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Coal business still gloomy, Buma says
The Publicly-listed coal mining service provider PT Delta Dunia Makmur, through its subsidiary PT Bukit Makmur Mandiri Utama (Buma), is striving to remain afloat amid the poor coal mining prospects in the country
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he Publicly-listed coal mining service provider PT Delta Dunia Makmur, through its subsidiary PT Bukit Makmur Mandiri Utama (Buma), is striving to remain afloat amid the poor coal mining prospects in the country.
Delta Dunia director Errinto Pardede said in Jakarta on Friday that prospects in the coal mining business were still quite gloomy as there was no sign of recovery in coal prices in the global market.
Based on the Newcastle coal index from 2011 to 2014, the trend of world coal prices in the last three years tended to decline because of the soaring supply of coal worldwide, which was not aligned with the rate of increase in demand, he said.
According to the company's financial report, Buma's capital expenditure in the first quarter of 2014 was cut by 25 percent to US$3 million, from $4 million in the same quarter last year. In 2003, the company lowered its capital expenditure to just $19 million, from $256 million in 2012.
Vice president director Ronald Sutardja said that with the low capital expenditure, Buma would focus on the maintenance of its existing heavy equipment in order to reduce operating costs.
He said that the existing mining equipment, such as heavy trucks and large excavators that were mostly procured during the period between 2010 and 2012, was still relatively new. 'With good maintenance, we are sure that we can extend the equipment's lifetime for up to one or two more years,' he said, adding that the lifetime of such equipment is usually between four to eight years.
Another director at Delta Dunia, Ariani V. Sofjan, said despite cost-cutting measures, the company was able to maintain the coal production at least at the same level recorded last year, and to profit.
Buma recorded a net profit of $13 million in the first quarter of this year, a turnaround from its net loss of $1 million in the same quarter last year, according to the company's financial report. Buma's coal production rose by 2 percent to 7.7 million tons in the first quarter of 2014 compared to the same quarter last year, while the total coal production in 2013 was 32.6 million tons, according to the report.
Errinto added that one of the company's measures to increase its cost efficiency was to decrease its employees in 2013. 'Delta cut around 2,500 of its employees, to around 10,000 employees from around 13,000 employees previously,' he said. (ask)
