The Jakarta Post
Coal mining heavyweight PT Bukit Asam (PTBA) has expressed a desire to acquire a lucrative coal mine in Tuhup, Central Kalimantan, to increase and diversify its coal reserves, amid an alleged bribery case implicating the mine’s former owner.
As a state-owned enterprise (SOE), Bukit Asam has the privilege of first pick to the mine, which was formerly operated by coal mining heavyweight PT Asmin Koalindo Tuhup (AKT), said PTBA’s newly appointed corporate secretary Apollonius Andwie on Tuesday.
The founder of AKT’s parent company, Samin Tan, was named a corruption suspect by the Corruption Eradication Commission (KPK) in February in relation to a case concerning the Tuhup mine.
“PTBA will look into it and study it,” Apollonius said during an online press briefing. “As a company that still wants to grow, acquisitions are, of course, one of our strategies.”
However, the government may only offer AKT’s mine to Bukit Asam “after everything is legally clear,” he noted.
Coal miners across Indonesia have been hit hard by worldwide lockdowns in the first quarter, as global electricity demand slumped after businesses and factories cut back on operations.
Bukit Asam’s acquisition plan also aligns with the government’s policy to tighten state control over Indonesia’s mineral wealth, a principle enshrined in the recently-passed Coal and Mineral Mining Law.
Legislators claimed that tighter control would improve accountability, but activists have lambasted the claim, pointing out that Indonesia’s natural resources industry has been rife with corruption.
For Bukit Asam, acquiring AKT’s coal mine, prized for its high-carbon coal, will not only increase but also diversify the company’s reserves.
“AKT’s metallurgical coal reserves can be very beneficial for PTBA, which has, until now, been very reliant on thermal coal,” said investment analyst Robertus Yanuar Hardy of Kresna Sekuritas.
High-carbon metallurgical coal is used to produce steel, whereas lower-carbon thermal coal is used to generate electricity. The former commodity is about triple the price of the latter.
Selling metallurgical coal would allow PTBA to diversify its revenue streams during periods of low thermal coal demand, as has been the case amid the COVID-19 pandemic.
PTBA’s latest quarterly financial report revealed that the company's profits fell 20.5 percent annually to Rp 903.24 billion (US$61.8 million) in the January-March period amid weakening coal demand and prices. Bukit Asam’s sales volume rose 2.1 percent yoy to 6.8 million tons yet its revenue fell 4.01 percent yoy to Rp 5.12 trillion
AKT lost control over the Tuhup mine in 2017 when the Energy and Mineral Resources Ministry cancelled its mining permit because of maladministration. The permit was otherwise valid until 2023. Thus began a protracted legal battle between the ministry and AKT.
Samin then allegedly paid legislator Eni Maulani Saragih, a Golkar party politician, a Rp 5 billion bribe to lobby the energy ministry to allow AKT regain control over the prized mine, according to the KPK.
The KPK said on May 6 that Samin had been added to its most-wanted list (DPO) after skipping two summons over the case.
Meanwhile, AKT is currently attempting to switch its legal status from a contract of work (PKP2B) miner to a special mining permit (IUPK) miner, which would allow it to legally regain control.
“Bukit Asam’s coal reserves will significantly increase if it can gain control of PKP2B’s former mine, assuming the government rejects converting that [AKT’s] PKP2B into an IUPK,” Rizal Kasli, chairman of the Indonesian Mining Experts Association (Perhapi) told The Jakarta Post on Wednesday.
Rizal added that state-owned companies were given priority access to mines by the government as a means to boost state revenue and ultimately bring benefits to the public.