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JAKARTA. Integrated energy company PT ABM Investama aims to boost contributions from its non-coal-mining business with a total investment of around US$500 million over the next five years, in an effort to significantly reduce reliance on volatile coal prices.
“We’ve seen that our current business model is heavily dependent on the mining business […]. So, we have set a vision to see the same degree of contribution from our coal-mining and non-mining businesses,” ABM Investama president director Andi Djajanegara told reporters on Tuesday.
Under the plan dubbed Vision 2020, the firm expects to see revenue contribution from coal-mining down 50 percent in 2020 from around 60 to 70 percent last year.
The firm plans to develop and expand its non-mining business, such as coal-fired power plants, retail logistics, international projects, gas-powered plants and trading services.
ABM corporate strategy director Yovie Priadi said that his firm would spend around $500 million for the five-year development and expansion plans on non-coal-mining business, with between $300 million and $400 million going to the development of coal-fired power plants.
Yovie said that his firm would review any possibilities, including partnerships, bond issuance, private placements and bank loans, to fully finance the required investment.
The company aimed to build power plants with capacities of between 1,000 and 1,500 megawatts in the next five years, in line with
the government’s ambitious plan to produce enough power plants to provide 35,000 MW by 2019, he went on.
ABM, through its subsidiary PT Sumberdaya Sewatama, currently operates power plants with a capacity of 1,100 MW in 80 locations across the country.
The firm is now participating in tenders to provide power plants producing 600 MW, mostly gas-fired, in Sumatra and Kalimantan.
Besides expanding its power plant business, ABM also plans to jump into the retail logistics business in the next 12 months.
“We already have logistic infrastructure, so we’re going to expand it for the retail market as we see the retail business has been growing significantly throughout years,” Yovie said.
He explained that his firm would also expand its genset service to less-developed markets, such as Cambodia and Myanmar.
ABM’s Andi said that expanding his firm’s business portfolio outside of coal mining would be of great importance in helping the firm reduce reliance on coal, particularly amid the declining demand of coal and the price slump.
Indonesia’s coal price reference (HBA) plunged to $59.59 per ton for June from over $70 per ton last year.
ABM, listed on the Jakarta Stock Exchange as ABMM, saw its revenues decline by 6.9 percent to $723.6 million last year from $777 million in 2013 due to pressures from coal prices and operational costs.
It recorded net losses of $113.7 million last year, compared to $4.6 million in net profit the previous year.
The firm aims to pocket between $1.5 billion and $2 billion in revenues in 2020, once its Vision 2020 has materialized.
Yovie said that his firm also looked into new foreign markets, such as the Philippines, Thailand, Pakistan and Bangladesh amid sharp decline in demand from China.
ABM’s annual coal production usually hit 21 million tons a year, with China becoming the only export destination with demand of around 5 million tons. (Khoirul Amin)
