The company signed an agreement on Thursday to deliver 51.8 million tons of coal to the state-owned subsidiary’s Suralaya plant, equating to roughly 5 to 6 million tons of coal per year.

Eight units operate at the Suralaya compound with a combined capacity of more than 4,800 megawatts.

PTBA corporate secretary Joko Pramono told The Jakarta Post : “Tthe coal price will be determined each year based on discussions with Indonesia Power, while referring to the government’s coal reference price.”

The government coal reference price currently stands at $90.09 per ton.

Indonesia Power is a subsidiary of state utility firm Perusahaan Listrik Negara and as of last year, PTBA was their biggest coal supplier, feeding some 5.7 million tons of coal to PLN’s facilities across the country.

PTBA is currently making the progression from coal miner to integrated energy company, and this deal is an important move in the expansion, for which the company has allocated $US226.6 million in capital.

This is the second major coal sales contract for the company in the last year, after they inked a 30-year deal in December with fertilizer producer Pupuk Indonesia for 68.6 million tons of coal.

The company also revealed that it is also looking at expanding its coal mining sites, despite its large coal reserves in South Sumatra.

Joko Pramono told The Jakarta Post that PTBA was currently conducting due diligence studies on several mining areas to be acquired by the company.

“We are in serious talks. We don’t have limitations on calorie content, whether high or low,” Joko said.

According to a document posted on its website, PTBA has diverse coal specifications, ranging from 4900- 6400 kcal/kg.

PTBA has mining permits covering 90,832 hectares in Sumatra and Kalimantan. Its coal resources total 7.29 billion tons with mineable reserves of 1.99 billion tons.