Indonesian coal producer Geo Energy has entered into a life-of-mine offtake agreement to supply European energy group EP Resources with coal from its Triaryani (TRA) mine in south Sumatra.
Under the agreement, EP Resources will take up to 12mn t/yr of coal from TRA, with the price linked to the ICI 4 index, which is jointly produced by Argus. The 12mn t/yr offtake volume amounts to 75-85pc of TRA's annual export volume.
Geo Energy acquired the TRA mine, which has reserves of 275mn t, in October last year. The mine produces GAR 4,000-4,200 kcal/kg coal.
EP Resources will make available a standby payment facility of up to $20mn as part of the deal. In addition, Swiss commodities investment firm ResInvest — which assisted in arranging the offtake deal — will invest $35mn in shares of Geo Energy, with an aim of acquiring an equity stake of at least 5.5pc by 31 March 2026, the company said.
Prior to the TRA acquisition in October last year, Geo Energy had set an output target of 8mn t for 2023 for its SDJ and TBR coal mines. In November 2023, the company said it is aiming to significantly raise output to 20mn-25mn t/yr within the next two years following the TRA acquisition.
