Coal news and updates

Jatenergy received first coal purchase order from Chinese customer

Jatenergy's energy and material trading arm has received its first, non-revocable purchase order for 150,000 tonnes to 300,000 tonnes of coal per month from China’s Qingdao Jiahe Rundong Trading.
   
The company will use its extensive coal network in Indonesia as a base to source coal from the two main Indonesian coal areas Sumatra and Kalimantan to meet this order.

Jatenergy will also act as Qingdao’s representative in Australian and Indonesia with a percentage based fee paid to Jatenergy of coal product exported for Qindao.

It is confident of meeting the maximum 3,600,000 tonnes per annum required for Qindao’s energy requirements in China for the life of the three year order.

“Jatenergy has the ability to develop its energy and material trading arm. It has been a strategy of the company to utilise its network of suppliers and customers to access product for trade,” executive chairman Tony Crimmins said.

Separately, Jatenergy has agreed with PT Prakarsa Corporindo to extend the completion date for the US$2 million sale of PT Coal Soil Brik, which holds the Katingan Coal Project, by 30 days.

This is to allow for local government acknowledgement and approval of the share transfer.

Qingdao Jiahe Rundong Trading

Qingdao is part of the Hejia Group, a high-tech enterprise specialising in the research and development, production and sales of fine chemicals.

Hejia has fixed assets of 250 million RMB, annual sales of 600 million RMB, plant area of 360mu, 300 scientific and technical personnel and over 800 employees.

Strategy and Market Demand

Jatenergy’s strategy is to focus on the growing enterprise of China as it develops its network into South-East Asia and Australia using well established Chinese partnerships.

Coal remains China’s dominant energy source – making up more than 60% of its primary energy resources - and its consumption is forecast to continue rising.

In 2012, coal consumption was 3.52 billion tonnes. This is expected to rise to 4.8 billion tonnes by 2020, according to the China National Coal Association.

Katingan

Katingan is a 5,000 hectare tenement located 160 kilometres northwest of the city of Palangkaraya in the South Kalimantan Province on the island of Borneo.

Jatenergy had acquired 80% of this project through the acquisition of Blackrock in 2011.

Analysis

The purchase order from Qingdao Jiahe Rundong Trading not only marks the first purchase order for Jatenergy’s energy and material trading arm, it also provide cash flow to the company in the form of fees for exported coal.

It is also close to completing the sale of the Katingan Coal Project, which would add a further US$1.8 million – the remaining amount to be paid from the US$2 million sale price – to the company’s cash position.

With a market capitalisation of $2.46 million, Jatenergy's valuation continues to remain light.

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