TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Coal miner Bukit Asam ventures into palm oil business
State-run coal miner Bukit Asam announced Tuesday that it had acquired an 8,000-hectare oil palm plantation located on the companyâs South Sumatra mining concession, which would bring not only additional mineable resources to the company, but also diversified revenue from the palm oil business
Change Size
State-run coal miner Bukit Asam announced Tuesday that it had acquired an 8,000-hectare oil palm plantation located on the company's South Sumatra mining concession, which would bring not only additional mineable resources to the company, but also diversified revenue from the palm oil business.
In a press release published on the Indonesian Stock Exchange (IDX) website, Bukit Asam said that it had acquired a 100 percent stake in the plantation firm Bumi Sawindo Permai, which operates an 8,346-hectare oil palm plantation in Tanjung Enim, South Sulawesi.
The publicly listed mining firm acquired the plantation company from Mahkota Andalan Sawit through its subsidiary Bukit Multi Investama for Rp 861.38 billion (US$71.5 million), which is equal to 11 percent of Bukit Asam's total equity. The transaction was finalized last Friday.
The company's corporate secretary, Joko Pramono, said that Bukit Asam sourced the funds needed for the acquisition from bank loans.
The acquired land contains a reserve of 580 million tons of coal ' out of Bukit Asam's total 1.59 billion tons of coal reserves in the Tanjung Enim concession ' which will be used to supply the company's planned 2x60 megawatt Banko Tengah mine-mouth power plant.
The mine-mouth plant is expected to begin operations in 2018 at the latest and will burn 5.4 million tons of coal per year.
Joko did not mention the plantation's annual production capacity, but added that about 4,000 hectares of the plantation area were ready to be harvested and that it was equipped with a processing mill that was able to produce up to 45 tons of crude palm oil (CPO) per hour.
The acquisition marked the company's first entry into the plantation business, Joko said further.
'We want to synergize the plantation and the coal mining, so we don't have to close the plantation for mining activities and instead generate more revenues from operating the plantation,' he told The Jakarta Post over the phone.
'Contributions from the [newly acquired] plantation might be insignificant for now, but we are keen to acquire similar plantations in the future,' he continued, adding that the plantation would contribute less than four percent of the company's revenue.
Bukit Asam's mining business license in Tanjung Enim covers around 66,000 hectares of land.
Tanjung Enim is Bukit Asam's largest concession, which represents nearly 80 percent of the company's total reserves of 1.99 billion tons.
Both coal and palm oil prices are currently under pressure. CPO futures plunged 20 percent this year on swelling global supplies of cooking oils, including a record US soybean harvest, Bloomberg reported. Meanwhile, the Indonesian coal reference price (HBA) showed that the price of the commodity had fallen by 15 percent during the first nine months of the year.
Despite the decline in global coal prices, however, Bukit Asam saw its bottom line jump by about one-third in the first half of this year on the back of cost-cutting and multi-branding strategies.
After bleeding in the first six months of last year, Bukit Asam reported that it booked a 33.23 percent increase year-on-year (y-o-y) to Rp 1.16 trillion ($96.7 million) in net profits during the first half of this year.
The company's revenues surged by about 18 percent, from Rp 5.43 trillion ($452.7 million) in the first half of last year to Rp 6.43 trillion ($536.1 million) during the same period this year. In contrast, the company saw its revenues slip by 6.22 percent y-o-y and its net profits slump by 44.06 percent during the first half of last year, dragged down by an unfavorable coal market.
Bukit Asam's shares ' traded on the IDX under the code PTBA ' slumped by 2 percent on a daily basis to close at Rp 12,075 ($1.01) apiece on Tuesday. The mining index slumped by 0.5 percent on the day of trading.
