Byung Chae Seo: Building a Floating Coal Terminal

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INDONESIA is an archipelagic country endowed with abundant natural riches. Its forests, rivers, mountains, marine and natural resources, all existing for thousands of years, constitute an invaluable resource for the country. It is for this reason that 46-year-old Byung Chae Seo has fallen in love with Indonesia.

Initially Byung, a Korean who has lived in Indonesia for about 11 years, was set on buying a number of coal mines owned by Indonesian businessmen but in the process his business interests changed course.  

He discovered just how complicated and time-consuming it was for coal-mining companies, particularly for small and medium size companies, to sell coal. The island of Kalimantan has a lot of coal mines in a number of regions, but unfortunately production is not up to export standards as the capacity of the collection vessels is more than 45,000 tons whereas coal production does not reach that volume.  

Then there are huge distances to cover to reach the closest bulk terminal. To reach the Indonesian Bulk Terminal (IBT), for example, a coal-transporting vessel must cover a distance of 250 kilometers, or 500 km in one trip!  

In addition, due to the shortage of barge cranes, sellers and buyers are obliged to hire them at high rates. Loading the coal into a barge crane is also time consuming as you have to wait your turn. “As a result, these coal-mining companies, particularly the small producers, suffer losses in terms of time and money. That is why I looked for an alternative for this black gold,” said Byung, the president director of PT Stakeholder Success Worldwide Pratama (SSWP), who is usually addressed simply as Mr. Chae.  

“I really want to help these coal-mining companies solve this problem. That’s why I developed the idea of building a floating coal terminal so that we can reach these companies. In this way they don’t have to cover long distances and can cut their costs,” said Byung.  

Byung’s concept is indeed a breakthrough in Indonesia, and indeed in the world. The first floating terminal, built offshore has been built in the waters of Kalimantan, Indonesia’s main coal-producing island. SSWP’s floating coal terminal is the first in the world. The terminal is expected to provide solutions for coal-mining companies, particularly in Kalimantan.  

Since China stopped exporting coal in 2004 to prioritize its domestic needs, a number of countries that formerly depended on China for coal turned to other countries, including Indonesia. In fact, China later began to import coal in large quantities.  

Indonesia competes with Australia and South Africa in coal export, which offer lower prices to importing countries like Japan, Korea, Taiwan, the Philippines and China. The import demand for coal has been rising as coal is also increasingly being used in various areas such as for power plants, the cement industry and textile mills. It is estimated that in 2010 the demand of state electricity company PLN for coal will rise to 30 – 60 million tons, or even to 90 tons in 2015.  

Unfortunately, coal mining companies in Indonesia cannot meet the demand for coal from the Philippines, Japan, Korea, India, Spain and Hong Kong because, for reasons of efficiency, the buyers or the users buy coal in minimum quantities of 35,000 MT or 65,000MT. Meanwhile, the coal collection vessels at the terminal can take in at least 45,000 MT and any less than that would mean increased overhead costs.  

In addition, as the coal mines are far from the coast, smaller vessels that transport coal will find it difficult to access them. The coastal waters in Kalimantan are very shallow so vessels have difficulty coming close to the shore. Usually, coal mining companies will carry their coal on barges that travel along small rivers. When the barges reach the coast, the coal is then transferred to larger vessels, which will take the coal to a terminal.  

“A floating coal terminal would be closer than the existing terminals. It is floating on the sea and has more barge cranes. In this way the costs can be cut to a minimum,” said Byung.  

Another fact, said Byung is that a buyer usually only pays after the coal arrives at the terminal because the transportation cost and the cost of loading are huge. These costs are borne by the coal mining companies and for this reason the price of coal is high although the quantity is small. That’s why the price of Indonesian coal is higher than that of other countries even though the quantity is the same.  

The vessel that transports coal has a smaller number of barge cranes so that coal-mining companies or the sellers sometimes must rent more barge cranes at high rates. In case of a delay, for example, the fine is quite high. Meanwhile, a floating coal terminal provides four barge cranes and a bigger collection vessel for the coal before it is taken to the main coal terminal.  

Byung further explained that while the coal is available at the container terminal at a low price, there was no guarantee that buyers could get a vessel with barge cranes for loading the coal. Also, the seller is not always able to get a collection vessel as there is a huge demand and he has to wait a long time.  

“Kalimantan island has two coal collection terminals, namely the Indonesian Bulk Terminal (IBT) on Laut Island and Balikpapan Coal Terminal (BCT) in South Balikpapan. IBT is about 250 km from Tabaneo, which is the closest terminal to a coal mining site. Tabaneo itself is located about 200 km from Adaro Barge Port. The location of BCT is about 30 km in the direction of South Balikpapan. BCT is usually used by coal mining companies with a large production volume in East Kalimantan, such as PT Multi Harapan Utama, PT Tanito Harum and PT Bukit Baiduri Enterprise. Meanwhile the smaller coal mining companies have difficulty getting to the collection terminal because they must spend a lot of money on transportation and loading and must also pay high fees to rent barge cranes,” said Byung.  

A collection terminal cannot be built in shallow water. A floating coal terminal with a capacity of 10 million – 12 million tons will meet the requirements of these smaller companies. The floating terminal that SSWP has built is also provided with a coal collection vessel and four barge cranes that can be operated at the same time so that the coal loading time can be shortened.  

With the construction of a floating coal terminal, coal mining companies will save time and money. In the case of a floating coal terminal, the coal can first be collected in a collection vessel. The terminal is located in Kalimantan waters and is easily accessible for small vessels. In addition, the coal mining companies can conduct transactions directly with their buyers. (Bertahindara)  

The Jakarta Post, November 26, 2008

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