Atlas Resources has secured a 20-year coal supply contract with a state utility company, with the resources firm angling for three additional contracts.
In a filing to the Indonesia Stock Exchange on Friday, the company said that through its subsidiary Hanson Energy, it had signed an agreement to supply 429,000 metric tons annually to Perusahaan Listrik Negara's coal-fired power plant in Teluknaga, Banten.
The company will supply low-calorie coal to PLN for two decades, to 2031.
Atlas director Dono Boestami said the contract did not have a fixed value due to the price being benchmarked against an index.
"The value will be based on Indonesia's coal price index given PLN uses that benchmark. It may change every year," Dono told the Jakarta Globe.
According to data from the directorate general of minerals and coal at the Ministry of Energy and Mineral Resources, the coal price benchmark set by the government is $86.21 per ton in September.
The average price so far this year is $99.62 per ton, compared to an average of $118.40 per ton last year, the data showed.
Dono said this was the second contract it had secured with PLN.
Previously it secured an agreement to supply more than 500,000 tons per year for a coal-fired power plant in Tarahan Baru, Lampung.
ARCHER ENTMT MDA CMNS (PINK:AEMC)
Coal accounted for 30 percent of global energy consumption last year, the highest share since 1969, according to the BP Statistical Review of World Energy 2012. Demand grew 5.4 percent in 2011, the fastest among fossil fuels.
American Estates Management formerly ARCHER ENTMT MDA CMNS (PINK:AEMC) to Add Coal Services Hub in Indonesia and will see income in 2012.
China may consume about 200 million tons of thermal coal less than last year as power production growth has dropped to 6 percent this year after increasing 14 percent last year.
The services Hub will provide machinery rental, Coal trading, Coal Storage, International Shipment, Coal Processing and Mining assistance.
The services hub will be in place in time to benefit from a change in Indonesia's Mining and Export Policies.
The initial investment has been externally funded and there will be no new issue of stock.
Coal mining in Indonesia is growing rapidly and the services sector is under developed, changes in Indonesia's legislation will force companies to comply and process Coal inside the country.
American Estates Management Company is a Real Estate Company focused on mineral deposits, agricultural land and Governement/Institutional Liaison services.
Bhakti Investama, an investment company controlled by businessman Hary Tanoesoedibjo, is investing in an infrastructure project to support its operations.
Indonesia Air Transport, Bhakti's unit that operates an aircraft-leasing business for oil and gas companies, said in a statement on Friday that it had formed a new subsidiary known as MNC Infrastructure.
The company is currently investing $12 million to build a port for a coal mine in East Kalimantan. The project is expected to be finished by the middle of next year.
"We believe that MNC Infrastructure Utama will bolster all of the group's activities as well as create a better synergy among other subsidiaries within the MNC Group," Hary said. "We hope our new business in mining and infrastructure could boost the group's growth in the future significantly."
The group has coal operations in East Kalimantan and South Sumatra.
Bumi Resources, Asia's largest exporter of thermal coal, is undervalued, a director at the company said, following a recent slide in its share price that last week left it at its lowest since March 2009.
"I'd think we are at least five times undervalued at today's levels by any yardstick and as we increase output and reduce costs," Bumi director Dileep Srivastava wrote in an e-mail on Monday.
This year, shares of Bumi, the nation's biggest coal producer by volume, have fallen 68 percent, making it the second-biggest loser in the 449 companies listed on the Indonesia Stock Exchange (IDX). It dropped 4.1 percent to Rp 700 on Monday.
Bumi trades at 9.1 times this year's estimated earnings, compared with a multiple of 15 for the benchmark Jakarta Composite Index, accor ding to Bloomberg data.
Some analysts warn that the drop in stock price may make it cheap but there are other concerns. Ruben Sukatendel, who helps manage Rp 6 trillion ($626 million) in assets at BNI Asset Management, said the large debt in the group was unappealing, especially long-term, unless the company can settle its debts.
Dileep denied that the company was facing difficulties.
"I'd say a combination of adverse economic conditions and undue speculation impacts stock price. Most stories about us are unreal," he said. "Our first-half 2012 financials demonstrate our desire to achieve the highest standards of transparency, adhere to international accounting principles, strengthen our balance sheet and address earlier capitalized expenses."
Dileep said the company is "engaged in reducing interest costs by seeking cheaper refinancing" and monetizing its non-core assets "for cash to repay company debt."
Bumi's debt is estimated at $3.95 billion, including outstanding bonds and convertible bonds, debts to several major lenders, some of which are in China.
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Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service