LG successfully develops Indonesian coal mine

LG International Corp. CEO Song Chi-ho, second from right, checks production facilities at an open-cast coal mine in Indonesia, Thursday. The company will begin commercial production at the mine, located on the eastern part of Kalimantan Island, in January. / Courtesy of LG International Corp.

By Lee Hyo-sik

LG International Corp. has successfully developed its second coal mine in Indonesia, taking another step toward becoming a major natural resources developer in Asia.

The trading unit of LG Group said Thursday that it held a ceremony to mark the beginning of pilot production at the open-cast GAM coal mine, located on the eastern part of Kalimantan Island.

The company plans to start commercial production in January, producing 3 million tons of coal annually. It plans to increase the production gradually over the years to as much as 14 million tons.

The GAM is an open-cast coal mine, spanning 106 square kilometers, which is estimated to hold about 220 million tons. The company acquired a 60 percent stake in the mine in 2012 and has operational rights.

LG has signed supply contracts with utility and other businesses in India, China and other Asian countries.

“For the past four years, we have been working hard to develop the GAM mine,” a company spokesman said. “We had to deal with local residents, obtain approval from the Indonesian government, and build logistics and production infrastructure. We are just delighted to be able to finally begin production.”

The GAM is only 60 kilometers away from a nearby port, while it takes up to 300 kilometers for other mines on Kalimantan to transport coal to the coast, according to the spokesman, who stressed that the company has an upper hand in costs over its rivals.

“Many Southeast Asian nations are rushing to build coal-fired power plants to meet the surging electricity demand in line with the rapid economic growth,” he said. “The demand for goal will continue to grow, creating lucrative business opportunities for us. We will continue to secure more mining rights in Indonesia and other countries to become a major natural resources developer in Asia.”

In 2007, LG acquired the MPP mine, also on Kalimantan Island, and has since been producing 3 million tons of coal annually.