Cokal and PT Petrindo Commit to Fund BBM Haul Road Upgrade with PT Petrosea Contractor
Cokal Limited has secured a binding agreement with PT Petrindo to jointly fund and develop the BBM Haul Road into an all-weather route, appointing PT Petrosea as contractor to support coal transport capacity growth.
- Binding term sheet signed between Cokal and PT Petrindo for BBM Haul Road upgrade
- PT Petrindo to fund road development in exchange for toll fee access
- PT Petrosea appointed as main contractor, starting October 2025
- Toll fees linked to coal price indices with investment recovery and interest terms
- Strategic infrastructure supports ramp-up of BBM and TBAR coal mines
Strategic Infrastructure Partnership
Cokal Limited (ASX, CKA) has taken a significant step forward in its infrastructure development strategy by entering into a binding term sheet with Indonesian coal company PT Petrindo Jaya Kreasi Tbk. This agreement focuses on upgrading the Bumi Barito Mineral (BBM) Haul Road, a critical artery for coal transport in Central Kalimantan, Indonesia. The partnership builds on a memorandum of understanding announced in March 2024, reflecting a deepening collaboration between the two companies.
The haul road upgrade aims to transform the existing route into an all-weather road, enhancing capacity and reliability for coal transport. This is essential for Cokal’s growth ambitions, particularly the ramp-up of production at its BBM mine and the development of the adjacent TBAR mine. PT Petrindo, which owns the nearby DBK coal mine, will fund the upgrade, securing access to the road for its own coal transport needs.
Financial and Operational Terms
Under the terms of the agreement, PT Petrindo’s investment will be structured as a prepayment of future toll fees payable to Cokal for road usage. The toll fees are indexed to the Platts SS Coal FOB Australia price, with rates escalating as coal prices rise, ensuring a dynamic revenue stream for Cokal. The collection of toll fees will commence once a combined transport capacity of two million tonnes is reached or by July 1, 2026, whichever comes first.
Importantly, Cokal retains full ownership and licensing of the haul road, while PT Petrindo’s funding will be progressively determined based on actual development needs. The agreement also includes a 12% annual interest on PT Petrindo’s investment, payable only after the road reaches a 2.5 million tonnes per annum capacity, protecting Cokal’s financial interests during the early stages of road expansion.
Contractor Appointment and Next Steps
To execute the upgrade, Cokal and PT Petrindo have jointly appointed PT Petrosea Tbk as the lead contractor. PT Petrosea is expected to commence on-ground activities in October 2025, bringing experienced local expertise to the project. This appointment signals a clear timeline for infrastructure development, which is pivotal for meeting production and transport targets.
Cokal CEO Karan Bangur highlighted the strategic importance of the deal, emphasizing the company’s ability to recoup prior investments and generate sustainable income through toll fees. The partnership not only strengthens Cokal’s financial position but also enhances operational synergies with PT Petrindo, fostering a collaborative approach to regional coal infrastructure.
Broader Implications
This infrastructure collaboration underscores the critical role of transport logistics in the coal mining sector, particularly in Indonesia’s resource-rich Central Kalimantan region. By upgrading the haul road to an all-weather standard, both companies mitigate risks associated with seasonal disruptions and improve access to export routes, potentially boosting coal sales and operational efficiency.
While the total investment amount remains flexible and tied to evolving development needs, the structured toll fee mechanism provides a transparent framework for cost recovery and revenue sharing. Market watchers will be keen to monitor the definitive agreement signing and the progress of construction activities, which will be key indicators of Cokal’s operational momentum and financial outlook.
Bottom Line?
This partnership marks a pivotal infrastructure milestone that could redefine coal transport efficiency and revenue streams for Cokal and its partners.
Questions in the middle?
- What is the anticipated total capital expenditure for the haul road upgrade once fully scoped?
- How will toll fee revenues impact Cokal’s cash flow and profitability in the near term?
- What are the risks if the combined transport capacity targets are delayed or not met?