Adaro Energy Total Coal Output Falls 4% Y-o-Y in H1 CY18, Coking Coal Production Surges

PT Adaro Energy, Indonesia’s second largest coal miner, produced 24.06 MnT in the first six months of this year, down from 25.13 MnT in the same period last year, the company said in a statement.

Sales in January to June this year also dropped by 6% to 23.8 MnT, from 25.27 MnT in January to June 2017, it said.

“We expect higher production and sales volume in 3Q 18 as a result of additional mining faces in PT Adaro Indonesia, the increased delivery rate of new mining equipment and expectation of more favourable weather,” the company said in its statement. Adaro maintains coal production guidance of 54-56 MnT for this year.

The company said it has secured a large portion of coal sales volume for the rest of the year.

In the first six months of 2018, domestic market remained the largest buyer for Adaro’s coal, accounting for 22% of its total sales. Malaysia, China, and India each equally accounted for 12% of Adaro’s total sales.

Semi-soft Coking Coal Output Climb
While total coal sales dropped, Adaro’s semi-soft coking coal output from its subsidiary, Adaro Met Coal Companies (AMC) continues to increase as the company is looking into tapping the coking coal market.

Semi-soft coking coal output from AMC surged 37% to 0.62 MnT in January to June this year, from 0.45 MnT in the same period last year. Sales also climbed 28% to 0.49 MnT in the first half of this year, compared to the same period last year.

Adaro MetCoal Companies is a group of seven companies which hold Coal Contract of Works for seven concessions in Central and East Kalimantan. Adaro acquired all the companies from BHP Billiton in Oct’16.

Adaro has also completed the acquisition of Rio Tinto’s 80% stake in the Kestrel Coal Mine on 1 Aug’18, the company said. The company signed a binding agreement with private equity, EMR Capital, to acquire Rio Tinto’s stake at Kestrel’s coking coal mine in March this year.

With the completion of the deal, Kestrel now is owned by Kestrel Coal Resources Pty Ltd, which holds a 80% stake while Mitsui Coal Australia has the remaining 20%. Kestrel Coal Resources is a joint venture between Adaro Energy (48%) and EMR (52%).

Kestrel produced 4.25 MnT of hard coking coal in 2017.