PTBA on expansion mode

Petromindo

IDX-listed coal giant PT Bukit Asam Tbk (PTBA) has set an aggressive expansion plan including to acquire new coal mines and power plant projects.

PTBA Finance Director Achmad Sudarto said that in the power plant business, the company is looking to acquire to new coal-fired power plant projects by participating in a number of tenders held by state-owned electricity firm PT PLN with combined capacity of up to 800 MW in Kalimantan and Sumatra.

He said that the company is optimistic to be able to grab at least half of the planned projects.

Achmad said that PTBA is also looking to acquire new coal mines, both at home and overseas, in a bid to help increase reserves, and that the company is currently in the process of conducting due diligence. He expected at least one acquisition will be completed this year.

He said that the company was looking to acquire at least 51 percent interest in the targeted coal mining firm, and must have minimum reserves of 100 million tons. Acquisition of mines with lower reserves will be delegated to its subsidiary.

He said that PTBA?s coal reserves currently stood at 3.3 billion tons, with resources of 8.3 billion tons.

Achmad said that PTBA has allocated Rp 5 trillion for capital expenditure this year, of which 60 percent will be allocated to help finance expansion of its power plant business and coal mine acquisition, while 10 percent will be allocated for its mines in Tanjung Enim, South Sumatra, and the remaining 30 percent for financing infrastructure development.

As earlier reported, PTBA plans to increase coal sales volume this year by 30 percent, and production by 22 percent.

He said that PTBA is not overly concerned with the funding requirement for the expansion plans as the company currently has cash on hand of Rp 3.7 trillion and treasury stocks worth Rp 2.3 trillion. He added that having a relatively low debt ratio, will also allow the company to raise funds via the debt market including bonds issue. Another alternative funding source is rights issue, he said.

Editing by Reiner Simanjuntak