Publicly listed coal miner PT Toba Bara Sejahtra is focusing on shifting its business portfolio from mining to electricity in order to sustain long-term growth amid fluctuating coal prices.

Toba Bara Sejahtra, controlled by the family of Coordinating Maritime Affairs Minister Luhut Pandjaitan, hoped that by 2020, its revenue contribution from power plants and the mining sector would be equal.

“This is a part of our growth strategy. We will invest hugely [in power plants] from now until 2020 so there will be substantial additional income for the firm,” Toba Bara Sejahtra director Pandu P. Sjahrir said on Monday.

As part of its plan, its subsidiary Gorontalo Listrik Perdana (GLP) reached the so-called “financial close” recently for the construction of the Sulbagut-1 steam power plant (PLTU), which has a capacity of 2x50 megawatts.

After reaching the financial close, the company is now focusing on preparing the construction of the plant.

The Sulbagut-1 power plant, which will supply electricity for Perusahaan Listrik Negara (PLN) in the northern part of Sulawesi, will cost US$210 to $220 million with syndicated loans worth $171.7 million from state-owned Bank Mandiri.

GLP is run by a consortium that comprises Toba Bara Sejahtra with 60 percent ownership, PT Toba Sejahtra with 20 percent and Shanghai Electric Power Construction Co. Ltd. with 20 percent.

Construction is scheduled to start in the first half 2018, while the commercial operation date (COD) is set for the middle of 2020.

Pandu said the location for the construction of the power plant was selected based on the business plan (RUPTL) from PLN.

“We will build a ‘base load power plant.’ This shows the need for electricity is huge in Gorontalo,” he said.

Apart from Sulbagut-1 plant, Toba Bara Sejahtra expects to reach financial close for a Sulut-3 power plant next year in North Sulawesi. The plant will be built under its subsidiary PT Minahasa Cahaya Lestari with a capacity of 2x50 MW and is scheduled to start its COD in 2020.

“Toba has also submitted [pre-qualifications documents] for the bidding process of renewable power plant projects,” Toba Bara Sejahtra president director Justarina Naiborhu said.

In the meantime, as Toba Bara concentrates on its investment in power plants, it will also maintain its coal production volume at last year’s level of between 5.5 million to 6.5 million tons.

Despite coal prices increasing in the first half of this year, Justarina said this would only begin to affect the company’s top and bottom line in the second half of 2017 to 2018.

The Asian benchmark price for thermal coal, the weekly index at the Australian port of Newcastle, was recorded at $92.28 per ton on July 28, up from $50.63 per ton recorded at the end of 2015.

Pandu said coal prices over the past seven months had been affected by bad weather that reduced supply. However, due to limited supply, demand had soared.

This year, the firm is focusing on exporting to its existing clients in various countries including South Korea, Taiwan, China and India. About 95 percent of the company’s total coal production is exported.

In the first half of 2017, Toba Bara’s revenues declined to US$127.86 million from $139 million in the same period last year. Its net profit, however, increased to $8.03 million from $2.62 million.

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