Bayan forecasts profit to rise by 86 percent

Ika Krismantari ,  THE JAKARTA POST ,  JAKARTA   |  Fri, 06/26/2009 1:15 PM  |  Business

Local coal producer publicly listed PT Bayan Resources is targeting this year's gross profit to rise by 86.2 percent.

Bayan director for corporate affairs and corporate secretary Jenny Quantero said Thursday that gross profit would reach about Rp 1.75 trillion (US$171.5 million) up from Rp 939.5 billion in 2008.

"This is mostly because of an increase in production volume and a drop in production costs," she said.

She said the company had signed contracts to deliver 10 million tons of coal this year to clients in Korea, Japan, Taiwan, Malaysia and India.

Last year, the company only sold 5.9 million tons.

Jenny added that company revenue this year was projected to rise 32.6 percent to about Rp 6.5 trillion.

The company also forecast a drop in production costs of between $50 and $55 a ton this year, lower than the $71 booked in the fourth quarter of last year on the back of lower oil prices. This would contribute to higher profits.

Bayan president director Chin Wai Fong said the company would start producing 300,000 tons of briquettes from its new upgrading coal plant this year.

He said the new plant would be the first one in Indonesia. The technology would enable the company to process low-grade coal and create more value-added.

Fong said that the $68 million briquette production plant would start operation in the third quarter of this year.

The company expects to increase coal production by 1 million tons next year.

Bayan signed a joint venture agreement with Australia's White Energy earlier this year to build the coal upgrading plant with participating interests of 49 percent and 51 percent, respectively.

The agreement also says Bayan will prioritize plant development until capacity reaches 15 million tons.

The company has set a capital expenditure budget of $88 million this year, to be

financed mostly from cash reserves, for expansion and heavy machines, Jenny said.

Fong also said the company is considering acquiring coal companies in Kalimantan, subject to feasibility study.

The latest financial report show Bayan posted a net profit of Rp 113 billion in the first quarter this year, up on the Rp 16 billion last year.

Bayan was the eighth largest coal producer in Indonesia in terms of production volume in 2007. It has 6 coal mines in Kalimantan with a total area of 81,265 hectares.

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