PT Bukit Asam Tbk and PT Kereta Api Indonesia Sign Agreement related to Coal Transport Development on Sept. 29,2018 - Photo by PTBA

JAKARTA (TheInsiderStories) – Indonesian coal miner, PT Bukit Asam Tbk (IDX: PTBA) and state-owned railways operator, PT Kereta Api Indonesia (KAI) signed Coal Transport Development Framework Agreement for 2018 to 2027. The company expect to increase the coal transport capacity to 60 million tons (MT) of coal per year by 2023.

The signing was carried out by PTBA’s chief executive Arviyan Arifin and KAI‘s CEO Edi Sukmoro in Bandung, West Java on Saturday (29/09). Both parties will construct coal transport from Tanjung Enim Baru – Prajin and Tanjung Enim Baru – Tarahan lines (Second Line) in South Sumatera.

Later, the coal transportation to Tanjung Enim Baru line – Prajin has a minimum capacity of 10 MT of coal per year and the Tanjung Enim Baru line – Tarahan (Second Line) has capacity a minimum of 20 MT of coal per year by 2023.

Currently, PTBA and PT KAI have operated the Tanjung Enim coal transportation line to Tarahan with a capacity of 25 MT of coal per year and the Tanjung Enim line – Kertapati with a capacity of 5 MT of coal.

Last year, PTBA and KAI signed an agreement for coal transportation at 130.1 MT of coal of volume during 2017-2021 period. The coal is sourced from PTBA’s coal mining in Tanjung Enim, South Sumatera, and will be transported to Tarahan port in Bandar Lampung and to Kertapati harbor in Palembang.

Along with the significant planned production growth, PTBA needs to boost coal transportation through KAI for serving its long term supply contract which now reaches 574 MT of coal for domestic customers.

Throughout the first semester (1H) of 2018, PTBA has managed to achieve a net profit of Rp2.58 trillion (US$177.39 million) or an increase of 49 percent from the 1H of 2017 worth of Rp 1.72 trillion. Other than that, PTBA’s income also increased by 17 percent from the 1H of 2017 to Rp. 10.53 trillion.

One of the factors supporting PTBA’s revenue increase is export coal sales by selling high-calorie coal. Until the first semester of 2018, PTBA had succeeded in selling 12.22 million tons with a composition of 6.37 million tons or 52.1 percent for the domestic market and 5.85 million tons or 47.9 percent for the export market.

On export market, PTBA’s coal supplied to several countries, such as China, India, Thailand, Hong Kong, and several other countries. In 2018, the miner began exporting medium to high calorie coal as a strategy in dealing with the Domestic Market Obligation (DMO).

Along with the rising price of coal and increasing demand for coal, PTBA is preparing to meet demand for high calorie coal for export markets. Until the end of the second semester of 2018, the coal producer will increase its sales of high calorie coal for the export market.

Throughout 2018, PTBA estimated export coal sales to reach 12.14 million tons. PTBA’s coal sales increase in the first semester of 2018 certainly gives PTBA’s revenue increase as well as providing substantial contribution to foreign exchange for countries from PTBA coal exports.

PTBA has also diversified its coal business to other sectors that include power plants. One of the power plants is the mine mouth coal-fired power plant South Sumatra 8, whose construction will begin soon. Later, electricity from the South Sumatra project will be supplied to meet the electricity needs in Sumatra.

In 2018, PTBA has also allocated Rp6.55 trillion for investment fund. The investment consists of Rp1.43 trillion for routine investment and Rp5.12 trillion for development investment.

With a large investment allocation, PTBA is sure to be able to develop product diversification and expand sales of its products.

As a holding member of Mining Industry, PTBA is also ready to work together with other mining SOES. Various synergies between companies have been prepared, including the 2×40 MW East Halmahera project.

In this project PTBA will provide energy supply for the new Feronickel plant owned byPT Aneka Tambang Tbk (IDX:ANTM) in East Halmahera. PTBA will also synergize with PT Indonesia Asahan Inalum in the Kuala Tanjung power plan project with a capacity of 2×350 MW to provide electricity supply for the Smelter II Aluminum expansion plant.

Through the downstream industry, PTBA hopes to continue to increase added value and increase PTBA’s revenue, which will also contribute to the Indonesian economy through foreign exchange and non-tax state revenues.