Indonesian coal deal fuels doubts over production quota approvals
A major coal deal in Indonesia is set to secure a powerful new partner for one of the country’s biggest miners, even as the industry worries a delay in the government’s approval of production quotas could have a severe impact on the business outlook. Low Tuck Kwong and his daughter Elaine Low, the biggest shareholders of Bayan Resources, agreed on September 16 to sell a 30 per cent stake in…
A major Indonesian coal deal has raised concerns over the government's approval of production quotas, potentially impacting the business landscape. Bayan Resources, owned by shareholders Low Tuck Kwong and Elaine Low, agreed to sell a 30% stake in its third-largest coal producer to tycoon Andi Syamsuddin Arsyad, known as Haji Isam.
The deal came at a crucial time for Bayan after the government delayed approving additional coal quotas for three of its subsidiaries. The uncertainty caused Bayan's shares to plummet before the deal's announcement, only to recover significantly afterward. The Lows, who hold 62% of Bayan's shares, would retain about 32% after the sale, potentially leaving control uncertain.
Jhonlin Group, a commodities and logistics conglomerate, would gain a substantial stake in Bayan, potentially becoming a major player in Indonesia's coal market. If Jhonlin succeeds in acquiring a 60-million-tonne production quota, its combined output with Bayan could account for about one-eighth of the country's coal market. Despite the deal's announcement on September 16, the government approved the needed quotas for Bayan's subsidiaries a week later, enabling the company to resume production.
The episode underscores the critical role of government approval in the mining industry, as delays can severely curtail operations and complicate planning. Indonesian media have suggested a link between the permit delays and Haji Isam's stake purchase, but the government maintains no such connection.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
