Renuka to divest coal units amid weak price

By Romel S. Gurky

IDX-listed coal mining firm PT Renuka Coalindo Tbk said it plans to divest its stakes in coal units PT Jambi Prima Coal (JPC) and PT Surya Global Makmur (SGM) as part of strategy to cope with the lingering weal coal price.

Renuka said in a statement recently as part of the plan, JPC and SGM will also transfer debts owed to vendors to Renuka Energy Resource Holding (RERH) and third parties.

Renuka said it plans to divest stake in JPC worth Rp 5 billion to other parties. JPW will also transfer debts worth US$1.91 million to RERH, and claims worth $1.90 million to the latter.

The company said that it will divest stake in SGM worth Rp 1 billion and transfer debts owed to PT Bandargah Mandiangin lnternasional (BMI) and Renuka to third parties.

Renuka owns 99.99 percent stake in JPC and indirectly controls 90 percent of SGM.

Renuka operates coal mines in Jambi Province. The company, however, said that the mining operation is quite costly due to the long logistics chain to carry out export, thus making it less competitive particularly amid the current weak coal price environment. The highest production level from the Jambi mines was 600,000 tons per year.

The company believes that coal price is unlikely to recover in the near term and that imports by China and India are likely to further decline in the future. As such,

Renuka said it will divest its stake in JPC and SGM, and will instead focus on coal trading business, and look for new better coal assets.

Editing by Reiner Simanjuntak