Baramulti seeks up to 50% long-term contract

By Edgar Subroto

IDX-listed mining firm PT Baramulti Sukses Sarana Tbk (BSSR) is seeking to secure long-term contracts with its customers which account for up to 50 percent of its total sales, the company has said.

Additionally, the strategic partnership with its partners namely, Tata Power Company Limited, Idemitsu Kosan Co Ltd, and Trafigura will create larger market opportunity for the company and subsidiary?s coal products, the company said.

BSSR aims to produce 5.8 million tons of coal in this year and 8.5 million tons of coal in 2014 from its two mines in East and South Kalimantan, more than double compared to last year?s total output of 3.6 million tons. Coal sales volume is more or less the same with production target.

Out of the 5.8 million tons target, its South Kalimantan coal mining unit PT Antang Gunung Meratus (AGM) is expected to contribute around 5.5 million tons and the remaining to come from BSSR mine in Loa Janan, Kutai Kartanegara regency, East Kalimantan.

Previously, its affiliated company PT Baramulti Sugih Sentosa (BMSS) sold most of the company?s coal. BMSS main coal markets are China, India, Japan, South Korea, and domestic market. All of the company and its subsidiary?s coal sales to BMSS are based on negotiation in reference with the prevailing spot price or an index of global commodity prices at the time of its shipment.

Last year, the company?s average selling price was only US$39.8 per tons, down from the previous year at $48.2 per ton, and production cash cost (excluding royalty) increased marginally by 1.9 percent to $19.6 per ton from $19.2 per ton in 2011, primarily as a result of an increase in mining costs including fuel, equipments and higher stripping ratio.

Editing by Reiner Simanjuntak