T

he country’s second-largest coal mining contractor PT Bukit Makmur Mandiri Utama (Buma), a subsidiary of publicly listed PT Delta Dunia Makmur, has signed an extension on a mining-service contract worth US$820 million.

According to a document filed by Delta Dunia Makmur with the Indonesia Stock Exchange (IDX), Buma and PT Perkasa Inakakerta, a subsidiary of publicly listed coal producer PT Bayan Resources signed an agreement on the contract extension on Jan. 18.

The contract will be effective from Jan. 1, 2012, to Dec. 31, 2017. During the period, BUMA will work in overburden removal with a total volume of 261 million bank cubic meters (bcm) and transportation of 29 million metric tons of coal.

The contract extension follows a previous similar contract extension agreed on Dec. 19, 2011, by Buma and PT Gunungbayan Pratamacoal, another subsidiary of Bayan Resources. That agreement, worth $640 million, replaced the previous 2007–2013 contract.

Under the new agreement, Buma will also work for Gunungbayan for overburden removal with a total volume of 260 million bcm from Jan. 1, 2012, to Dec. 31, 2017.

The contract also provides for an additional option of 50 million bcm overburden removal.

The overburden-removal business has become a major contributor to Delta Dunia Makmur’s consolidated revenue, at about 80 percent. The company’s overburden business in 2011 reached about 334 million bcm, increasing from 292 million bcm in 2010.

Meanwhile, coal production reached 34.8 million tons in 2011, declining slightly from 35.1 million tons in 2010.

The company, previously involved mainly in property businesses, turned into a holding company with an investment focus on mining services after it acquired Buma in 2009. Through its 99.99 percent ownership of Buma, Delta
Dunia Makmur is now the largest pure play mining contractor listed on the IDX.

Buma is the second-largest coal-mining contractor in Indonesia, providing mining services under long-term operating agreements with some of Indonesia’s largest coal producers, such as PT Berau Coal and PT Adaro Indonesia, as well as PT Kideco Jaya Agung and subsidiaries of PT Bayan Resources.

Delta Dunia Makmur director for investor relations Rani Sofjan said that the company planned to allocate around $300 million in capital expenditure this year.

“Most of the capital expenditure will be used for our heavy equipment, which supports the company’s contractor business,” Rani said.

She said that the capital expenditure will be funded by available financing from vendors of heavy equipment and other sources including bank loans and internal cash flow.

Delta Dunia Makmur is 40 percent-owned by a consortium of Northstar Tambang Persada Ltd. and 60 percent by the public.

Delta Dunia Makmur reported consolidated revenue of Rp 4.98 trillion in the first nine months of 2011, increasing by about 18 percent from Rp 4.19 trillion in the same period in 2010.

Due to growing costs of revenue, the company’s operating income stood at Rp 482.84 billion in the first nine months of 2011, declining significantly from Rp 755.96 billion in the same period in 2010.

The company suffered a net loss of Rp 12.14 billion in the first nine months of 2011, after reporting a net profit of Rp 351.94 billion in the same period in 2010. (rcf)