MEC, previously known as Middle East Coal, has a coal mine project in East Kalimantan and is investing $5.2 billion in infrastructure including a smelter, railway and power plant.
MEC's executive vice chairman, Madhu Koneru, said there was potential to expand the 130-kilometre-long railway project, with scope to build as much as 1,000 km of railway in East Kalimantan.
"We are focusing on the (current) railway project, and that is long-time construction," Koneru said, speaking on the sidelines of an infrastructure conference in Jakarta.
"Technically yes there is potential (to extend the railway), commercially yes there is potential...we have planned for expanding the railway if it makes logical sense going forward," he said.
MEC has a licence for a 5,000 hectares coal mine in East Kalimantan and has already finished exploration works, Koneru said. It has close to 2 billion tonnes of coal reserves in the East Kalimantan mine and about 30 percent of production will go to the domestic Indonesian market while 70 percent will be exported to India and China.
He said production would start about six to eight months before the railway begins operations.
The main customer for the domestic coal supply is Indian state aluminium maker NALCO's captive power plant at the mine which will supply power to NALCO's alumina smelter. The coal-fired power plant will have a capacity of 1,400 megawatts.
MEC will sell 10 million tonnes a year of sub-bituminous coal to two Indian end-users on 15-year contracts. Tata Power is expected to sign a long-term contract with MEC.
MEC will also sell another 5 million tonnes a year to either Indian or Chinese end-users, and 2 million tonnes on the spot market.
MEC's planned mine is in an undeveloped part of East Kalimantan, with no road or river connections to a port. It will transport its coal to its port by rail rather than trucking and barging.
The railway will cross 20 km of swamp which will be treated to take the line and will tunnel through 85-90 meters of mountain, Koneru said in an interview with Reuters on March 9. (Reuters)
