Adaro expects flat growth amid lingering weak market

IDX-listed coal giant PT Adaro Energy Tbk, expects no significant improvement in the company?s financial results this year as low coal prices continue to undermine its revenues, The Jakarta Post reported Saturday.

Adaro President Director Garibaldi Thohir said the company was still in a difficult situation as low coal prices in the international market continued to affect the company?s business.

?We are thankful that in 2013 we still booked a profit [US$231 million], although lower than the previous year. In 2014, we will try to survive,? he said after his company shareholders' general meeting on Friday.

Adaro sold 53.47 million tons of coal last year, a 10 percent increase compared to a year earlier. The company is expecting to produce between 54 million and 56 million tons of coal this year, up 7 percent from the 52.3 million tons output in 2013, according to the company?s document.

The 2014 production target is subject to approval from the government, which expects the country?s total coal production to reach 421 million tons this year, a similar number compared to a year earlier. The government may consider limiting coal output for energy security reasons.

As part of its expansion plan and business survival, Adaro is planning to strengthen its power business and become an integrated energy company, including running the electricity generation business.

Adaro, through its 100 percent subsidiary is running a 2x30 megawatt (MW) mine-mouth power plant in South Kalimantan. It is has a 65 percent stake in another 2x100 MW power plant project in South Kalimantan. A South Korean company holds the remaining 35 percent stake of the project.

Mohammad Effendi, the president director of Adaro?s subsidiary PT Adaro Power, said the company expected to soon sign a power purchase agreement (PPA) for the 2x100 MW plant project with the state electricity company PLN. ?The PPA is expected next month with PLN," Effendi said, referring to state-owned electricity firm PT Perusahaan Listrik Negara.

Through 34 percent owned PT Bhimasena Power Indonesia, Adaro is also involved in the development of a 2x1000 MW coal-fired power plant in Central Java. (*)