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UPDATE 1-BHP Billiton weighs getting out of Indonesian coal

Published 20/04/2016, 02:22 pm
© Reuters.  UPDATE 1-BHP Billiton weighs getting out of Indonesian coal
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* BHP sold 25 pct stake in IndoMet for $335 mln in 2010

* Coal asset prices down 60-90 percent since then

* Indonesian Haju mine has 1 mtpa capacity (Adds analyst comment, valuation background)

By Sonali Paul

MELBOURNE, April 20 (Reuters) - BHP Billiton (LON:BLT) is considering quitting its coal assets in Indonesia, where it recently started shipping steel-making coal from a small mine, amid uncertainty over Indonesian regulations and a weak outlook for coal.

BHP owns a 75 percent stake in the IndoMet Coal project, having sold the rest to Indonesia's Adaro Energy ADRO.JK in 2010 for $335 million. Coal asset prices have collapsed since then, and analysts said BHP would be lucky to fetch $200 million now for the stake in a largely undeveloped resource.

"Does it move the dial for BHP? No. But it's a really high quality met-coal property and potentially a fantastic opportunity for an Indonesian company with the right connections," said Shaw & Partners analyst Peter O'Connor.

BHP, the world's largest exporter of metallurgical coal, is considering a range of options for IndoMet, a spokeswoman said. She declined to comment on whether the company has entered into talks with any potential buyers for its stake.

"BHP Billiton is conducting a strategic review of the long-term future options for its Indonesian coal interests, IndoMet Coal, which comprises seven coal contracts of work within the provinces of Central and East Kalimantan," the global miner said in its quarterly review.

IndoMet started producing last year from the 1 million tonnes a year Haju mine, where BHP has come under fire from environmental groups. The mine made up less than 2 percent of BHP's metallurgical coal output in the first nine months of this fiscal year.

BHP has held off approving larger developments in Indonesia, awaiting more certainty on government regulations. says the IndoMet assets holds at least 1.27 billion tonnes of coal resources. Its CEO and a spokesman did not immediately respond to emailed requests for comment.

Indonesia's director of coal mining at the Energy and Mineral Resources Ministry, Agung Pribadi, said he was unaware of BHP's review of IndoMet.

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