KPC revises down output target

By Er Audy Zandri

IDX listed Kaltim Prima Coal, the country?s largest coking coal producer, has recently stated to revise down its output expectation this year.

?Initially we planned to produce up to 45 million tons of coal this year. However production reached around 32 to 33 million tons until September. I think it?s safe to say that we should be able to produce another 10 million tons for the rest of the year, making a total of around 42 million tons,? a high ranking executive in the company told Petromindo.com recently.

The reason for the production cut, he said, has more to do with rain, which falls almost every day on KPC?s concession in Central Kalimantan.

?And the regulation prevents us from hauling our coal on rainy days, which makes it harder to transport our coal,? he said, adding that coal prices drop has little-to-no effect to KPC as it has long term contracts with buyers. ?So far, we have not received any mention about shipment cancellation or price revision from buyers.?

To comply with its commitments the company stated it should be able to make better use of the river barging route, hiring two additional tug-and-barge sets from MBSS since two months back, making a total of ten tug-and-barge sets from the previous eight.

"We think we could maximize their utilization, probably to 100 percent with zero idle time," he said, adding that the company might request for additional tug-and-barge units at the start of next year.

MBSS is KPC?s barge operator, which the source claimed to offer the most competitive pricing in the market, though he did not go into details.

The source said that despite the emerging Japanese market, as the country has recently closed down 12 of its nuclear power plants to possibly replace them with coal, Japan only constitutes about 30 percent of KPC?s total market.

?Our domestic market, on the other hand, could reach around 50 percent, including major companies like Freeport, as well the State Owned Electricity Company PLN through the 10,000MW project. Because the Indonesian price is currently the best price, as it uses the prices decided three months back,? he said, though in the coming months, Indonesian prices will be the lowest due to the same three months prior system.

Editing by David Mustakim