, President Director Sukrisno said by telephone in Jakarta today.

Coal prices have more than doubled in a year as demand from Asian utilities increased. Indonesia, the world's biggest exporter of power-station coal, is drafting regulations to tie contract prices to the international market to benefit from rising global rates, Simon Sembiring, former director general of coal and mineral resources, said June 20.

The record price ``will be a reference when we negotiate the price for shipments to Suralaya'' power plant next year, Sukrisno said. The government's proposed new policy on price benchmarks ``will help us a lot,'' he said.

The Suralaya power plant, operated by PT Indonesia Power, a unit of state utility PT Perusahaan Listrik Negara, is Bukit Asam's biggest customer. Coal prices for the power station were raised 13 percent starting July 1, the third price increase this year, to 617,900 rupiah ($67) a ton.

Bukit Asam plans to sell 13 million tons of coal this year, including about 22 percent mined by other producers, Sukrisno said on July 14. The Suralaya plant will receive 5.1 million tons of the fuel.

Indonesian coal producers are currently prohibited from selling to domestic buyers at a price higher than their lowest export agreement. Bambang Setiawan replaced Sembiring on July 18.

Coal prices at Australia's Newcastle port, a benchmark for Asia, reached a record $194.79 in the week ended July 4. The weekly index fell 2.6 percent in the week ended Aug. 8 to $156.16 a ton, according to the globalCOAL NEWC Index.

To contact the reporter on this story: Leony Aurora in Jakarta at laurora@bloomberg.net.