Indonesia’s Bukit Asam Keeps Expanding into Downstream

PT Bukit Asam Tbk (IDX: PTBA), targeting the sales volume around 30.7 million tones (MT) of coals in 2021 from a year ago recorded 26.1 MT of coals - Photo by the Company

JAKARTA (TheInsiderStories) – Indonesian coal miner PT Bukit Asam Tbk (PTBA) has planned to set up a joint venture company with PT Pertamina, fertilizer producer PT Pupuk Indonesia and publicly listed PT Chandra Asri Tbk (IDX: CAPC), with each of them having 25% interest respectively. Through the  joint venture company, the four companies will develop a coal-gasification plant that will produce gas to feed the downstream industries operated by Pupuk Indonesia and Chandra Asri.


Through the  downstream expansion, coal will be processed into a coal derivative product that has a higher selling value. According to chief executive of PTBA Arviyan Arifin, the new project will need investment around US$1.5 billion and will produce 400 tons of ANH gas per day.

He added that Chandra Asri, Pertamina and Pupuk Indonesia also become the offtakers for the project. The groundbreaking of the new project is scheduled  on November, 2018 and will start the commercial production in 2020.

“We already signed the gas sale and purchase agreement last year,” said Arifin on Wednesday (12/09).

As a holding member of the state-owned mining company, he continued, PTBA is committed to continually participating in advancing the Indonesian economy.

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 by PT 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.