PT ABM Investama Tbk (IDX: ABMM) eyes coal mine and allocated up to US$250 million for the acquisition plans, said the director on Thursday (06/18) - Photo by ABM Investama

JAKARTA (TheInsiderStories) – Indonesian miner, PT ABM Investama Tbk (IDX: ABMM) eyes coal mine and allocated up to US$250 million for the acquisition plans, said the director on Thursday (06/18). The company is eyeing productive mine around Sumatra, East Kalimantan and South Kalimantan.

The director, Adrian Erlangga said, the company aimed to increases the reserves around 70 – 100 million tons (MT) of coal. By the end of 2019, the publicly listed firm had total reserves almost 260 MT of coal from its two sites in South Kalimantan and Aceh.

He hopes that the acquisition targets can be executed in this year. Beside prepared funds for acquisition, he continued, ABM Investama also set capital about $45 million and production volume around 12 – 13 MT of coal from the initial targets of 15 MT of coal. Last year, the miner produced 11.76 MT of coal.

Recently, Moody’s Investor Service affirmed the B1 corporate family rating of the companu and the B1 rating on its $350 million senior unsecured notes due 2022. At the same time, Moody’s has revised the outlook on these ratings to negative from stable.

The affirmation reflects its integrated operations, which support its operating performance through cost synergies and its adequate liquidity with no material near-term debt maturities. More specifically, ABM Investama is exposed to weak thermal coal prices, which are likely to remain low over the next 12 months as the epidemic-led economic downturn reduces demand for thermal coal.

The earnings contraction will primarily be driven by lower earnings at its wholly owned mining subsidiary, PT Reswara Minergi Hartama, due to lower coal prices. Reswara, with three operating mines, is the largest earnings contributor, accounting for around half of ABM’ reported revenue in 2019.

The unit’ coal is produced predominantly through PT Mifa Bersaudara (MIFA) which produced 7.1 million tons in 2019. ABM Investama is increasing production at its MIFA mine to compensate for the declining production at its PT Tunas Inti Abadi (TIA) mine, which produced four million tons in 2019 and will likely run out of coal reserves by 2022.

Moody’s expects the miner to refinance its bond well ahead of maturity date. A material reduction in its cash balance of around $102 million as of Dec. 31, 2019 would likely lead to a downgrade.

ABM Investama is an integrated energy company with investments in coal mining, mining services, engineering and logistics, and power generation. The Hamami family controls 79 percent of the company through PT Tiara Marga Trakindo (23 percent) and Valle Verde Pte. Ltd., (56 percent). The remaining shares are held by the public.

Its subsidiary PT Cipta Kridatama was signed a mining services contract with local partner PT Berkat Murah Rejeki on June 15 with total value of Rp348.6 billion (US$24.9 million). Early 2020, the unit had also signed a mining service contract with other local miner, PT Kuansing Inti Makmur with worth of Rp7.4 trillion.

And, last year, has pocketed a similar contract from PT Multi Harapan Utama worth $337 million and PT Binuang Mitra Bersama worth Rp8 trillion.

US$1: Rp14,000

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