Bumi Plc targets 30 mtpa in mid-term
Tuesday, January 8 2013 - 12:44 AM WIB
LSX-listed Bumi Plc recently stated it targets to produce 30 million tons of coal per annum this year, reviewing its mine plan against a backdrop of weak coal prices.
The company said in a trading update for FY 2012, stated that the weak coal prices might affect its selling price down to around US$70 per ton compared to US$81.4 per ton in 2011.
"Production for Berau is expected to be in line with previous guidance at 21 million tons of coal for the full year. 2013 production is forecast at 23 million tons, an increase of 9.5 percent," the company said about Berau Coal.
The company said that production unit costs for the second half of 2012 are expected to be in line with the first half. "Higher fuel and contractor costs have been mitigated through a review of the mine plan and consequent reduction in stripping ratio and hauling distances. Further cost saving initiatives are underway," the company said without further details.
Given the weak coal price environment, the company said it has focused on lower cost pits and deferred some of its expansion plans, particularly the overland conveyor and power plant. It nevertheless continues to target a medium term production target of 30 million tons per annum.
"Our near term strategy is very clear: to effect a separation from Bumi Resources and to maximise value in our operating subsidiary, Berau. We have taken immediate steps to mitigate the on-going impact of lower coal prices by adjusting the mine plan for Berau, targeting lower stripping ratios and reducing hauling distances. Expansion must be profitable and sustainable and we believe that the conditions are not right for the $288m proposed overland conveyor and power plant projects at Binungan to proceed at this juncture.
These projects will be revisited as market fundamentals start to improve. In the meantime we will focus on further initiatives to drive down our cost base and ensure we have optimal operating management in place across our business," company CEO Nick von Schirnding said.
With regards to PT Bumi Resources Tbk, it recently issued audited results, under Indonesian GAAP, for the nine months ended 30 September 2012. The net loss for the period is reported as $655m and Bumi plc will be consolidating its 29.2 percent share of this loss (after appropriate IFRS and consolidation adjustments) in its income statement for 2012, having classified its investment in Bumi Resources as an associate up to 30 September 2012.
Editing by Er Audy Zandri