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tate-run coal mining company Bukit Asam says it remains on track to meet its target of adding 5,000 megawatts (MW) to its power-generating capacity as part of its diversification strategy.

The steep fall in global coal prices has hit the mining industry and forced the publicly listed company to venture into the electricity business as an independent power producer (IPP) supplying electricity to state-owned power firm PLN.

By doing so, Bukit Asam is tapping the potential of rising demand for electricity in the country. The government has proclaimed a target of increasing nationwide electricity supply by 35,000 MW within the five-year period before 2020.

“With huge coal reserves, we have the potential to supply 5,000 MW of electricity and it is not too difficult for us to meet the government’s target,” Bukit Asam president director Arviyan Arifin said on Monday evening.

Bukit Asam has coal deposits of 8 billion tons, 3.3 billion tons of which are mineable. The coal reserves are expected to support the company’s long-term business plan to produce at least 50 million tons of coal annually by 2020.

The firm has broken ground on a 2x620 MW mine-mouth power plant project in South Sumatra called the “Sumsel 8”, with construction expected soon. The project belongs to a US$1.6 billion joint venture, in which Bukit Asam owns a 45 percent stake. China Huadian Hong Kong Company Ltd., a subsidiary of Chinese state-run power firm China Huadian Corporation, holds the rest.

Three other power plants in Sumatra will also be built soon, namely the 3x600 MW Sumsel 9 and 10, as well as the 800 to 1,200 MW power plant in Peranap, Riau, in a $2.4 billion partnership with PLN and Tenaga Malaysia Berhad (TNB).

Also in the pipeline is a 2x350 MW power plant project in Kuala Tanjung, North Sumatra, in partnership with state-owned aluminum producer Indonesia Asahan Aluminium (Inalum).

As of now, Bukit Asam owns a power purchase agreement with PLN through its power plant in Banjarsari, also in South Sumatra, which has a capacity of 2x100 MW. It also owns two more power plants in the same province.

The mine-mouth power plants are expected to support the company’s ongoing efficiency program, as they are developed in close proximity to mining sites, meaning lower transportation costs to transfer the coal to power plants, while the electricity generated can directly be transmitted through a transmission line.

Ongoing efficiency measures with regard to operating and investment costs were helping the company “survive” with relatively good performance despite the coal prices slump, Arviyan said.

“Our margin will certainly decrease with this efficiency, but we’re able to survive this way rather than by having a big budget, yet suffering huge losses,” he said.

Last year, Bukit Asam posted a 9 percent year-on-year (yoy) increase in net profit to Rp 2.04 trillion ($152.5 million), while total revenues rose by 5 percent to Rp 13.72 trillion.

This year, the company was targeting 52 percent growth in sales volumes to 29 million tons, said corporate secretary Joko Pramono. In terms of production, Bukit Asam expected at least a 20 percent increase this year.

Shares in Bukit Asam traded at Rp 7,400 apiece on Tuesday, down 2.95 percent from the previous day. The stocks have soared almost 70 percent so far this year, easily outstripping the broader benchmark Jakarta Composite Index’s (JCI) 5 percent gain.