Gresik establishes subsidiary to run coal mining business, Indonesia

PT Semen Gresik has established a new subsidiary to run its coal mining and processing business with a total investment of IDR500m (US$55m), reports the Jakarta Post.

The establishment of SGG Energi Prima is part of the company’s strategic measures to secure an energy supply for its cement factories, according to Gresik president director Dwi Soetjipto.

"Semen Gresik as a group is facing challenges to secure a supply of energy and electricity in accordance with its long-term development plans," Dwi said in a statement.

According to Dwi, Gresik needs up to 3.2Mta of coal and would need up to 4Mta when its two new cement plants, located in East Java and South Sulawesi, become operational in the first and third quarters of this year, respectively.

The new subsidiary, SGG Energi Prima, will operate in coal mining activities, coal transportation, coal and its derivatives trading as well as expansion, which covers cooperation with other companies and the acquisition of coal mining areas.

Semen Gresik director, Erizal Bakar, said the company’s initial investment for SGG Energi Prima had reached IDR500bn which was supported by Semen Gresik’s capital expenditure.

"Further investment for SGG Energi Prima will depend on the results of an evaluation concerning the company's acquisition of possible coal mining companies or mining areas," Erizal told The Jakarta Post on Sunday.

SGG Energi Prima, which is based in Gresik, East Java, has yet to operate any mining area.

"We are studying possible collaboration with other companies and the potential take over of mining areas, possibly in Riau, West Sumatra or Kalimantan. We are looking at companies that already carry out operations or remain in the exploration process in mining areas," Erizal said.

The new company was expected to start supplying coal for Semen Gresik this year, according to Erizal.