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urbulent coal prices have shaken the earnings of mining company PT Petrosea (PTRO), which saw net income plummet by 46.6 percent annually to US$7.5 million in the first quarter of the year (Q1).

The miner expects flat growth in 2013 due to limited coal demand.

In their Q1 financial report, the miner reported that direct costs had risen 19.6 percent year-on-year to $68.7 million.

Petrosea sustained nearly $2 million in losses related to the net incomes of other joint-controlled entities that they hold shares in and another $4.3 million connected to interest expenses and finance charges.

The costs and losses underscored the 14 percent year-on-year revenue increase, equivalent to $91 million, the miner booked between January to March 2013.

Mochamad Kurnia Ariawan, Petrosea director, attributed the condition to declining coal prices. Last month, coal prices, based on the Indonesia Coal Price Index (CPI), tumbled to $88.6 per ton, 24 percent less than prices in January 2012.

Kurnia also pointed out that a dip in quarterly mining production dragged down quarterly mining revenue as well as mining income.

'€œMining production fell by almost 10 percent from 40.5 million bank cubic meter [bcm] in the fourth quarter of 2012 to 36.8 million bcm in the first quarter of 2013,'€ he said.

As a result, quarterly mining revenue during that period slipped 19.6 percent to $81.5 million in the first quarter of 2013 while net income from mining went down 58.4 percent to $5.7 million.

Alexei Jerome Jovellana, another director at Petrosea, said that adverse weather conditions had affected coal production during the first quarter and that the upcoming dry season would act as an '€œupside'€ to coal production.

He added that this year, the growth trend in overburden volume would remain '€œflattish'€. Overburden is the removal of material, such as rock and soil, that covers a coal seam or ore body. The overburden volume of Petrosea reached 36.8 million bcm in the first quarter of 2013, a figure 15 percent higher than the same period in the previous year.

He added that, given the trend, the company would focus spending their $25 million capital expenditure on equipment maintenance.

However, Eddy Junaedy Danu, the newly appointed president director of Petrosea, pointed out that the miner secured funds from the transfer of debts from PT Indika Capital, a subsidiary of PT Indika Energy. The debt restructuring is worth $140 million. Indika Energy owns a 69.8 percent stake in Petrosea.

'€œAround $24 million would be used as operating capital,'€ he said, adding that Petrosea would allocate 14.25 percent of net profit in 2012 to pay out dividends, worth 0.0069 cents per share, to the 1.01 billion shares in circulation.