High prices raise Adaro income by12 percent

Posted on May 1, 2012


The Jakarta Post, Jakarta | Sat, 04/28/2012 9:03 AM

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The nation’s second largest coal miner Adaro Energy has reported a 12 percent growth in net income to US$122 million in the first quarter this year, from an earlier level of $109 million and on the back of an average 18 percent increase in its selling price.

The publicly-listed coal company, however, made only a 3 percent increase in sales volume to 11.25 million tons and a 3.4 percent growth in production to 11 million tons in the January-March period.

Adaro’s unaudited, first quarter financial report, which was announced here on Friday, showed a 21 percent increase in net revenues to $916 million from $757 million last year.

The $5.7 billion mining company, which owns coal-mining concessions in South Kalimantan, exports more than 70 percent of its output.

But Adaro’s president Garibaldi Thohir told reporters after the company’s annual general shareholders meeting that he was not greatly concerned about the government imposing an export tax on mineral ores.

“I think the government should differentiate coal from other mineral ores because coal can be classified into a finished product, unlike other mineral ores that have to undergo a certain process,” Thohir added.

The Energy and Mineral Resources Ministry plans to impose 25 percent export taxes on unprocessed mineral ore starting in May.

Thohir said Adaro had not only met its domestic market obligation, as stipulated in its mining contracts, but had also been one of the largest suppliers of coal to the state electricity company PLN.

“As long as the market demand is there and the price is right, we prefer to supply to the domestic market,” he said.

According to him, the only way to add to the value of coal is to turn it into electricity, which has been included in the company’s portfolio since 2010.

“If we want the highest value- added from coal, the only way to achieve that is by using minerals to generate electricity,” Thohir said.

Adaro director of corporate affairs Andre J. Mamuaya said that the company had signed a letter of intent to supply 3 million tons of coal a year to an independent power producer (IPP), which would build a 200-megawatt (MW) power plant in South Kalimantan.

“The power plant project, which will cost $400 million, will come on stream in 2016,” Mamuaya added.

Adaro and its Japanese partners will build a coal-fired power plant with a capacity of 2,000 MW in Central Java, slated to operate in 2016.

Shares in Adaro traded at Rp 1,810 apiece at Friday’s close, unchanged from the previous day. (nad)