Toba Bara Sejahtra?s coal production higher

By Romel S. Gurky

IDX-listed PT Toba Bara Sejahtra Tbk said on Friday its coal production volume grew 13.3 percent year on year from 4.1 million tons in the first nine months of last year to 4.6 million tons in the same period of this year, while on quarterly (quarter-on-quarter) basis, it expanded 19.9 percent from 1.5 million tons in the second quarter of this year to 1.8 million tons in the third quarter.

The production volume of 4.6 million tons in the January-September 20113 period derived from all three operating subsidiaries with the following respective contributions: 3.1 million tons from PT Adimitra Baratama Nusantara (ABN), 1.0 million tons from PT Indomining (IM), and 0.5 million tons from PT Trisensa Mineral Utama (TMU), the firm said in a statement filed with the Indonesian Stock Exchange.

The company?s y-o-y production growth of 13.3 percent was predominantly attributable to TMU?s significant production ramp-up post the earlier than expected completion of its hauling road connecting TMU and IM via ABN. The company is expected to achieve this year?s targeted production of 5.8 ? 6.4 million tons. Total production as of the third quarter reached around 75.4 percent of this year?s average production target of 6.1 million tons.

In line with the strategy to lower overall costs towards preserving and maintaining better profitability margin, in the third quarter of last year the company embarked on a series of controllable cost reduction initiatives, which included lowering stripping ratio (SR) and overburden dump distance (dump distance). These two cost components account for ~65-70 percent of FOB vessel cash cost.

The company successfully reduced SR by 14.1 percent y-o-y from 16.0x in the nine months of 2012 to 13.7x in the same period of 2013, while on q-o-q it lowered it by 6.6 percent from 13.6x in the second quarter of 2013 to 12.7x in the third quarter. On the other hand, it slashed dump distance by 25.0 percent y-o-y from 2.2 km in the first nine monts of 2012 to 1.7 km in the same period of 2013.

Along with the rise in production, secured coal sales volume also increased by 20.2 percent to 4.4 million tons in the first nine months of 2013 from 3.7 million tons in the same period of last year, and grew 17.8 perent q-o-q to 1.6 million tons in the third quarter from 1.4 million tons in the second quarter of 2013.

Meanwhile, the company?s average selling price (ASP) during 2012 moved relatively in tandem with its benchmark Newcastle Index. However, this year?s situation was different compared to that of last year. When the Newcastle Index fell 16.0 percent from US$93.2/ton in the first quarter of 2013 to $ 78.0/ton in the third quarter, the company managed to improve its ASP from $66.4/ton to $ 67.9/ton over the same period. Such an improvement in ASP was the result of the company?s ability to capitalize on securing its coal sales based more on fixed pricing rather than index-linked.

Editing by Johannes Simbolon