The governor of Indonesia's South Sumatra province has revealed plans to invest 11 trillion rupiah (US$ 1B) in new railroads so that its coal reserves can be moved from the mines to the ports more efficiently.
The governor, Alex Noerdin, said he plans to build 270 km of railway in the province, which will have the capacity to transport 50 mtpa of coal mined in the province.
"Coal production depends on the availability of transportation," Noerdin said. He added that the project could be completed within three to four years.
South Sumatra has 47 bt of coal resources, half of Indonesia's total. However, its coal production averages just 12 mtpa due to poor transportation. Kalimantan island accounts for most of the other coal produced.
State coal miner PT Tambang Batubara Bukit Asam Tbk, which has coal mines in South Sumatra, is one of the firms that could benefit from the project. It has already announced that it would form a joint venture with state train operator, PT Kereta Api Indonesia, to upgrade an existing railway linking its coal mines to a port on the southern tip of Sumatra – a project estimated to be worth US$ 1.8B.
However, it will also be able to use the new railroad to deliver 20 mtpa of coal to a port on the southeast side of Sumatra, once the new railroad has been completed.
