JAKARTA (TheInsiderStories) – The energy and mineral resources (EMR) ministry has issued a special mining business permit to PT Arutmin Indonesia, a unit of coal miner, PT Bumi Resources Tbk (IDX: BUMI), on Nov. 2. However, the issuance of permit is considered illegal because the derivatives rule of the Mining Law do not exist.
According to the director general of EMR ministry, Ridwan Djamaluddin, the company permit valid from Nov. 2, 2020 Nov. 2, 2030. he company is one of seven first – generation coal concession work (CCoW) holders.
And based on the Joint Ore Reserves Committee, this producer affiliated to the Bakrie Group, has coal reserves of 213 million tones and has resources of 1.66 billion tones. Arutmin has a mining area in Satui, Senakin, Batulicin, and Asam-Asam in South Kalimantan with an area of 57,107 hectares.
While, the parent, through its majority-owned subsidiaries, is Indonesia’ largest thermal coal producer. Beside, Arutmin, PT Kaltim Prima Coal (KPC), also are still waiting for the government’ official decision related to the conversion permit. The company permit will be completed in 2021.
Based on the official data, directly, BUMI controlled 70 percent Arutmin’ shares and 20 percent indirectly through PT Green Resources. BUMI owns 99.50 of green shares at its unit. The miner also holds 25 percent of KPC’ direct shares and 26 percent indirectly through PT Sitrade Coal.
On Nov. 2, 1981, Arutmin signed the CoW with state-owned firm, PT Bukit Asam Tbk (IDX: PTBA) for exploration and exploitation of coal reserves in Southeast Kalimantan in 1982. BUMI’ 90 percent-owned unit has not yet pay dividends, but the Bakrie-owned company expects it to start paying dividends in the second half of 2020.
Still, Arutmin has certain outstanding liabilities it needs to pay off before it can initiate dividend payments. Assuming benchmark Newcastle thermal coal price of $65 – $70 a metric ton (MT), Moody’s expects the miner to continue to meet the approximate $30 million annual cash interest payments on Tranche A along with around $35 million in Tranche A principal in 2020.
However, BUMI will remain current on its cash interest payments, the majority of its debt carries payment-in-kind interest, which is accrued and added to the principal amount of debt.
Bumi Resources, through its majority-owned subsidiaries, is the country’ largest thermal coal producer. The company produced around 86 MT of coal in 2019. Its principal assets include a 51 percent stake in KPC and a 90 percent stake in Arutmin.
The EMR ministry data showed, beside PT Tanito Harum whose licenses have been revoked, there are seven other contract that will expire in the next five years. The companies are PT Kendilo Coal Indonesia in 2021, KPC in 2021, PT Multi Harapan Utama in 2022, PT Adaro Indonesia in 2022, PT Kideco Jaya Agung in 2023, and PT Berau Coal in 2025.
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