Stone & coal interests
The group has made loans to certain Indonesian companies with interests in stone deposits and coal mining concessions, all of which are located in East Kalimantan in Indonesia.
The main stone concession comprises substantial deposits of high grade andesite stone located to the north east of the SYB northern plantations. Stone interests are complementary to the group’s plantation interests because quarried stone represents a valuable resource for improving the durability of infrastructure in the group’s operations.
The coal mining concessions comprise a high calorific value deposit near Kota Bangun and the lower grade Liburdinding concession in the southern part of East Kalimantan.
The andesite stone and coal mining concessions are held by Indonesian companies, which are wholly owned by the group’s local partners. Stone quarrying is classified as a mining activity for Indonesian licensing purposes and is subject to the same regulatory regime as coal mining.
Historically, the group had the right, subject to satisfaction of certain conditions to acquire 95% of the concession holding group of companies at the local partners’ original cost. The concession holding companies were ﬁnanced by loan funding from the group originally on terms such that no dividends or other distributions or payments could be paid or made by the concession holding companies to the local partners without the prior agreement of the group. However, changes to the Indonesian regulatory regime applicable to foreign investment in mining since the arrangements were agreed in 2008 meant that, from 2014, the applicable conditions could no longer be satisﬁed in their existing form. In the meanwhile, the group has continued to provide loan funding to the concession holding companies. The andesite stone concession holding company has guaranteed the obligations to the group of the coal concession holding companies.
The local partners have acknowledged the directors’ expectation that, when the loans to the concession holding companies have been fully repaid, the group would renegotiate these arrangements such that the group would participate in the equity of ATP if, and to such extent as, Indonesian regulations may then permit. Details of such new arrangements have not yet been agreed.
The group intends to achieve its objective of withdrawing from its coal interests as soon as practical by encouraging the applicable concession holding companies to mine out the Kota Bangun concession, which has limited coal reserves, as rapidly as possible and to divest the Liburdinding concession.