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Berau hopes to make up loss with higher output
Despite posting another net loss in its first half financial performance, Berau Coal Energy says it is optimistic that its financial performance will pick up, the government having approved the companyâs request to increase its annual production
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espite posting another net loss in its first half financial performance, Berau Coal Energy says it is optimistic that its financial performance will pick up, the government having approved the company's request to increase its annual production.
Berau ' one of the country's largest coal miners ' has secured consent from the Energy and Mineral Resources Ministry to increase its annual production to 24.1 million tons from 22 million tons earlier this year.
The company initially requested the quota to be increased to 25.75 million tons, but the agreed quota will still help the miner cope with the impact from the bearish global coal market, said Singgih Widagdo, Berau's general manager for corporate communications.
'Thankfully, the government is aware that coal miners are having a hard time in dealing with
plunging coal prices and need more income to face such hardships,' Singgih said.
The government has limited coal output to 397 million tons this year, down from 421 millions tons in 2013, or a 6 percent decrease, in a move aimed not only at protecting the environment and maintaining reserves, but also at helping to stem the decline in global coal prices.
Singgih said that his company was on track in meeting the quota, having produced 14 million tons of coal as of July. The company produced 23.2 million tons of coal in the whole of 2013.
'With more to sell, we hope that we can cushion our slumping selling prices and enhance our financial performance this year. However, it depends on whether the unpredictable global coal market will improve.'
Berau ' an asset of London-listed Asia Resource Minerals (ARMS) that recently split from Bakrie Group due to internal tension ' ended in the red once again in the first half of 2014, accumulating a total net loss of US$40.28 million for the period.
Last year, the coal miner booked $42.27 million in net loss between January and June, swelling to $162.12 million by the end of the year.
The company's first half revenue for this year was $705.75 million, down from $722.11 million last year, battered by a plunging average selling price (ASP).
Berau's ASP has slipped by about 8 percent on an annual basis to $56.5 per ton as of June, in line with cooled global coal prices resulting from oversupply and declining demand from China, the world's largest consumer of coal.
The global market situation has also led Berau to postpone its plan to issue $450 million of five-year guaranteed senior secured notes this year, which was to help the company refinance its debts.
The company's dwindling performance has led to worries that the company might fail to pay its debts, to the extent that accountant PricewaterhouseCoopers ' who reviewed ARMS' financial result ' has warned that the company must soon restructure its debts if it is to survive, Reuters reported.
