India's Mundra Port and Special Economic Zone will take part in a $1.65bn port and rail project in Indonesia together with a unit of Indian conglomerate Adani.
MPZEZ said it would take charge of the port component of the project by setting up a facility capable of handling 35m tonnes of coal per annum.
The Indonesian unit of Adani signed an agreement governing the dedicated rail and port project with Indonesia’s PT Bukit Asam and the regional government of Sumatra Selatan, a region in southern Sumatra.
PT Bukit Asam owns the second largest coal reserves in Indonesia.
The agreement grants coal purchase rights to Adani who will transport coal using the specially built rail and port facilities for a maximum period of 30 years, extendable by mutual consent.
PT Bukit Asam will sell 60% of the coal to Adani at a government notified price. The remainder would be on a contract carriage basis for the Indonesian coal company. The long-term transportation rate for the coal will be linked to the consumer price index and fuel prices.
The expected duration of the infrastructure-development part of the project is four years.
The 250 km rail line will connect the coal mining area of Tanjung Enim to coastal Tanjung Carat, the location of the proposed port.
Adani already has a large coal-mining operation in East Kalimantan, Indonesia.
The group has also recently acquired 100% interest in one of the largest coal assets in Australia, the group said in a statement, adding that the coal from its Indonesian and Australian sources would assist the group in its “rapid expansion” of its power and coal businesses.
Adani is the largest importer of thermal coal in India.
Australian and Indonesia coal exports are forecast to push global seaborne volumes past 1bn tonnes for the first time by 2012, according to a recent report by DnB NOR Markets.