Indonesia's PT Earthstone Resources plans to produce 3 million tonnes of iron ore this year after starting production at one of its mines on Sumatra island, its chief executive said on Friday.
The firm operates five iron ore mines in different parts of Sumatra and initial production will come from its Nalo Baru mine in Jambi province, Pankaj Singh said.
"Production is expected to reach close to 10 million tonnes within two years when we start production in two other mines," Singh told Reuters.
To develop the mine, the company planned to spend $40-$45 million this year, compared to $10 million in 2008, he said.
The firm has locked in a contract with a Chinese buyer to ship 36,000 tonnes of iron ore from this year's production at $55 a tonne, FOB Padang port in southern Sumatra, Singh said.
Iron ore from the firm would help boost iron ore production in Indonesia and may benefit local steel companies which currently depend on imports of semi-finished raw material.
"Indonesia is not known for iron ore in the global market because there are not too many players in the business," Singh said, adding the country would be become an increasingly important player with the opening of more mines.
Energy and mineral ministry data shows Indonesia produced 4.6 million tonnes of iron ore in 2008, or only a fraction of iron ore production from Australia, the world's top iron ore exporter, which is forecast to produce 367.7 million tonnes in 2009/10.
Indonesia's iron ore production was 1.89 million tonnes in 2007.
The Southeast Asian country has iron ore resources of 381 million tonnes, according to energy ministry data.
Some international players planning to set up steel plants in Indonesia have approached the firm to secure possible iron ore supply deals, Singh said, without elaborating.
Source: NineMSN
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