Friday, February 11, 2011

Buma sets aside $300 million to finance mining expansion

o take benefits from the surging global demand for coal, PT Bukit Makmur Mandiri Utama (Buma), the second-largest coal mining contractor in Indonesia, has set aside about US$300 million (Rp 2.68 trillion) to finance mining expansion this year. 

The firm’s president director, Budikwanto Kuesar, said Thursday that the company would expand production by between 10 and 15 percent this year to be able to benefit from the surging demand.

He added that the growth in the demand would be mainly driven by the soaring demand for coal from emerging Asian economies such as China and India.

“China is the largest buyer of Indonesia’s coal followed by India. Their economies have grown very fast leading to a climbing demand for coal to fire their power plants. That condition opens up ample opportunities for us, because we’ll acquire more mining contracts,” he told reporters after a press conference in Jakarta.

According to an International Energy Statistics report, China would import around 180 million tons of coal this year to fulfill its domestic consumption. In 2010, a Bloomberg report said, Indonesia exported around 55 million tons of coal to China.

India will also import a huge amount of coal in 2011. A report from Reuters says that the amount can reach 142 million tons of coal. 

To catch up with the soaring global demand, the Indonesian Coal Mining Association (APBI) said earlier that the country’s miners had been committed to boosting production to 340 million tons of coal in 2011, a 23 percent increase from 270 million tons last year.

Seeing that positive trend, Budikwanto expected that his company could at least acquire two new mining contracts this year, but declined to mention the names of the companies with whom the firm would sign the contracts.

“Currently, we operate 12 coal mining projects in South Kalimantan, Central Kalimantan and East Kalimantan. We hope to have two more projects in 2011,” he said.

However, he said that the company had no plan to acquire coal mining sites although the current spike in coal prices had offered the company a chance to make more profit. “We want to focus on our core business as a mining contractor,” said Budikwanto. 

According to the Energy and Mineral Resources Ministry, the Indonesian coal reference price for February stands at $127.05 per ton, up 13 percent from $112.4 in January. 

Analysts predict that the price stays above $120 due to flooding in Australia and growing demands in China and India.

In 2010, Buma produced 35.1 million tons of coal, jumping 7.3 percent from a year earlier. Bloomberg Businessweek noted that in the first nine months of 2010, the firm booked Rp 3.8 trillion in net revenue, a slight increase from Rp 3.79 trillion in the same period a year earlier. However, the firm’s net profits slumped to Rp 419 billion last year from Rp 628 billion in 2009. 

Budikwanto hoped that his company’s net profits would rebound this year.

Buma is a subsidiary of publicly listed PT Delta Dunia Makmur. The company was established in 1998 and currently employs around 11,500 workers across the country. It operates 3,200 units of heavy equipment such as excavators, bulldozers and dump trucks. 

The company carried out mining activities at mining sites owned by several coal companies including PT Adaro Indonesia, PT Berau Coal, PT Kideco Jaya Agung and PT Arutmin Indonesia.

Source: Buma sets aside $300 million to finance mining expansion | The Jakarta Post

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