Golden Energy plans to acquire 2-5 coal firms this year

IDX-listed coal mining firm PT Golden Energy Mines Tbk (GEMS) is looking to acquire between two and five coal mining companies in Kalimantan and Sumatra as part of expansion strategy, Bisnis Indonesia reported on Monday.

The paper quoted GEMS President Director Fuganto Widjaja as saying that the acquisition process is expected to be completed this year. ?I hope the acquisition process can be finalized this year. But it?s difficult to be ascertained, because it has to go through negotiation, it may take longer (time). About two to five mining firms are targeted, but not all would be realized,? he said during a public expose Friday.

The paper said that GEMS is looking for coal firms with minimum reserves of 20 million tons to help increase the company?s current total reserves of 600 million tons.

GEMS currently has cash reserves of US$40 million. Combined with $40 million loan from PT Bank Mega Tbk, funding for the planned acquisition is deemed sufficient.

GEMS has set a coal production target of 9 million tons this year, up from 8.5 million tons last year. Kontan reported that in the first quarter of this year, output has reached 1.96 million tons. The paper quoted GEMS Corporate Secretary Sudin Sudirman as saying that sales volume this year is targeted to reach 11 million tons. In the first quarter of this year, sales volume reached 2.88 million tons.

The company has allocated US$15 million for capital expenditure this year.

As has been previously reported by this portal, GEMS aims to increase sales volume in the domestic market, to account for 60 percent of total sales this year, from 53 percent last year.

Fuganto said that higher sales in the domestic market comes amid rising demand not only from power plants operated by state electricity firm PT PLN, but also from other industries such as smelter, cement, and paper. He added that the increase in coal demand at home will be more evident in 2018-2020, when more coal fired power plants enter financial closing, start construction, or completed.

He said the company will also continue export, not only to traditional markets of India and China, but also to growing markets particularly in Southeast Asia where power plants are also being developed.

?India and China will still be the dominant export markets, but in line with declining demand from China, we?ll open up new markets in ASEAN. Our target is both traders and end users of coal,? he said.

GEMS through three subsidiaries including PT Borneo Indobara, PT Kuansing Inti Makmur and PT Trisula Kencana Sakti hold a combined coal concessions of 38,165 hectares spread in South Kalimantan, Central Kalimantan, and Jambi provinces.(*)