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Adaro’s subsidiary seeks up to $58 million from IPO
PT Adaro Minerals Indonesia is the coking coal mining subsidiary of PT Adaro Energy, the second largest coal miner in the country by output after PT Bumi Resources.
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oking coal producer PT Adaro Minerals Indonesia expects to raise up to Rp 831.67 billion (US$57.83 million) through an initial public offering (IPO) in December, mainly to maintain mining equipment.
Adaro Minerals, a subsidiary of Indonesia’s second largest coal producer by output PT Adaro Energy, plans to offer 6.04 billion new shares, equivalent to 15 percent of its enlarged capital, according to the prospectus released on Thursday.
The shares would be offered for between Rp 100 and Rp 125 apiece to raise a maximum Rp 756.07 billion. The company is ready to raise an additional Rp 75.6 billion by issuing another 604.85 million shares at the same price, should there be an oversubscription.
The company said that proceeds from the IPO would be loaned to subsidiary PT Maruwai Coal, which would use the funds to repair and upgrade coal mining infrastructure.
“This is in line with increasing coal prices and rising exploration costs in the development of mining techniques in Lampunut [Central Kalimantan], from 2022 to 2023,” the company said in the prospectus.
The remaining funds would be allocated to repay a principal loan from Adaro Energy. As of Aug. 31, Adaro Minerals had $186.9 million in debt from its parent company.
Read also: Decade-high coal prices drive strong H1 mining performance
Adaro Minerals booked $206.62 million in revenue in the January-August period, exceeding full-year operating revenues in 2018, 2019 and 2020, which averaged $118 million, supported by high coal prices and rising coal sales.
The company's coal sales volume in the January-August period reached 1.43 million tons, rising 59.3 percent year-on-year (yoy).
Indonesia's benchmark coal price (HBA) stood at US$215 per ton in November, up from $75.84 per ton in January, according to Energy and Mineral Resources Ministry data.
Record-high coal prices have helped Indonesian miners post strong results in the first half of the year, giving rise to market optimism as economies around the world begin to reopen following the easing of COVID-19 restrictions.
Adaro Energy spokeswoman Febriati Nadira said on Friday that Adaro Minerals had an attractive value proposition as it was the only hard coking coal producer in Indonesia.
"We're optimistic that the prospect of metallurgical coal will remain positive in line with economic growth and increasing demand for steel," she said.
Coking coal, also known as metallurgical coal, is used to make steel while thermal coal is used to generate electricity.
