PT Indika Energy Tbk (IDX: INDY) through its unit has acquired a 15 percent or 2,63 million shares of PT Multi Tambangjaya Utama from Prime Empire Investments Pte Ltd - Photo by PT Multi Tambangjaya Utama

JAKARTA (TheInsiderStories) – Indonesia’ energy company, PT Indika Energy Tbk (IDX: INDY) through its unit has acquired a 15 percent or 2,63 million shares of PT Multi Tambangjaya Utama (MUTU) from Prime Empire Investments Pte Ltd. The value of the transaction worth of US$9.9 million

As such, 100 percent MUTU’ share owned by the miner through its two units, PT Indika Indonesia Resources of 85 percent and Indika Capital Investments Pte. Ltd 15 percent. Indika’ spokesman Adi Pramono said in a disclosure information released on Friday (07/19), this transaction was completed on July 17 and has been approved by the Energy and Mineral Resources ministry on May 13.

Multi Tambangjaya Utama operating since 2012 and has total assets before elimination of $69.43 million as of March 31, 2019. While, Prime Empire is an investment company founded in 2010 and based in Hong Kong. The official website of INDY noted the beginning of Indika entered Multi Tambangjaya namely in 2012 when it acquired 85.0 percent of the ownership of shares.

MUTU have a thermal and coal asset with a third-generation Coal Mining Work Agreement based in Central Kalimantan, with a concession area of ​​24,970 hectares. Located around 30 km northeast of Ampah city and about 250 km north of Banjarmasin, South Kalimantan. The company built a coal haul road with a capacity of 3.0 million tons per year and a barge port with a capacity of 5.0 million tons per year.

Previously, Indika Energy through its unit, PT Indika Mineral Investindo (IMI) has invested AUS$639,459.80 ($456,000) in Nusantara Resources Ltd (ASX: NUS) and owned 19.9 percent at the Australian miner. The miner has acquired 2.78 million shares of Nusantara Resources with average price AUS$0.23 per share.

IMI entered the miner through a private placement. Nusantara Resources will use the funds to continue the development of the Gold Awak Mas Project in Toraja, South Sulawesi. The block has an estimated ore of 1.1 million ounces and resources of 2 million ounces.

On Dec. 12, 2018, IMI has entered into a share participation agreement with Nusantara Resources. Earlier, IMI has bought 33.4 million shares at a price of AUD$23 cents per share with total transactions reaching AUD7.68 million.

This investment is a strategic step for Indika Energy to diversify its business into other mining sectors outside of coal. The management believes that the coal business is still prospective and is the company’ mainstay, even though prices on the world market often fluctuate.

One of the company’ subsidiaries managing coal is  PT Kideco Jaya Agung, located in Paser, East Kalimantan in the land areas 50,921 hectares. Indika owned 45 percent in the coal miner.

This mining company was established in 1982, and the contract will expire in 2023. Estimated coal reserves owned by Kideco are 422 million tons with 50 consumers in 16 countries. The main destination to China and India.

Indika’ coal business in 2012-2015 did slow down due to sharply falling prices on world markets but began to crawl up in early 2017. As a result of the price decline, the company was hit but still managed well by increasing efficiency.

To date, the domestic market obligation of INDY has reached 25 percent of total production with an average production of 2.5 to 2.6 million tons per month with a production target of 34 million tons at the end of the year.

At the first quarter of this year, the coal miner’ net profit declined 79.95 percent to $11.7 million from prior year amounted to $58.38 million. The company’ sales also fell 13.39 percent on an annual basis to $700.73 million.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com