Coal Records US$ 200/ton, This Row of RI Tycoons is Getting Richer!

Jakarta, CNBC Indonesia – Coal is one of the vital energy commodities for Indonesia, not only contributing to foreign exchange through taxes and royalties paid to the state, coal also has an important role in national electrification and is still the main energy source with low costs.

However, coal has a long carbon chain, its combustion produces high emissions and contributes to global warming, so its existence in the future is increasingly being questioned.

Moreover, various countries have begun to implement green policies, including Indonesia which plans to achieve net zero emission in 2070.

Negative sentiment on environmental impacts does not seem to be able to silence coal’s long rally, one of which is triggered by a surge in demand for low-cost electricity.

Over the past year, the price of coal has continued to strengthen, even on Monday (27/9) the price of coal on the ICE Newcastle (Australia) market was recorded at US$ 202.95/ton. It’s up 6.2% from last weekend’s position and is the highest on record since at least 2008.

Meanwhile, from within the country, the Reference Coal Price (HBA) set by the Ministry of Energy and Mineral Resources (KESDM) has also been rising since March this year.

At that time, HBA was recorded at US$ 84.47 and last September the price reached US$ 150.03 per ton, which means that in less than a year the HBA has strengthened to 77.61%.

The increase in commodity prices will certainly have positive implications for the performance of coal mining issuers, becoming a catalyst for new coal issuers in the second half of this year.

On the other hand, this momentum can burden upstream industries such as power generation companies whose operating costs actually increase.

Actually, the long rally in the strengthening of coal prices has been reflected in the mid-year financial statements of national coal issuers. Of the 14 medium to large-scale issuers, only three companies experienced a decline in revenue.

Meanwhile, all companies in the middle of this year were able to record a net profit.

These companies include listed companies that manage coal mines, although they are not the business segment with the largest contribution, namely a subsidiary of the Astra Group, PT United Tractors Tbk (UNTR).

However, the contribution of the coal segment to UNTR’s operating income can still be said to be quite significant.

For the record, only PTBA and UNTR whose financial statements use rupiah denomination, while other issuers use US dollars.

To be able to give a clear picture, all of them were converted to rupiah using the exchange rate of Rp. 14,300/US$.

Photo: Revenue of Coal Issuers/Ferry Sandria/data lapkeu
Revenue of Coal Issuers/Ferry Sandria/lapkeu data

On an annual basis, since the middle of last year the cumulative revenue of these 14 coal issuers has increased 14 percent from Rp 124.36 trillion to Rp 142.35 trillion.

Besides UNTR, the highest revenue was recorded by PT Adaro Energy Tbk (ADRO), followed by PT Indika Energy Tbk (INDY) and PT Bayan Resources (BYAN).

Furthermore, there are state-owned coal companies (PTBA), Sinarmas Group coal companies managing Berau Coal (GEMS) and Banpu Group coal companies (ITMG) which also have quite large revenues, in the range of Rp 9-10 trillion.

The three issuers that experienced a decline in revenue were the Bakrie Group coal company (BUMI), the Luhut conglomerate (BUMI) and PT Samindo Resources Tbk (MYOH).

Profit of Coal Issuers/Ferry Sandria/data lapkeuPhoto: Coal Issuer Profit/Ferry Sandria/data lapkeu
Profit of Coal Issuers/Ferry Sandria/data lapkeu

In the first half of this year, none of the 14 companies experienced losses.

Previously, at the end of June 2020, there were still two issuers who suffered losses, namely INDY and BUMI.

On an annual basis, since the middle of last year the cumulative net profit of these 14 listed companies has increased by 99% from only Rp. 9.07 trillion, now to Rp. 19.28 trillion, with the best profit performance recorded by Bayan, which also experienced the largest profit growth.

Other issuers with impressive profit performances include ITMG, PTBA, GEMS and ADRO with revenues ranging from 1.6 to 2.4 trillion rupiah.

Next: The ‘Rulers’ of Indonesian Coal Mining Issuers