Holiday Ayo - The management of PT Bumi Resources Tbk (BUMI) ensures that the business plan for coal downstreaming continues as planned.

This coal issuer and the Salim Group are expanding to support Indonesia's decarbonization targets and as part of the requirements for extending Mining Business Permits (IUPK). 

“The company is exploring the production of coal into ammonia and is also establishing partnerships with strategic investors. Management points to high costs as one of the main challenges," said CLSA Sekuritas Indonesia, quoted from cnbcindonesia.com, Wednesday (13/9). 

Apart from that, BUMI also plans to diversify into the mineral industry, and its subsidiary, PT Bumi Resources Minerals Tbk (BRMS) is involved in mining gold and other minerals. 

BUMI also stated that it is currently exploring renewable energy, and sees the potential for developing rooftop solar power plants. 

Apart from that, until the end of the year the company was optimistic about the prospects for the coal industry in semester II-2023, especially after seeing high demand from the main coal importers, China and India. 

Moreover, the second semester of 2023 is seasonally good for the coal industry, with demand increasing as winter approaches. 

BUMI also maintained its production target for this year, but lowered the average coal price guide to US$ 80-90 per ton (from US$ 95-105 per ton) and costs to US$ 55-60 per ton (from US$ 60 -62 per ton), considering that the current increase in oil prices is still below expectations. 

Based on the CLSA Sekuritas Indonesia report, BUMI management also has a positive view of the second revision of the coal reference price (HBA) regulations carried out by the government in August 2023, because management believes that the 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. 

For your information, BUMI operates two main coal mines in East Kalimantan, Kaltim Prima Coal (KPC) and Arutmin. 

At the end of last year, BUMI carried out a private placement worth US$1.6 billion and the entry of the Salim Group (through Mach Energy Limited), which allowed the company to overcome its high debt position and focus on its main coal business.