Indonesia-based coal mining companies have been impacted by the Coronavirus (Covid-19) pandemic in terms of both operational and financial performances. Presently, the companies are having to conduct normalised production operations, despite being under stringent health protocols, while simultaneously facing lower commodity prices amid subdued demand.
Coal miners in Indonesia anticipate that the current market condition would not recover anytime soon due to the ongoing pandemic. In fact, they expect the global and domestic coal demand to go down further this year. Hence, the miners have taken all cost-cutting initiatives to endure the hard-hitting situation.
Lower demands from both export and domestic coal markets have significantly impacted miners’ sales margins and earnings, forcing them to adopt more prudent cash flow policy decisions in a bid to survive amid the present situation. Meanwhile, the Indonesian government has asked miners to avoid any layoff.
Here’s a look at some of the initiatives implemented by several large-scale coal producers in Indonesia:—
Bayan Resources Tbk PT (IDX: BYAN)
PT Bayan Resources Tbk, part of the Bayan Group, stated in a statement on Thursday 28th May’20 that some of its subsidiaries have been temporarily suspended due to Covid-19. Bayan’s coal projects in Tabang, East Kalimantan Province, which are temporarily suspended, include PT Bara Tabang, PT Fajar Sakti Prima and PT Indonesia Pratama. The company expects the temporary suspension would last for 1 to 3 months.
Bayan Resources’ operations at its Tabang site in Kalimantan contributed 51 to 75 percent of total revenue in 2019. The company estimates its revenue would decrease less than 25 percent in the first quarter this year (1QCY20) as compared to the corresponding period of the previous year.
“The second quarter outlook may not be encouraging and it is expected that the condition may not recover in the third and fourth quarter”, Bayan said in a statement, adding that the company implements efficiency initiatives in all operational aspects to limit losses.
Atlas Resources Tbk PT (IDX: ARII)
PT Atlas Resources Tbk is also implementing operational restrictions across its subsidiaries, namely PT Gorby Putra Utama, PT Musi Mitra Jaya, PT Sriwijaya Bara Logistic and PT Diva Kencana Borneo which are located in Sumatra and Kalimantan.
Atlas Resources estimates much lower net profit of more than 75 percent in 1QCY20 as compared to the same period last year. In order to sustain operations in the midst of Covid-19, Atlas Resources would be requiring debt restructuring, tax incentives from the governments and communicating with vendors.
Adaro Energy Tbk PT (IDX: ADRO)
“We will continue to focus on improving operational excellence, cost control, and efficiency as we anticipate the difficult coal market condition to continue in 2020 exacerbated by the global pandemic”, Garibaldi Thorir, Adaro’s President Director and Chief Executive Officer, commented recently.
Golden Eagle Energy Tbk PT (IDX: SMMT)
PT Golden Eagle Energy Tbk stated that production operations at its jobsites run normally but external factors, such as market demand and declining exchange rates of the Indonesian Rupiah against the US dollar, have impacted the company’s cash flow.
Kapuas Prima Coal Tbk PT (IDX: ZINC)
PT Kapuas Prima Coal Tbk, an Indonesia-based zinc and lead producer in Kalimantan, estimates 25 percent lesser revenue and net profit in 1QCY20 compared with the same period last year.
Aneka Tambang Tbk PT (IDX: ANTM)
PT Aneka Tambang Tbk, colloquially known as Antam, an Indonesian state-owned mining company, also estimates 25 percent lesser revenue and net profit in 1QCY20 compared with the same period last year.
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