BHP flags 20-25% sale of Indonesian coal mine

Long-term Indonesian coal investor, BHP Billiton intends to sell a 20-25% stake in its Maruwai coal project on Borneo island, Indra Diannanjaya, president director of PT Juloi Coal, one of BHP's seven participating coal mining units, told Fitri Wulandari of Reuters. The decision to keep a majority stake, after BHP last year signalled it would not develop the project in the world's top thermal coal exporting country, may show bids for the whole project were too low or that BHP sees better coal fundamentals.

"We want to keep a majority stake in the Maruwai coal project. So we are looking at selling a 20 to 25 percent stake. But if a business deal fails to take place, BHP would retain 100%. We are financially capable of developing the project," he said.

Sources told Reuters last year Indonesian coal miners PT Bumi Resources , PT Adaro Energy and PT Indika Energy were among the bidders for the Maruwai coal project. One said the world's largest miner had received bids both for 100% of the project, valueing it $500 million. It is expected to start commercial production in 2014 and output is expected to reach 6 Mt/y of both thermal and coking coal within five years.

The project will need between $500 million and $1 billion to produce 6 Mt/y, Mr Diannanjaya said. BHP plans to build a railway connecting the mine to the nearest barge-loading ports to help expand production, Diannanjaya said.