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INDONESIAN coal mining group Geo Energy has secured a deal to supply coal to global commodities group Engelhart Commodities Trading Partners (Singapore), or ECTP, until recently known as BTG Pactual Commodities, for the entire lifespan of its wholly owned coal mine.
At current coal prices, the deal is worth an estimated US$1.2 billion, said its CEO Tung Kum Hon.
From July 1 this year, Geo Energy will supply four million tonnes of coal from its PT Sungai Danau Jaya mine to ECTP for seven months, and then subsequently six million tonnes of coal until Dec 31 next year.
It will also sell a minimum of four million tonnes of coal for the remainder of the lifespan of the mine.
This follows an earlier offtake agreement that the group reached with ECTP for 23 shipments, or 1.5 million tonnes of coal, completed in June this year.
The group is hoping to produce six million tonnes of coal this year, with monthly production expected to rise to more than 500,000 tonnes.
Established in 2013, ECTP was founded as a commodity trading arm for Brazilian investment bank Grupo BTG Pactual. It has grown rapidly in the last three years to become one of the world's largest commodities traders.
The offtake agreement is a strong testament to Geo Energy's track record of delivering coal, said Geo Energy executive chairman Charles Antonny Melati.
"The coal offtake agreement would allow our group to focus on expanding our coal production while ECTP takes care of coal trading and sales," he said. "As our group aims to become one of Indonesia's top coal producers, we would continue to seek out acquisition opportunities in the region to replenish our coal reserves and to secure more of such offtake agreements."