Bara Jaya plans to acquire coal mine in 2019

By Romel S. Gurky

IDX-listed coal mining company PT Bara Jaya Internasional Tbk said on Thursday it plans to acquire a coal mine in 2019 in a bid to improve future profitability.

The company said in a statement that it is seeking mine producing high rank coal with calorific value (CV) of 5,600 kcal/kg GAR, and that the mine must have good production performance.

Bara Jaya did not provide further details about the acquisition plan, but acknowledged that its current low rank coal production has limited market, specifically India, as consumers prefer higher CV coal, thus giving the company little bargaining position in dealing with buyers. As such its margin from low rank coal production has been very limited and could not easily expand production as it only produces coal based on request from buyer and if the price is reasonable.

Bara Jaya through subsidiary PT Mega Alam Sejahtera (MAS) operates a coal concession in Berau Regency, East Kalimantan Province, producing low rank coal with CV of 3,300-3,500 kcal/kg. Bara Jaya owns another coal concession namely PT Sarana Mandiri Utama in Tarakan Regency, East Kalimantan, which has yet to enter production stage.

MAS resumed production in recent months, following years of suspension due to weak price environment. Bara Jaya said that as per November, it could only manage to sell 45,000 tons of coal to a buyer in India at a price of US$26 per ton, resulting in revenue of Rp 16.7 billion.

Editing by Reiner Simanjuntak