Ann: Kupang Smelting Hub Facility Project Update, page-43

Thanks @rocket973 ,

(I think we may be saying the same thing)

I understand that there is a ramp up period expected to achieve full run rate of 31,640 tonnes pa, and hence you may not wish to commit too much via a take or pay type agreement.

But my point was given that the full run rate will require power of 600 hours per month (at 14MVA) (i.e. 420 hours per month at 20MVA), just how valuable is a supply agreement that only guarantees a minimum of 40 hours at 20MVA).

If this was my business, then I would rather sign an agreement that guarantees the power requirement that I need (i.e. 420 hours per month at 20MVA), and work out a sliding scale mechanism to allow for the ramp up (i.e. not execute via a take or pay agreement).

By only guaranteeing the minimum of 40 hours at 20MVA (via the supply agreement), there is still the risk that the additional 380 hours per month is not met, as contractually there is no requirement for the Power company to supply this (especially given the cost of power from diesel as you pointed out). I'm not sure this is a risk that financiers would be willing to take (if they were lending debt against the Project).

Asked another way, the power agreement guarantees around 10% of the power requirement - so where does GMC plan on finding the remaining 90% if the Power company is not able to supply this, especially given the statement "PT Gulf has also agreed not to build its own power generator, so long as PT PLN can provide the amount of electricity power required by PT Gulf."