Antam plans to join the coal rush

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Tue, 09/09/2008 10:22 AM  |  Business

Publicly listed PT Aneka Tambang (Antam), the nation's second largest nickel producer, is planning to acquire coal concessions this year to help secure supply for its new coal-fired power plants.

Antam president director Alwin Syah Loebis told The Jakarta Post recently the company would need a coal supply of up to 5 million tons for two plants in its mining site at Pomalaa, Southeast Sulawesi, by 2012.

Currently, the state-controlled company only needs 200,000 tons of coal a year for the production process.

Alwin refused to cite the investment for the coal mines or the plant, which would have a capacity of 150 megawatts (MW).

He said the plan was part of the company's efforts to cut its soaring production costs following a jump in oil and coal prices.

The company's latest financial account reveals that fuel costs, which account for 13 percent of the total production cost, surged 52 percent to Rp 434 billion (US$47.3 million) during the first half of the year.

Alwin said the new plants would replace the existing diesel-fired power plant, which was deemed too costly, in the area.

Antam corporate secretary Bimo Budi Satriyo said the company would likely build the plants under an independent power producer scheme.

Aside from securing the energy supply, the shopping spree for coal concessions is also aimed at diversifying the company's portfolio (to compliment nickel) Alwin said.

Huge declines in global nickel prices have encouraged nickel producers to look for other minerals like coal, gold, and iron ore to offset losses.

Bloomberg reported that nickel, for three-month delivery on the London Metal Exchange, averaged $25,859 a ton in the three months through to June 30, compared to $45,701 a ton last year.

Antam posted a 49 percent drop in its first half year net profit compared to a year earlier, to Rp 1.46 trillion, on the back of lower nickel prices and higher production costs.

With coal demand likely to soar higher in the near future, giant companies are also jumping on the bandwagon to spin their fortune in seeking out coal concessions.

The soaring coal demand will be driven primarily by a government project to secure 10,000 MW by 2011 through the construction of coal-fired power plants.

State-owned power utility company PT Perusahaan Listrik Negara (PLN) has recently formed a subsidiary with a sole task of purchasing coal for ensuring supply to its coal-fired power plants.

The company invested between Rp 1 trillion and Rp 1.5 trillion to establish PT PLN Batubara.

PLN is currently the biggest single domestic consumer of coal, with consumption expected to reach 34 million tons this year, 43 million tons in 2009 and 82 million tons in 2010.

Publicly listed automotive kingpin PT Astra International is also in hot pursuit for coal companies by tasking its subsidiary, publicly listed PT United Tractor, to seek both greenfield and brownfield concessions.

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