BUMI corporate secretary Dileep Srivastava said the company projected an increase in total production of 5 to 10 percent next year, thanks to additional production from subsidiaries PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia.

“We can reach 100-110 million tons of coal next year, as we also have other coal assets, we can [produce] another 10 million tons from KPC, Arutmin, Pendopo and others,” he told a press conference on Tuesday after the annual shareholders meeting.

KPC, the largest coal producer in the country, is the main contributor to BUMI’s coal production with an annual coal output of around 60 million tons. The second largest contribution comes from Arutmin with an annual coal output of around 20 million tons.

BUMI has set a coal production target of 88 to 90 million tons this year, or 5 to 8 percent higher than the realized production of 83.29 million tons last year.

Srivastava said the company was upbeat that this year’s production target was achievable, as 85 percent of production had been allocated to fulfill BUMI’s sales agreements.

“[To reach our target] we have already secured buyers for 85 percent of our coal production. Hence, we don’t have much doubt or see much risk in achieving our goals,” he said.

The company also expects to book gross revenues of US$5 billion, or $100 million more than $4.9 billion in revenues it booked in 2018, despite the declining trend in coal prices.

BUMI chief financial officer Andrew C. Beckham concurred with the potential increase in next year’s coal production, but said it would depend on whether the company obtained a contract extension or not.

“It could be an increase of 10 million tons from KPC, but only after we get a contract extension. We just need the extension so everyone is comfortable and the funding will come,” he said.

KPC’s current Coal Contracts of Work (CCoW, or PKP2B in Indonesian) will terminate in 2021, while Arutmin’s CCoW ends in 2022. BUMI is still awaiting a government regulation (PP) that will spell out the requirements for coal miners to switch from the CCoW to the special mining permit (IUPK).

The regulation is a revision of PP No.1/2017 on mineral and coal mining activities. The tax and non-tax revenue regulations for mining companies are also being revised.

The change in the permits for mineral and coal mining companies is stipulated in Law No. 4/2009 on coal and mineral mining.

In addition to the contract extension issue, among the challenges BUMI faces is the escalation of the trade war between the United States and China, the government’s price cap on coal sold to state-owned electricity company PLN.

Srivastava said that BUMI was taking several measures to mitigate the impacts of the ongoing US-China trade war that had caused an economic slowdown in China and a decline in coal demand.

“We are carefully observing the markets in China and India and at the same time, are trying to develop new markets to Japan, Hong Kong, South Korea and Taiwan,” he said.

Meanwhile, regarding the company’s debt restructuring issue, Beckham said that the company planned to disburse $50 million in their next quarterly payment in July, following $19.85 million in its April payment.

"We started paying [our debt] in January, after which we have regularly paid both the principal and interest every quarter. In July, we will pay about $40-50 million in total. We hope to pay $50 million, but it depends on sales,” he said.

With its latest payment in April, BUMI has paid off $239.39 million in total, consisting of $145.48 million toward the Tranche A principal and $93.91 million in interest, including accrued and back interest.

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