The Jakarta Post
Publicly listed coal miner PT Harum Energy says it will continue to focus on selling coal abroad, with domestic demand weak as economic growth pushes down electricity use, and with uncertainty still surrounding many electricity projects.
Harum Energy president director Ray A. Gunara revealed on Wednesday that the entirety of his firm's production during this year's first half had been delivered overseas.
'Forty-four percent of production was sold to South Korea, 16 percent to Taiwan and 15 percent to Malaysia,' he said during a public expose event in South Jakarta, adding that sales to China had dropped to 11 percent of the company's production from 14 percent last year, with the world's second-largest economy reducing coal imports as economic slowdown affected domestic industries, according to Ray.
Harum Energy's sales fell by 38.5 percent year-on-year (yoy) during the first half of this year to 2.7 million tons from 4.4 million tons, company data show, while production slumped by 47.6 percent yoy to 2.2 million tons from 4.2 million tons. The decline was largely caused by lower global coal prices forcing the company to reduce production to balance its costs.
As of June, the company's costs of goods sold were recorded at US$120.8 million, or 42.3 percent lower yoy than last year's $209.3 million. However, its revenues also fell a sharp 42.5 percent yoy to $151 million from $262.5 million, causing its net profits to nosedive 84.5 percent yoy to $2.8 million from $18.1 million pocketed last year.
Despite global coal prices falling around 30 percent so far this year to $57 per ton from around $80, Harum Energy would still prioritize exports, said Ray, as domestic demand was not attractive enough for the company.
'Currently, domestic coal consumption is still 15 to 20 percent lower than this year's domestic market obligation [DMO], which stands at around 90 million tons,' he explained.
The DMO for coal has been in place for several years to ensure that domestic buyers have access to Indonesian coal and to reduce producers' dependence on overseas markets.
Last year, the DMO was set at 95.55 million tons. However, domestic demanded reached just 76 million tons as of December last year.
That prompted the government to lower the DMO for 2015 from 110 million tons, as previously planned, to 92.31 million tons. The figure is 23.41 percent of estimated domestic coal miners' production of 394.37 million tons this year.
Harum Energy director Eddy Sumarsono pointed to a slowing economy lowering industry electricity demand and a lack of clarity in the government's stance on its 35,000 MW power plant project as the causes of low domestic coal absorption.
'Construction of the plants is postponed as investors wait for a government decision whether to scale down the project or not,' he said, adding that more than 60 percent of the plants would be fueled by coal. (prm)
Your premium period will expire in 0 day(s)close x