Tuesday, April 7, 2009

Indonesian coal to power RAK projects

Dubai: Ras Al Khaimah Minerals & Metals Investments (RMMI) will begin supplying coal from Indonesia to power the UAE's first fully coal-fired power plant in Ras Al Khaimah in two years. This should help to solve a potential power shortage in the northern emirates - where hundreds of new towers would host thousands of families in new neighbourhoods.

RMMI is involved in three major mining projects in Indonesia, Armenia and Congo with investments totalling $1 billion (Dh3.67 billion). The projects will help the emirate to secure long-term energy supplies in the coming years, while the excess capacities will help other emirates.

"Initially, we will supply five million tonnes of coal to the Government of Ras Al Khaimah for the new power plant," Madhu Koneru, managing director of RMMI and vice-chairman of Middle East Coal Private Limited (MEC), a Special Purpose Vehicle (SPV) of RAK Investment Authority, told.

The strong economic growth in the northern emirates has accelerated the demand for power over the last few years. The fate of a number of projects in Ajman, Umm Al Quwain and Ras Al Khaimah would depend on steady supply of power. Al Salam City - one of the largest master-planned project - has been held back due to a dispute on potential power supply to the project.
"We are also looking at supplying excess production to India and Japan - the two countries in need for energy. In future, we could supply more coal to utilities ventures if more coal-powered power plants are developed in the UAE," Koneru said.

The Government of Ras Al Khaimah yesterday said it has been formally awarded a licence for the procurement, construction and operation of a special purpose rail network to extract and transport coal from Indonesia's East Kalimantan.

The licence was granted by the Regency of East Kutai in Indonesia to PT Trans Kutai Kencana, an Indonesian SPV of RMMI.

PT Trans Kutai Kencana is the vehicle for a joint venture between PT Kutai Timur Investama, the investment authority of East Kutai Regency and MEC.

The commitment to invest into East Kutai from the Government of RAK was announced earlier this month during the signing of a government-to-government socio-economic agreement between RAK and East Kalimantan Province in Indonesia. The signing was witnessed by Shaikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of RAK, and Indonesian President Susilo Bambang Yudhoyono at the World Islamic Economic Forum in Jakarta on March 3.

"East Kalimantan is the largest producer and supplier of thermal coal to both domestic and international markets. The planned infrastructure investments will enable RAK to maintain a high level of cost management and therefore stabilise prices of energy resources in the long-run as well by facilitating economical coal transportation from the resource-rich hinterland of East Kutai Regency in a scalable and efficient manner," Koneru said.

The first phase of the development programme will involve the commissioning of a 17 million metric tonnes per annum coal transportation and handling facility by 2012, while the civil and track work will be completed for 60 million tonnes annually.

Global engineering firm ARUP has completed the feasibility study and the engineering design for the 150-kilometre railway line that will connect the district of Muara Wahau to the East Kutai coast in East Kalimantan.

The railway is designed to enable a speedy and cost-effective transport of the coal, mined from remote, inaccessible interiors to the coal-loading jetty for easy movement domestically and through to international markets.

"We are going to start talking to contractors in April to construct the railway on a possible built-operate-transfer basis," Koneru said.
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