Subsequent to India’s lockdown extension till 17th May’20, two major coal companies in Indonesia devised a strategy to maintain performance by shifting their export market destinations.
PT Bukit Asam has begun to look for a new market, while PT Indika Energy will be diverting its India-bound exports to China, which is the second major destination country for coal exports from Indonesia. However despite loosening the lockdown, China has not been importing its typical supply of Indonesian coal.
Commercial Director of PT Bukit Asam Adib Ubaidillah said that the closure of areas in India and China had not yet had an impact on the company’s sales in the first quarter of 2020. Bukit Asam recorded sales of 6.6 million tons (MnT), growing 2.1 percent.
“The impact will only be felt in the second quarter of 2020, so our efforts will be to look for new markets, such as Brunei Darussalam. Then we can also enter to Thailand, Vietnam, Hong Kong, South Korea”, Adib said while discussing about the performance in first quarter 2020.
According to Adib, the focus of finding a new export market was also carried out to offset the decline in domestic demand, which contributed 65 percent to total sales, especially from the Indonesian state owned utility firm PT Perusahaan Listrik Negara (PLN). Adib admitted that PLN had proposed a significant decrease in the company’s coal purchases in April and May as a result of the sluggish electricity absorption.
On the other hand, PT Indika Energy Tbk. will divert exports from India to China. Head of Corporate Communications Ricky Fernando said coal shipments to India have stalled since the country implemented a lockdown. As a result, the company made adjustments to several coal sales contracts to India.
“So far there has been no cancellation of contracts, but there are some shipments to India that we are relocating to China”, said Ricky.
The diversion of exports to China is in line with China’s move to unlock the region. The latest data shows, there are recovery signals in China along with coal import data in April of 34.22 MnT. That figure is higher compared to 27.83 MnT imported in March and 25.3 MnT in April 2019.
Meanwhile, in the first quarter of 2020 the company sold 9.1 MnT of coal, with details of sales by its subsidiaries PT Kideco Jaya Agung of 8.8 MnT and PT Multi Tambangjaya Utama of 300,000 tons. To maintain performance, Indika will also maintain cost efficiency, maintain strip ratio to meet targets, and take advantage of fuel price momentum that is experiencing a decline.
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