Indonesia’s largest Coal producer Adaro has foreseeing no major improvement in Coal prices in coming year, which affect the company’s financial results as well. Subdued Coal prices have lowered the revenues of other miners as well.
[su_quote]The President Director of Adaro Mr. Garibaldi Thohir said to media, “The company was still in a difficult situation as low Coal prices in the international market continued to affect the company’s business”.[/su_quote]
[su_quote]He added, “We are thankful that in 2013 we still booked a profit around USD 231 million, although lower than the previous year. In 2014, we will try to survive”.[/su_quote]
In view of better future demand and contracts from the market, producers are keeping their production up which puts the market oversupplied and led to decline in Coal prices, which is hampering the revenues of Coal mining companies as well.
Market experts believe, global seaborn demand of Non-Coking Coal is expected to increase by around 3% to 987 MnT this year. Whereas, global supply of Non-coking Coal will increase by 4% to 999 MnT, that creates 12 MnT of surplus supply.
Spot price of Australian Non-coking Coal at Newcastle Port has declined to around USD 73/MT during March, which was the lowest in last five years. Indonesian Coal price reference (HBA) was lowered by 4% to USD 74.81/MT during April compared to January, 2014.
As per the company document, Adaro sold 10% more Coal to 53.47 MnT in 2013 than preceding year. Company is expecting to increase its production by 7% and will produce 54-56 MnT Coal this year, whereas in 2013, company has produced 52.3 MnT.
As the Indonesian government is expecting to limit the Coal production to control Coal prices and to secure energy, Adaro’s production target is subjected to approve by the government.
As part of its expansion plan and business survival, Adaro is planning to strengthen its power business and become an integrated energy company, including operating its electricity generation business.
Adaro, through its 100% subsidiary, is running a 2×30 Mega Watt (MW) mine-mouth power plant in South Kalimantan. It has a 65% stake in another 2×100 MW power plant project in South Kalimantan. A South Korean company holds the remaining 35% stake of the project.
Mohammad Effendi, the President Director of Adaro’s subsidiary PT Adaro Power said that the company has an expectation to soon sign a Power Purchase Agreement (PPA) for the 2×100 MW plant project with the state electricity company PLN.
[su_quote]“The PPA is expected next month with PLN,” Effendi said, referring to state-owned electricity firm PT Perusahaan Listrik Negara.[/su_quote]
Adaro is also involved in the development of the mega project 2×1000 MW power plant in Central Java with 34% share owned in PT Bhimasena Power Indonesia.
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