Adaro expects 5% increase in production
Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Thu, November 29 2012, 11:39 AM
Paper Edition | Page: 13
Coal miner PT Adaro Energy says it will increase production about five percent next year, even though there are no indications that global commodity prices will make a quick recovery.
Cameron Tough, Adaro’s head of internal relations, said on Wednesday that the company would likely see around a 5 percent increase in production in 2013, compared to this year’s estimate of between 48 million and 50 million metric tons.
“Adaro will still see an increase in production, as we grow with our customers,” Tough said on the sidelines of the Investor Summit 2012, hosted by the Indonesian Stock Exchange, on Wednesday.
Tough noted that demand for coal continued to grow, despite the global slowdown that has affected commodity selling prices, leading coal miners to report declining financial performances. Several miners have cut production to boost efficiency and increase sales of high calorie coals to minimize the downturn.
The firm has cut its production sales volume estimate from a previous range of between 50 million to 53 million metric tons.
Adaro director Syah Indra Aman said that the company would not rush to increase production if coal prices remained under pressure.
The company’s average coal selling price rose 3 percent in the first nine months of the year compared to the same period last year, while declining 2.7 percent from the first half of 2012.
Adaro produced 33.87 million metric tons of coal while selling 34.68 million metric tons in the first nine months of the year, down 4 percent and 9.5 percent respectively from the same period last year.
In the third quarter, Adaro’s production reached 10.87 million metric tons, down 12 percent from 12.47 million metric tons in the third quarter of last year.
“We remain on track to meet this year’s production target range,” Adaro corporate secretary Devindra Ratzarwin said.
Declining coal selling prices not only affect Adaro. Heavy equipment distributors and the firm’s mining contractors are also suffering.
An official of PT Pamapersada Nusantara, a subsidiary of heavy equipment distributor PT United Tractors, is a mining contractor for Adaro subsidiary PT Adaro Indonesia, said that the firm was waiting for coal mining companies to set production targets for next year.
“Next year will be challenging for us. We are still waiting to hear whether Pamapersada’s clients will revise production targets, which will affect Pamapersada’s work,” United Tractors finance director Gidion Hasan said on Wednesday.
Pamapersada’s clients also include PT Indominco Mandiri, PT Bukit Asam and PT Kideco Jaya Agung.
According to Gidion, Pamapersada would likely see a lower amount of overburden removal works projects next year. Although the company expects to lift 850 million bank cubic meter (bcm) in overburden removal this year, its overburden removal has only topped 634 million bcm as of the third quarter.
Given Pamapersada’s lower expectations for next year, United Tractors has estimated that its capital expenditures would be around US$300 million, much lower than this year’s capital expenditures of around $700 million.