With just over two months left before the end of this year, coal miner PT Baramulti Suksessarana (BSSR) is poised on increasing production and diversifying its export market to improve its bottom line.
BSSR aims to reach its coal production target of 10 million tons this year, up from 7 million tons as of the end of the third quarter in 2017, despite unanticipated weather conditions.
“One of the problems is the weather condition. Earlier, we made an optimistic projection that there won’t be high rainfall in the second and third quarters of 2017, but in fact there was,” BSSR president director Khoirudin told a group of reporters on Friday after the shareholders general meeting.
Amid unpredictable weather conditions, the firm decided to appoint a qualified mining contractor to help the company boost production. “We have appointed Cipta Kridatama. We hope they can perform well and help us reach our profit target,” he added.
From the January to September period, the firm saw net sales surge by 75 percent to US$290 million year-on-year (yoy), while its bottom line jumped by 450 percent to $63 million. The significant increase in coal prices from the beginning of this year has helped increase profits.
The Asian benchmark coal price, Newcastle thermal coal, reached this year’s highest price of $103.50 per ton in mid-September, after hovering at an average of $86.60 per ton in the first half of the year.
In addition to higher coal prices, the firm’s efficiency measures have successfully helped to improve net profit. “This year’s result is going to be better than last year. We are confident that our profit can reach $75 million by year-end,” BSSR finance director Eric Rahardja said.
The coal miner has chosen to focus on its core business of selling coal to the domestic market and expanding its export market, closing options for business diversification.
As of the third quarter, the company sold 28 percent of its coal production domestically, while 28 percent was exported to China, 26 percent to India, 16 percent to Korea and the remainder to other countries.
Korea is an important market that the company aims to expand in, hoping to record a 20 percent contribution to its total export, as other competitors mostly concentrated their sales on India and China.
From the total capital expenditure of $13.3 million, the company has used $6 million in the first nine months this year. Around 30 percent was used for operational purposes such as land acquisition, and the remaining for machinery and infrastructure facilities.
Its mining site, with the total area of 2,460 hectares, is located in East Kalimantan, 25 km south west of the city concession area in Samarinda. Meanwhile, under its subsidiary PT Antang Gunung Meratus, it also manages a mining site located in South Kalimantan, with a total area of 22,433 ha.
BSSR’s shares plunged by 1.52 percent to Rp2,600 per share in the closing session at the Indonesia Stock Exchange on Friday.
Source: Winny Tang / The Jakarta Post 23 October 2017