Berau Coal increased output 10%, cut stripping ratio 14%

By Ruli Setiawan

Berau Coal mined 6.1 million tons of coal in the third quarter, 10 percent higher than in the same period of 2012, while its stripping ratio for the year to date reduced to 8.8bcm/t, a reduction of 14 percent over the same period last year, London-listed Bumi Plc, the holding company, said in statement on Monday.

Bumi Plc further said Berau?s third quarter average selling price was $58.5/t, which is 18 percent lower than the same period in 2012. Berau is on target to mine 23 million tons for 2013.

"We remain very focused on operational improvements and efficiencies, which is our priority in the current weak coal price environment. We have achieved a 6% cost reduction this quarter compared with last year and made further progress on a number of other cost reduction initiatives,? Nick von Schirnding, CEO of Bumi plc said:

?While coal prices have moved off their lows, the near term outlook remains challenging. Our forecasts for full year production and financial targets remain unchanged."

The firm said good progress continues to be made in respect of the Company's asset optimization program, to reduce costs and improve efficiencies.

Fuel consumption for both mine fleet and shipping has been reduced by around 3 percent through the use of additives and better fuel management. Further fuel initiatives are currently being worked on, including improved leakage detection. The company spent $235 million on fuel in 2012.

Annualized exploration costs have been reduced by 30 percent through maximizing the utilization of drilling equipment. The number of rigs has been reduced; shifts have been increased, while the overall number of geologists has also been reduced.

In terms of barging productivity, sea trials have been completed on 330ft barges with a load capacity of 10,000 tons, against current 270ft barges with a 6000 ton load capacity. Timelines for implementation are currently under review.

Marketing costs on the sale of coal will reduce by 0.5 percent from January 2014 and discussions on further reductions are underway. Discussions are also at an advanced stage with a number of mining contractors to effect a rate reduction for 2014. An updated life of mine plan is being finalized before the year end, which will aim to further enhance the efficiency of current mining methods.

Capex for 2013 was originally forecast to be $70 million. Cuts in capex during the year will mean the forecast for 2013 will now be approximately $50 million. The lower than planned capex has come mainly from reduced spending on hauling roads and bridges, as well as support infrastructure. Given the current challenging market conditions, capex plans for 2014 are currently under review, with anticipated further cuts.

Editing by Johannes Simbolon