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Medco to boost coal production, seek loans for refinancing
Energy company PT Medco Energi InternaSional is looking to increase its coal production next year, supported by the launch of operations at its Duta Tambang Sumber Alam (DTSA) mine
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nergy company PT Medco Energi InternaSional is looking to increase its coal production next year, supported by the launch of operations at its Duta Tambang Sumber Alam (DTSA) mine.
The DTSA mine will begin production in the fourth quarter of 2014 or next year at the latest, according to Medco corporate secretary Imron Gazali.
'The initial production volume for DTSA is set at 300,000 tons per year,' he said.
Production from the DTSA mine will increase Medco's coal production, which currently comes from its Duta Tambang Rekayasa (DTR) mine. At present, DTR produces 600,000 tons to 700,000 tons of coal per year.
Both DTR and DTSA are located in Nunukan, North Kalimantan, and their coal has high calorific value. DTR began production in 2012 and most of its coal output is exported to meet international needs.
'We are planning to export DTSA's coal as well. With the slowdown in China, we are now looking at alternative markets. We have been exporting to India and that is doing well at the moment,' Imron said.
He added that the upcoming production at DTSA would surely boost the contribution from the company's mining business to its overall revenue.
'But it will still be relatively small because it's a new business,' Imron said.
According to Medco's data, its coal mining business accounted for 5.9 percent of its total revenue during the first six months of the year.
While the firm's total revenue stood at US$360.37 million, coal's contribution amounted to $21.43 million.
However, in terms of profits, the coal business made up a quarter, or $2.25 million, of Medco's bottom line in the first half.
Meanwhile, Medco's chief financial officer, Lany Wong, said the energy company expected to secure bank loans within the next two to three months to refinance its loans, which are due to mature in 2015.
- Medco's DTSA mine will start production next year at the latest
- Its initial output is set at 300,000 tons of coal per year
- Medco set to secure deal in 2-3 months' time to refinance loans of $120m
Data from the company shows that Medco has a total $343 million-worth of loans that will mature next year.
About $50 million of that figure has been refinanced, as Medco secured a financing deal with state-owned Bank Mandiri in August.
'That leaves us with $293 million of loans that need refinancing. We hope to reach another deal in two to three months' time to refinance another $120 million of the loans,' Lany said on the sidelines of the 2014 Investor Summit and Capital Market Expo.
By the end of the year, the company's remaining debts are estimated to be less than $200 million. 'In the meantime, we will assess other financing sources as well so that we can meet all of our refinancing needs for next year before the second quarter of 2015,' she added.
The company will also explore various sources of funding to generate capital expenditure (capex) funds.
Medco previously stated that it would need total capex funds of $1.4 billion from 2014 through 2016, excluding funds designated for its operations in Tunisia.
'The operations in Tunisia are estimated to take up to $370 million until 2018, but that's assuming that we develop the projects there ourselves. We may just ask other parties to partner with us,' Lany said.
Medco, which was founded by tycoon Arifin Panigoro, saw its shares rise to Rp 3,500 (29 US cents) on the Indonesia Stock Exchange (IDX) on Friday, up by 0.6 percent from the day before.
