Nov 28, 2011

Bayan & White Energy dispute in KSC

Australian clean coal developer White Energy has declined to buy out its Indonesian partner to save its flagship project, sending the Australian company's shares down 13%on Monday to a near 6-year low.
White Energy, as quoted by Reuters, said it has told its partner, PT Bayan Resources Tbk, a company that is owned by tycoon Dato' Low Tuck Kwong, it is in breach of their joint venture, including its role as coal supplier, and given it 7 days to resolve the breach.
White Energy holds 51% of PT Kaltim Supacoal (KSC) with the remainder held by Bayan, which owns the Tabang coal mine in East Kalimantan that supplies their 1 million-ton-a-year coal upgrading plant.
The two entered talks last week on how to rescue the project after Bayan said it no longer wanted to supply coal to the upgrading plant because it could get a better price selling directly into the export market.
Bayan offered to sell its stake in the project for around US$45 million as a condition for continuing coal supply, but White Energy turned the offer down, saying it did not make sense to pay that much.
Instead, White said it would pursue its legal and other commercial options.
"White Energy's Board and management team are clearly disappointed with the timing of Bayan's recent actions," Chief Executive Brian Flannery said in a statement.
He said the company remains confident that there is strong demand from large coal companies in Indonesia and elsewhere to partner with White Energy to commercialize its clean coal technology.
White Energy's shares sank to a low of A$0.515, their weakest since January 2006, and last traded down 11 percent at A$0.53.
 
Disclosure: No position at the stock mentioned above.
 
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