DEBT RIDDEN, BUMI BOOST COAL PRODUCTION TO 90 MILLION TONS/YEAR

Although Bumi Resources Tbk [BUMI] was still struggling to escape from sizable debt while price of world’s coal was on the downturn, the company still set target of increased volume of coal production in 2014. BUMI set target for production of 80 million tons to 90 million tons in 2014. If the 90 million tons target was met, it was expected that company’s coal production could grow by around 6 percent.

"We set target of coal production of BUMI subsidiary companies at 80 - 90 million tons all though the year," BUMI Company's Secretary Dileep Srivastava made the statement after Extraordinary Meeting of Shareholders [RUPSLB] in Balai Kartini in Jakarta on Thursday [3/4].

Price of coal sank to its lowest level since March 2009 to USD 77.35 per metric ton. Trend of coal price downturn was predicted to continue to quarter 1-2014. According to Bloomberg statement on Monday [10/2], price of coal for delivery contract in March 2014 at ICE Futures Europe inched down by 0.57% against last week's price at USD 77.35 per metric ton. Over the past week, price of coal dropped by 2.27%.

Dileep was expecting that this year price of coal would be better compared to previous year. However, predictably price of coal would not be too far different from this year. “This year price of coal was predicted not to be too far different from last year. Probably this year price would be USD 80 – USD 90 per ton, revenue depends on price”, Dileep said.

Hence if BUMI production target this year would reach 90 million tons and the company could sell at USD 90 per ton, it was not impossible that the company could pocket income of USD 8.1 billion this year.

However, in a condition where export of coal was hindranced by unstable market condition, Dileep said, BUMI was anticipating negative sentiment from China as one of Indonesia's export destination of coal. "Our market was still sensitive to sentiment from China, but supply and demand is still there." Dileep remarked.

By end of 2013 the Management of Bumi Re­sources estimated coal production to reach 80 mil­lion tons, higher than the targeted 77 million tons. In 2012 Bumi Resources projected coal production to reach 74 million tons and sales 68 million tons.

According to Dileep, by early this year Bumi Resources would maximize output and expected sales of coal in January 2014 would exceed 7 million tons. Dileep said that Bumi Resources would maxi­mize production and sales, especially in Semester I 2014. However Bumi Resources would synchronize target of coal production and sales with the market condition and Government's policy.

At the moment Bumi Resources was still making dialogue with the Government about the policy of national coal production restriction which was aimed at reducing coal export. "After attainment at Semester I 2014, we would further set target for Semester III in June or July 2014." He said.

Bumi Resources allocated capital expenditure for 2014 to the amount of USD 50 million for com­pany expansion. All the financial resources were from company's internal resources. According to Dileep, ther was no significant investment by Bumi Resourc­es this year because the mine managed by the subsid­iary company PT Kaltim Prima Coal and PT Arutmin Indonesia had the capacity to produce coal up to 90 million tons.

Bumi Resources was now still developing assets in Sumatra, among them by way of making offer to Independent Power Producers EIPPI. The company was also finalizing documents for transferring owner­ship of some Mining Business Permit [IUP] in Sumatra and Kalimantan for mid-term exploitation in strength­ening market share.

To Meet Quorum

Dileep Srivastava also disclosed at the Ex­traordinary Shareholders Meeting IRUPSLBI PT Bumi Resources Tbk IBUMII which only reached Quorum after being suspended several times. Meaning 3 agenda to be approved by the shareholders had been approved.

"In today's meeting shareholders approved the 3 agenda which we proposed. From the quorum requirements at the RUPSLB shareholders meeting which was 40 percent, we had met the quorum. Of all the shareholders present 63.19% shareholders agreed on 3 agenda which we proposed," he said.

Dileep underscored that the three agenda ap­proved, i.e. approval to transfer company's shares in PT Kaltim Prima Coal [KPC] and Bumi Resources Mineral [BRMSW] as part of debt settlement to China Investment Corporation [CIC] and buying of shares belonging to PT Kutai Timur Sejahtera KPC by the company or subsidiary company to be executed in accordance with the Regulations of Bapepam-LK No.IX.E.2.

Besides, the second agenda being approved in BUMI meeting today was approval of BUMI plan to guarantee or set as guarantee company's asset, as required by Article 102 Law no 40 year 2007 on Limited Company.

Furthermore the shareholders also agreed on the last agenda, i.e. change in company's capital structure and change as well as underscoring of all company's rule. "As soon as shareholders agree, plans would be executed soonest," Dileep concluded. (SS)

Business New - April 11, 2014