PT Bukit Asam Tbk (IDX: PTBA) has prepared a capital expenditure (Capex) worth Rp4.04 trillion (US$288.57 million) to finance its business development projects this year - Photo by the Company.

JAKARTA (TheInsiderStories) – Indonesian coal miner, PT Bukit Asam Tbk (IDX: PTBA) has prepared a capital expenditure (Capex) worth Rp4.04 trillion (US$288.57 million) to finance its business development projects this year, the management said on Thursday (01/23). The amount is lower than Rp6.47 trillion allocated by the company in 2019.

One such project is the construction of a coal gasification plant in Tanjung Enim, South Sumatra, its corporate secretary Hadis Surya Palapa told reporters in Jakarta. PTBA is still carrying out a front end engineering design. After that, the engineering procurement construction stage will be carried out before starting the whole construction. Overall, the plant is targeted to be completed in 2023 so that it can be operated commercially in 2024.

“We have also cooperated with PT Kereta Api Indonesia to build a railroad that can transport coal from Tanjung Enim-Kertapati and Tanjung Enim-Tarahan,” Palapa noted.

Besides these projects, the company remains aggressive in producing coal. This year, Bukit Asam targeting coal production could reach 30 million tons (MT), up 5.26 percent from last year’s target of 28.5 MT. Marketing director’ of state-owned firm, Adib Ubaidillah said, that the production will be used to meet domestic consumption and export demand. He said power producer, PT Perusahaan Listrik Negara (PLN) will absorb 60 percent of the production and the rest will be exporting to India, Taiwan, Pakistan, and Thailand.

In exporting the coal, the miner will transport it using national ships to adjust the government policy regarding the use of national vessels. Therefore, Bukit Asam will be able to contribute to the national ship’s industry’s revenue.

The miner also hopes to be able to deliver 50 percent products directly to the end-user without bridged by the trader. Nowadays, around 70 percent of selling is still using a trader.

Regarding the firm’s expansion, Bukit Asam has finalized the feasibility study of the coal gasification project. Bukit Asam’s CEO Arviyan Arifin said that based on the result of the feasibility study, Tanjung Enim will be the location of the project as the readiness of infrastructure compared to Peranap in Riau.

He expects all of the processes is targeting to be completed in 2021. The building process will take time around three years and will be operating in 2024. The plant, Arifin added will not only process coal to gas but also other profitable derivative products. The derivative products like methanol will have added value seven times higher than the main products as methanol is pivotal in biodiesel making.

In building the plant, Bukit Asam will team up with Pertamina and US investors, Air Products and Chemical. The three parties have agreed to build a joint venture company with an investment of $3.5 billion. The joint venture company will process upstream and downstream products. In upstream processing, Air Production will be the majority shareholder while in downstream processing, Bukit Asam will be the majority shareholder.

Meanwhile, in this year, the coal producer allocated capital expenditure of Rp4 trillion for next year. The miner planned to use investment funds for a number of projects. Bukit Asam will work on the coal gasification project, the development of coal transportation and the Mulut Tambang Sumsel 8 in the Muara Enim project in South Sumatera.

Besides, the company is currently in the process of developing two steam power plant projects in the Muara Enim and East Halmahera areas with a total investment of $2.03 billion. The project is being built by PT Huadian Bukit Asam Power, a consortium between Bukit Asam and China Huadian Hongkong Company Ltd. This project requires an investment of $1.68billion, funded by the Exim Bank of China.

In addition, Bukit Asam is also collaborating with PT Antam Tbk (IDX: ANTM) to build the Feni power plant in East Halmahera, North Maluku. The power plant project which has a 3×60 megawatts (MW) power plant capacity and a 3×17 MW diesel power plant. This project requires an investment of $350 million, which can be funded by banks.


Written by Lexy Nantu, Email: