Mine holding company plans up to Rp 17t capex

Three state-controlled mining companies under the recently set up mine holding company plan to allocate a combined Rp 14 trillion-Rp 17 trillion worth of capital expenditure next year, of which the largest will be made by coal miner PT Bukit Asam Tbk (PTBA) as it seeks to boost production, Bisnis Indonesia reported on Friday.

The paper quoted Budi G. Sadikin, President Director of state-owned aluminum maker PT Indonesia Asahan Aluminium (Inalum), the holding company for the three firms, as saying that PTBA must quickly monetize its huge coal reserves of around 3 billion tons amid concerns that the price of the commodity will drop in the long run due to declining demand amid ongoing push into renewable energy sources for electricity generation around the world.

?There are concerns that coal demand will decline in the long run. That?s why we need to monetize the PTBA reserves,? he said. He explained that fortunately, domestic coal demand will continue to increase amid massive coal-fired power plant development, but this will stop at one point, by which time domestic demand for coal will also start to decline.

The government set up the holding company for state-controlled mining firms on September 29, transferring its controlling shares in three listed mining firms including PTBA, PT Aneka Tambang Tbk, and tin giant PT Timah Tbk into Inalum.

Gunadi said that about 70 percent of the fund required for the 2018 capex will either come from bank loans or bonds, which may be issued in the second semester of next year. The remaining 30 percent will come from internal funds. He said that the three mining firms are free to raise the funding requirement.

PTBA said in November it planned to allocate around Rp 5 trillion for capex next year and aims to increase coal production by 10-15 percent from the estimated 23-24 million tons in 2017. (*)