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Bukit Asam posts profits amid market slump

State-run coal miner Tambang Batubara Bukit Asam continued to book profits in the first nine months of the year despite a market slump, owing to its cost-efficiency program success.

The publicly listed miner announced on Tuesday that the company’s net profit dipped only by 5 percent to Rp 1.5 trillion during the January-September period, fromRp 1.58 trillion (US$115.45 million) in the same period, last year. Total revenues, meanwhile, rose 8.4 percent year-on-year (yoy) to Rp 1.5 trillion during the nine-month period.

Despite declining bottom lines, Ariyanto Kurniawan from Mandiri Sekuritas said that the results for the first nine months were not necessarily bad news, taking into account that the coal mining industry was under pressure on account of decelerating prices.

“The company’s performance indicated that Bukit Asam’s net profit was resilient amid weak coal prices. We attributed the pick-up in performance to higher sales volume and improving average selling price on the back of currency depreciation,” Ariyanto said in a research note.

The company’s coal production was up 13 percent on an annual basis to 14.08 million tons, while its total sales was up 8 percent to 14.34 million tons, the company’s recently published statement revealed.

Meanwhile, Bukit Asam’s average selling price (ASP) during the first nine months, according to the company’s press statement, was 2 percent lower than the corresponding period last year. Its ASP for January-September this year was Rp 712,099 per ton.

The ASP has gradually improved, with the company seeing its prices down 3 percent on an annual basis in the first half and by 4 percent in the first quarter.

Coal prices have steadily decelerated in the past few years, amid oversupply and declining demand from major coal importer China. The condition has led to steep declines in the profits of Indonesian coal producers.

Australia’s Newcastle coal price, an Asian benchmark, has tumbled to less than $60 per metric ton since surging above $136 a ton in early 2011. Indonesia’s coal reference price (HBA) slipped by nearly 9 percent along the year and close to 30 percent since early last year.

Bukit Asam corporate secretary Joko Pramono said that among the company’s strategies to minimize declining prices was prioritizing the export of high-calorie coal.

The company’s exports, according to the company’s statement, were up 5 percent yoy to 6.68 million tons during the first nine months, whereas its domestic sales increased 12 percent to 7.46 million tons. Exports made up 48 percent of the company’s total sales volume.

Besides prioritizing exports, the company also worked on reducing its cash cost — or production costs at site level per unit of output — which declined 13 percent to Rp 563,000 per ton. Bukit Asam’s stripping ratio — the ratio of the volume of waste material that must be removed to get coal — from 5.59 at the beginning of 2015, to 4.49 by the end of September. Stripping ratio is among determining factors in miners’ production costs.

“Amid weak coal prices, we managed to carry out efficiency strategy and optimize our mining, which in turn increased our revenue,” he said in the statement.

Source: www.thejakartapost.com, Wednesday, 21 October 2015