PT Bumi Resources Tbk (BUMI), revealed that downstreaming the coal industry is the company's main agenda in supporting Indonesia's decarbonization targets. This is also one of the requirements for extending a mining business permit (IUP).
In CLSA Sekuritas' research, BUMI conveyed its expansion roadmap that will be carried out in the future. First, BUMI is currently exploring the production of coal into ammonia. "This step will be built with strategic investor partnerships because cost is one of the highest challenges," the research was quoted as saying by Investor Daily, Thursday (14/9/2023).
Apart from that, BUMI also plans to diversify into the mineral industry together with its subsidiary, PT Bumi Resources Minerals (BRMS), which is involved in gold and other mineral mining. The company will also explore new renewable energy, one of which is using solar panels as a source of electrical energy.
CLSA research states that the company's main business as a coal producer is still prospective due to high demand from the largest coal importers, namely China and India. This projection is supported by winter in the second semester of 2023. "BUMI maintains its production target for this year, but lowers its average coal price guidance to USD 80-90 per ton from USD 95-USD 105 per ton).
Meanwhile costs fell to USD 55-USD 60 per ton from USD 60-USD 62 per ton considering that the current increase in oil prices is still below expectations.
BUMI management has a positive view that the second revision of the coal reference price regulations will be carried out by the government in August 2023. BUMI believes that this revision will better reflect the actual market price. "The company estimates that royalty rates will normalize from 32% in the first semester of 2023 to 28% in the remainder of this year," said the research.
For information, BUMI operates two major coal mines in East Kalimantan, Kaltim Prima Coal (KPC) and Arutmin. At the end of 2022, BUMI conducted a private placement worth USD1.6 billion. In line with that, Salim Group through Mach Energy Limited entered BUMI, allowing the company to overcome its high debt and focus on its core coal business.
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