Strike while the iron is hot.

That is what coal miner PT Alfa Energi Investama is hoping to do as it plans to carry out an initial public offering (IPO) amid improving global coal prices.

Alfa Energi Investama aims to sell 300 million shares, or 23.08 percent of the company’s enlarged shares, during the IPO, which is slated to run from May 30 to June 1.

The shares will be offered at a price range of between Rp 400 and Rp 500, thus setting the targeted IPO funds amount at Rp 120 billion (US$9.02 million) to Rp 150 billion.

The company expects to allocate half of the proceeds for working capital, a third for repaying debts and the remainder for the development of supporting facilities around its coal mining concession area that covers over 2,000 hectares of land in Kutai Kartanegara, East Kalimantan.

“We believe that the coal mining business still has good prospects. Hence, we want to offer 23.08 percent of our shares through the IPO,” Alfa Energi Investama president director Aris Munandar said on Monday.

The company is scheduled to see its debut stock trade on the Indonesia Stock Exchange (IDX) on June 7.

Australian thermal coal prices, the benchmark for Asia, stood at an average of US$65.90 per ton throughout 2016, up from an average of $57.50 per ton in the previous year, thanks to China’s efforts to reduce overcapacity in its domestic coal sector. During the first quarter of 2017, the average price stood at $87.41 per ton.

As a result, the company saw a boost in its production and sales throughout 2016. At that time, it produced 263,773 tons of coal, a six-fold increase compared to output in 2015.

It also managed to sell 259,659 tons of coal, up 78.8 percent year-on-year, with 80 percent of total output exported to countries such as China, South Korea and India.

Alfa Energi Investama booked $7.4 million in revenue last year, up 76.2 percent annually, and
Rp 28.6 billion in gross profits, up from just Rp 2.17 billion in 2015.

This year, the company has allocated Rp 20 billion to Rp 30 billion in capital expenditure to jack up its production to 530,000 tons of coal, 95 percent of which will be sold and the rest kept in its inventory.

At present, the company has coal resources amounting to 21.2 million tons and coal reserves of 6.58 million tons from its concession in Kutai Kartanegara, which is operated by subsidiary PT Alfara Delta Persada.

“We produce low-to-medium range thermal coal with calorific values ranging from 3,500 to 4,500 kilocalories a kilogram. Thus, our coal is suitable for use in coal-fired power plants [PLTU],” Alfa Energi Investama independent director R. Ishak Abdul Rahman said.

Meanwhile, the company has been granted location and principle permits for the development of the Anggana PLTU in Kutai Kartanegara with a capacity of 50 megawatts (MW) of electricity.

It has also signed a memorandum of understanding with a company in the region to jointly develop the facility.

President Joko “Jokowi” Widodo’s administration has set an ambitious goal of procuring 35,000 MW of electricity in a bid to increase the national electrification ratio to 97 percent by 2019, up from the current ratio of 88.3 percent. PLTUs are expected to contribute to nearly 60 percent of the total capacity.

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